America is dealing with a ‘caregiving crisis’
The COVID-19 pandemic put a spotlight on caregiving as more Americans were either thrust into the role or saw their caregiving responsibilities drastically increase.
On top of that, Americans are now living longer, and diseases like Alzheimer’s and Parkinson’s are projected to afflict millions more in the coming years, says Jessica Tuman, head of Voya Cares and ESG practices at Voya Financial, a retirement, investment and insurance company.
Add to that high inflation and a caregiving labor shortage, and it’s only become more challenging and costly to get help. The number of employees in nursing and residential care facilities plunged by over 400,000 between January 2020 and 2022, according to Federal Reserve data.
While it has begun to rebound since the start of the year, the numbers remain significantly lower than before the pandemic.
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The financial implications of caregiving
The expense of hiring help for health care needs means many Americans opt to take on the responsibility of caring for aging parents or loved ones with disabilities themselves.
Data from insurance company Genworth shows that the cost of care has steadily increased since 2004 — and it’s projected to get even more expensive in the future. The median yearly costs of care in 2021 included $61,776 for a home health aide and $108,405 for a private room in a nursing home.
AARP reports that family caregivers spend about a quarter of their income on caregiving activities, with an average cost of $7,242 a year.
Caregivers also often face an impact on their work life as well — even those who don’t quit their jobs may miss out on career opportunities and promotions, or see an impact on their work performance and increased absenteeism.
Look into financial resources and caregiving support
For the first three years, Revere served as an unpaid caregiver. Over that time, the family lived off of her grandmother’s pension until she died in 2017. And because she’d stopped making payments on it, her grandmother’s life insurance had lapsed.
Later, Revere shared a room upstairs with her mother and converted the downstairs rooms of their house into an Airbnb for rental income to help pay off the mortgage.
Without her grandmother’s pension, the family’s income fell enough to qualify Revere to serve as a paid caregiver through California’s In-Home Supportive Services.
Tuman suggests looking for any services or assistance programs that are provided at the city, county, state and federal level. Depending on your eligibility, Medicare, Medicaid and veterans’ programs may help cover some expenses.
Organizations involved with the specific disability or caregiving aspect you’re dealing with may be able to provide you with some resources as well.
While Revere didn’t have any caregiving support at her previous job, Tuman says many employers offer Employee Assistance Programs (EAPs), which provide basic support for caregiving challenges or medical issues, like counseling and referrals.
Some may also offer more specialized benefits, like paid caregiver leave, flexible work arrangements and concierge services. Legal benefits can also be helpful, especially when it comes to dealing with things like living wills, special needs trusts and powers of attorney.
If you have a health savings account or a flexible savings account through your employer, these may also be used for qualifying medical expenses for you or your dependents.
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Why it’s important to make plans in advance
Fewer than 1 in 5 Americans have started to plan for their own long-term care even though over half are either already in a caregiving role or expect to be in one in the next three years, according to a recent survey from insurance and investment management company Lincoln Financial Group.
Some don’t expect to be at risk, while others underestimate the potential costs.
“The most important advice that we give [employees] is to retain your job,” Tuman says.
“Because through your job, you get all these benefits, financial security and it impacts your retirement. The most important thing for an employee to do is to speak to their employer, speak to their HR advisers about whatever support they have available.”
However, the RCI also notes that workplace and public policies for caregiver employees “are not widespread and evidence of their effects is needed.”
Both Revere and Tuman agree that people need to talk to their parents about financially preparing for their long-term care early on. This could include padding their retirement fund for unexpected expenses, looking into long-term care insurance or getting certain legal documents into place, like a power of attorney.
Revere’s mother passed away in March, but she’s still recovering from the emotional and financial strain of the past six years. While she was able to save some money after she qualified as a paid caregiver, she still has her mortgage and student loans to pay off.
Revere began to share her story on TikTok in 2020, and her account @momofmymom currently has 672,000 followers. Although her caregiving time has ended, she plans to continue advocating for caregivers over her social media platforms.
“So many more people will be in the role sooner than we think,” she emphasizes. “And I think these are conversations that need to be had.”
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