Managing the Challenges of Caregiving
Recognizing the financial and emotional impact of caregiving.
While living longer can have many benefits—such as the ability to spend more time with family and friends—one of the downsides is that both physical and cognitive health often start to fail. Eventually, this could require assistance.
When a loved one needs care, it can impact the entire family—and particularly the individual’s primary caregiver. Providing care to another individual can take a toll physically, as well as emotionally and financially. So, it is vital to have help and resources available. Having a plan in place ahead of time can also be extremely beneficial.
The High Cost of Caregiving
According to AARP, family and friends who provide care to an elderly loved one spend an average of $7,000 out-of-pocket each year. This is in addition to the physical and mental exhaustion.
Many care providers must also either cut back on work hours or quit their jobs altogether, which not only leads to loss of income, but also reduced retirement savings and ultimately less in future Social Security retirement benefits. Based on a MetLife study, this equates to an average overall financial loss of more than $300,000.
In some cases, caregivers may even have to take out hardship loans or take early withdrawals from their retirement accounts to cover their expenses. But having a plan in place before a loved one needs care can help to alleviate some, or possibly even all, of this burden.
Documents That Should Be in Place
When developing a plan for your own or a loved one’s future care, there are some items that should be in place, such as Powers of Attorney, a Will, and other estate planning documents.
Powers of Attorney
Having powers of attorney in place can better ensure that an individual’s wishes are carried out if they become incapacitated. There are instances where it may make sense to have POAs effective now before incapacitation. The reason for this is because as we age, ordinary tasks become challenging, and we may need assistance from our trusted agent to take care of business for us. A durable power of attorney (POA) names one or more persons or agents who act on an individual’s behalf for financial, real estate, and legal transactions.
A healthcare power of attorney designates one or more individuals, such as a spouse or other loved one(s), to make important healthcare decisions on a person’s behalf in case they are not able to do so on their own.
Will
A will is a legal document that describes an individual’s wishes for the distribution of their assets, as well as names who is to receive them. Wills may also outline how dependents, such as a special-needs child, are to be cared for upon the individual’s passing.
Other Estate Planning Documents
Other estate planning documents, such as certain types of trusts, can also be beneficial in planning ahead for long-term care needs, which in turn, can help ease the strain on one’s caregiver(s).
Other Care and Payment Options
Even with the best of intentions, a caregiver cannot be available 24/7. They also may not be qualified to provide all of the care that a loved one requires. So it is possible that other care options will have to be considered, such as hiring a home healthcare professional or moving the individual into a long-term care facility.
But this type of care can be expensive. According to the Genworth Cost of Care Survey, the monthly median cost of a home health aide in 2023 was nearly $6,300. And the average cost of just one month in a skilled nursing facility was $8,669 for a semi-private room and $9,733 for a private room.
These expenses have the ability to quickly deplete assets. So it is important for both a care recipient and caregiver to have additional payment alternatives available.
Some possible payment solutions can include long-term care insurance and Medicaid.
Long-Term Care Insurance
Today’s long-term care insurance policies typically cover a wide range of care options, including skilled nursing facilities and assisted living facilities, as well as home healthcare services.
Some plans will reimburse the insured for the cost of care (up to a certain daily or monthly maximum amount) and others will pay a flat daily or monthly benefit. There are many different variations of long-term care insurance, so it is important to determine which will best fit your potential needs.
As with other types of health insurance, it is essential to apply for long-term care coverage before one becomes ill or cognitively impaired. Otherwise, it is likely that the insurance application will be denied. Additionally, the earlier one obtains coverage, the more cost-effective it will be, as age is one factor that is taken into consideration during underwriting.
Medicaid
Medicaid is a jointly funded federal and state program that pays for certain long-term care services—but only if an individual meets both health and financial criteria, including having a low income and asset level.
Although the names sound similar, Medicaid and Medicare are two different programs. Medicare offers health insurance coverage to qualifying individuals who are over age 65 (as well as those under 65 who have certain health conditions). Medicare pays very little (if anything) for long-term care services.
In order to qualify for Medicaid’s financial criteria, a single individual must typically have assets of $2,000 or less, not including certain assets such as their home, a vehicle, and term life insurance coverage.
For married couples, the asset limit is higher, depending on the state. However, even assets that are jointly titled count towards Medicaid’s resource criteria for the spouse who is applying for benefits. So qualifying for Medicaid can cause financial hardship for the “healthy” spouse, as well.
Items to Consider
Providing the best care for a loved one can be difficult. But for those in the LGBTQ community, it can pose some added concerns. Some key items to consider are:
- Friendly caregivers and facilities. For LGBTQ folks, as well as others, such as ethnically diverse families, it can be challenging to find places or care providers that are a good fit. For instance, there may be cultural differences, such as language barriers and food preferences. Also, individuals need places where they can feel safe.
- Legal capability for making decisions. If an individual does not have a spouse or other blood relatives available, who has the legal capacity to make decisions for him or her?
Additional Caregiver Resources
Caregiving is a tough job, physically, emotionally, and financially, so don’t be afraid to reach out for assistance from family and friends. It is also essential for caregivers to remain socially active so as to have an outlet for their own personal needs.
Some additional helpful resources for caregivers include:
Discussing your situation with a Certified Financial Planner™ can help, as these professionals can assist you with creating a plan that works for your particular situation and objectives. For those in the LGBTQ community, working with a CFP© who is familiar with the specific challenges faced can help you prepare and make any changes that are needed in the future.
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