The Financial Burden Of Caregiving

0:28On Planet Money, we have covered a lot of topics. The challenges of caregiving a loved one can take an emotional and physical toll on those involved. But there's also financial burdens that come with it too. My mother is in what they call the waiver program and receives full services from the state. She had to liquidate all of her assets except her house to receive these services. She's in a nursing home situation, and when she passes, the state will take her house. But in the meantime, we have to maintain the house, and that means paying taxes and utilities and keeping it in a reasonable condition so the state could take it when we're done.

1:12It's pretty horrible. Diana, thanks for that message. AARP estimates that caregivers lose more than$43 ,000 in income as a result of the demands of caretaking. They also spend an average of$7 ,242 out of pocket each year. And those costs are rising. In-home care alone is rising more than three times faster than inflation. That's according to new reporting from Axios. Why is the cost of care going up? And what can you do to manage it? We get to those questions and so much more after this short break. I'm Jen White. You're listening to the 1A Podcast. Back with more in just a moment. Stay with us.

1:54On Wait, Wait, Don't Tell Me, it's not so much we get to talk to celebrities, it's that we get to talk to celebrities about other celebrities, like we did with actor Nathan Lane. I remember having to tell George C. Scott that I was leaving the show to do this musical, and he said to me, You're leaving me to do a f***ing magic show? Listen to Wait, Wait on the NPR app or wherever you get your podcasts. Joining us for this discussion is Emily Peck. She's a national correspondent at Axios. She writes about the economy and how public policy is changing the way Americans live and work. Emily, welcome back to the program.

2:32Hi, it's great to be here. Also with us is Beth Pensker. She's a financial planning and retirement columnist at MarketWatch. She's also the author of the new book, My Mother's Money, a guide to financial caregiving. Beth, welcome to the program. Hi, thanks for having me. And Dana Lynn Rutherford. She's president of the Venner-Grinn Foundation for Anthropological Research. She's also the author of the book, Beautiful Mystery, Living in a Wordless World. She's one of many caregivers for her disabled adult daughter, Millie. Dana Lynn, great to have you back. Thanks so much for having me. And we want to hear from you.

3:06If you're a caregiver, how much are you paying to care for a loved one out of pocket? What kind of financial support do you rely on from the federal government, and what difference has that made? We're also taking your personal finance questions. Email us at 1a at wamu.org. Let's go back to another message we got from one of you. Hi, my name is Michelle. I care for my husband, James, who is eight years older than I am. He's 73. I'm 65, just turned. The role of a familial or a paid caregiver is immeasurable to many people. The cost of in-home nursing home care is astronomical. It's at least$10 ,000 a month.

3:49To pay somebody to come in and care, including family caregivers, is much less expensive, much more pleasant for the individual, and much more economical just overall. Michelle, thanks for that message. Emily, let's start with the cost of in-home care, which is rising more than three times faster than inflation, according to your reporting. When we say in-home care, what all does that include? Yeah, so that's everything from, you know, someone coming in to help with daily living tasks, just bathing, meal prep, housekeeping, to more advanced nursing care and medical care as well. So it really runs the gamut.

4:29And to be clear, does this include things like nursing homes or just specifically a care that's being provided in a person's home? This is just care that's being provided in a person's home. So not nursing home costs. This is in-home care. This is all the people paying money to keep their loved ones at home where so many people would rather be and often is less costly overall. Maybe not in terms of out-of-pocket, but just compared to really how much it costs to have someone in a nursing home 24-7 than in their own home. But as we said, the costs for this specific kind of care are rising. Why? So the costs are rising for in-home care for a few reasons.

5:10Some really big picture demographic change, I think, as we all know, the American population is aging rapidly. In a lot of states now, the number of people over the age of 65 outnumber young people, young adults, and that's happening. There's a silver tsunami, people call it, of baby boomers hitting retirement age and growing rapidly, this population, while at the same time, there's not as many young people around to take care of them. So there's more and more demand for in-home care from a rapidly aging population and then less people doing this work. And then on top of that, this year, there's been a crackdown on immigration.

5:51About a third of the people who do this work are immigrants. So that means there's even less supply to meet the demand, right? There's fewer and fewer workers that are available to do the work. Danilin, you're one of many caregivers for your adult daughter, Millie. Tell us about her and what kind of support she requires. So my daughter, Millie, just turned 25. She has a beautiful smile, a contagious giggle, and a lot of friends. She's also multiply disabled. She doesn't walk on her own or talk, communicate with signs or symbols. She has seizures. She basically can't be left alone. I'm a widow.

6:26I work full-time for a foundation based in New York, and I need 24-7 coverage. And I did the numbers in advance for you. I mean, including taxes and benefits, the total was$293 ,000 for the fiscal year that ended in July. Is that out of pocket, Danalyn? No, this is covered by the state. I cover, I provide her with housing and everything else in her life. and I also pay some money for, you know, experienced caregivers to help manage her in scheduled shifts, the majority is coming from the state of California and from Medicaid. Beth, what about you? How much did you pay out of pocket to care for your mother when she was ill?

7:08Well, out of pocket, it was flights back and forth, Ubers, you know, various things that I had to pay, and then all the bills that I had to cover that I was eventually reimbursed for. But we also had caregivers for my mom. And the cost when we started was about$3 ,000 a week for 24-7 coverage at home. And also while she was in a facility because the response times weren't what we needed for her because she was completely incapacitated. So she couldn't even ring the call bell at certain times. And so we needed somebody sitting by her bedside with her all the time, sort of anticipating her needs.

7:50But then things got complicated as her care situation went on. People needed vacations. Sometimes we needed double coverage because they couldn't move her. One person couldn't move her. So by the time we were finished and my mom passed away, we were up to over$4 ,000 a month, which was covered partially by her long-term care insurance and partially out of her savings. One of the main reasons you wrote your book, My Mother's Money, was because you wanted to offer concrete information about the financial realities of caregiving. In your opinion, what typically gets missed in this conversation? The interplay between the emotions that you have and the decisions that you have to make and the money that you're spending.

8:34When I was my mom's financial caregiver, I had to spend her money knowing that it was my money eventually. And in the stock market world, we call that double dealing. You know, you're playing, are you really doing things out of your mom's best interest or are you doing things out of your best interest? You really have to think carefully about, you know, the decisions you're making on, you know, should we put mom in a nursing home or should we bring her home? Because, you know, those cost differences, you know, sort of matter in the end. And my book was meant to wake people up to those questions that you're going to face.

9:15Even if you're not a hands-on caregiver, chances are if you are directly related to somebody who's ill and needs help, you're going to be a financial caregiver in some capacity. Because it's just not a task that you can pay somebody to do most of the time. Emily, why is care so expensive? When we think about the people who are often providing in-home care, those aren't very highly paid jobs. So what's driving the cost? Well, those aren't very highly paid jobs, and a lot of people don't really want to do them. So that will drive up the price that you pay for labor. There's also, you know, companies in the middle that hire these workers and, you know, that consumers like us go through.

10:02and they take some off the top for that as well. Just because the work isn't, it's ironic in the care industry that the jobs are sort of low paying, but that doesn't mean the cost is affordable for people. You see this in childcare as well. On the one hand,$20 an hour is a low paying job, but when you're just a regular person having to pay that cost out of your own pocket, it becomes really hard to manage and shoulder. Well, earlier this year, we discussed what the Trump administration's cuts to Medicaid mean for caregivers. Over 8 million family caregivers rely on Medicaid for their own health care coverage.

10:44And so with new work requirements, there are going to be new administrative hurdles that family caregivers are going to have to navigate to qualify for health care coverage on their own, alongside the administrative hurdles that they're navigating for a care of a loved one in their home. And then it's likely that we'll see benefits being reduced. When you look at what happens when states have fewer resources and Medicaid dollars, they often cut home and community-based services first. That was the president and CEO of the National Alliance for Caregiving, Jason Rezendez. President Trump's deep reductions to Medicaid will cut federal spending by about$900 billion over 10 years, in addition to adding new work requirements.

11:26We got this message from one of you. We get zero financial support in the state of Kentucky for Medicare. So again, zero dollars. So my mom, we're having to use all of her savings to pay for her part-time care companion with dementia. And then moving to a memory care facility, part-time care companion. and we're starting to equal the cost of a full-time memory care assisted living, which is, again, not covered by any insurance at all. Let's head to a quick break. We'll be right back.

12:07Danilin, you mentioned that most of the over$200 ,000 you pay annually for your daughter's caregiving, It is covered by the state. But roughly how much do you think you're paying out of pocket? And how are you coming up with the money to do that? Yeah, thank you so much for that. I mean, I'm kind of a special case because I'm in California where actually care in the home is mandated. You know, it is actually strongly supported in my state. Before Millie turned 18, I was paying a lot out of pocket to bring my caregiver's salaries up to what was more like a living wage. So don't want to give people the wrong impression.

12:44Yeah, how do I pay for this? Gosh, it's really hard for me to anticipate, you know, even evaluate that. Millie needs an adaptive van. Those are very expensive. Millie needs personal care items that are very expensive. It's very expensive being a disabled person. All of these things cost a lot of money and I provide her with housing and that's very expensive, you know, so in my community, which is not a cheap place to live. How do I pay for it? Well, you know, living in California is key, but I also have assets. I lost Millie's father when she was three and her brother was six. My late husband was a management consultant.

13:24We lived simply for years. We didn't own a house or a car, and he saved. And when Millie was 10 months old and getting diagnosed, he took out an extra million dollars in life insurance on top of what he had from his firm. And after he died, you know, we invested the payout. So during those years before Millie turned 18, she didn't really qualify for much support from the state, but I was able to pay for her care by supplementing my salary with earnings from the money that Craig left me. You know, the other thing to say about Millie, and this is something that's the case for parents of people like her, we disinherit her.

14:02She has no assets. She's not allowed to have any assets, or else she would lose all of her services. and complicated, but she gets social security through the loss of her dad, not through SSI. So she doesn't automatically qualify for these services. I've had to fight for them. The bureaucratic battles one has to wage, that's actually real opportunity cost as well. So I think it's really important to recognize that. I also just want to underline, I'm unusual. I'm incredibly privileged. I'm in a really good position compared to so many people, and I don't want that part of the story to get lost here.

14:42Beth, what about for you? How did you come up with the money to cover those out-of-pocket costs to support your mom? It was a lot of juggling. The biggest obstacle I faced was that she needed some big checks sent out almost immediately when I started taking care of her. She went in to have spinal surgery and was supposed to be a short-term thing that ended up having a lot of complications. And I ended up having to take over fully for her in her finances. And she was 76 and living a full life at that point. So when I had to go in there to her desk and see what bills needed to be paid, I wasn't yet the power of attorney on her accounts.

15:22And there was a past due bill for her long-term care insurance. It was$6 ,800 and some dollars. And they wanted it FedExed immediately or else she was going to lose her policy. And that policy was our lifeline. So I couldn't let her lose that policy. So, you know, two weeks or three weeks into my mom being sick, I had to cut a check out of my own account for that much money, which is not something, you know, I typically have sitting around. So I had to pull money out of retirement savings in order to cover that check, which I knew eventually down the line would probably get reimbursed. I wasn't absolutely sure, but I was pretty sure.

15:59But, you know, so, you know, there you go. I have the time I spent figuring it out. I had to cut a check out of my own money and take it out of my retirement. And I had to go and FedEx the check. And then, you know, three, four months later, it came back to us regular mail, of all things. Emily, when we look at the current landscape of financial support for caregivers in this country, what does that look like? Well, the current landscape does not look great, primarily because of the pullback at the federal level. You already mentioned the work requirements that are being implemented, stricter work requirements for Medicaid, also for food benefits, for SNAP.

16:42I mean, we're living through that now this month. People getting food benefits haven't received them yet because of the shutdown. But even before that, these work requirements were really impacting people's financial outlook, including caregivers, some of whom work and get these benefits and take care of a lot of people who aren't working and getting the benefits. But overall, that's lifting the whole boat of the household. You know what I mean? And now I speak to some of these people and they're afraid of losing that support. So it's looking really scary. And the same with Medicaid. A lot of times all these benefits are sort of interconnected.

17:19So if you lose one, you lose the other. It's harder to apply for that. So it's like the tide is pulling away from a lot of these households. And it's a scary moment. Beth, you argue that federal programs that offer financial support caregivers weren't working all that well even before the current administration. How so? It's just really hard to apply for these benefits. They have really strict limits, especially Medicaid. And to go through the red tape to do it usually requires a lawyer to fill out the paperwork. I talked to one lawyer who told me that they still have to basically batch, email, PDFs to Medicaid.

18:02And the applications are hundreds of pages long. And the input system that they have to send them to, and this is in New York, so it's different in each state, but only accepts 100 pages at a time. So they have to split the application up into multiple files and send it across and hope that they get connected on the other side of things in order to get a Medicaid application through. And that's just really difficult for a person to do on their own, especially when they're struggling as a caregiver. You know, not everybody has the education and the technology to do that sort of thing. So a lot of people hire lawyers to help them through this, and that's a cost also.

18:41And it's just complicated right now even. You know, the technology hasn't been updated. There's processing time and wait times. So if you just start making all that stuff harder, it complicates life for families. Danilin, you mentioned how you're privileged to live in California where your daughter can receive these state benefits. But what are you hearing from your friends who are caregiving in other states about what they're paying and maybe changes they're noticing? Yeah, no, that's a really great question. I don't really know how they handle it. You know, you have to get on a waiting list for a voucher to get the kind of support that Millie gets.

19:23And, you know, I have friends who have, you know, adult children who need the kind of care that Millie has, who just are paying for it out of pocket. You know, if they have assets, that's great. If it's their retirement, that's where it's coming from. There's also just the problem of, like, the uncertainty, you know, that when your person is in a situation where people are really low paid, there's a lot of staff turnover, So you're not just worried about where the money is coming from. You're also worried about the care that your person is receiving. Well, here's another message we received from one of you.

19:57I have a child with special needs who has some medical issues. He's now 19. Had he been typically developing, I would have gone back to work when he reached school age. I've missed out on at least 12 years of employment outside of the home. And another of you writes, my younger brother dealt with our dad as he spiraled with dementia and Alzheimer's. It took a toll on his ability to work and hurt him because his job is commission-based. AARP estimates that caregivers in the U.S. lose more than$43 ,000 in income as a result of the demands of caregiving. With rising in-home care costs, we'll likely see even more family members taking time off work or leaving the workforce altogether to fill in these gaps.

20:36Emily, what implications could this have for the economy more broadly? Well, this has huge, huge implications, and I don't think people talk about it enough, but the cost and the need for caregiving is paid, a lot of times unpaid, by women most of the time. the majority of caregivers are still women who wind up leaving jobs, going to part-time, leaving the workforce altogether. And that pullback does cost the economy in terms of talent lost, in terms of, you know, just people lost. And it costs you not just the lost income, you know, maybe if you've quit your job, but your career progression for a lifetime is affected when you have to leave the workforce to care for a child, a disabled child, you know, an elderly relative, your parents.

21:31And you see all kinds of interesting impacts. When I was reporting my latest piece, I even ran across some research that found that when there are enough people to supply this work, enough immigrants to do elder care, birth rates even go up for the educated women who, you know, are able to sort of manage everything that's going on, get the care they need for their loved ones and work. You know, it really, it takes a lot to sort of get the economy running. And the role that this elder care plays is really, really important. Beth, as a financial columnist focused on caregiving and retirement, what are the most common issues you see among the people seeking your advice?

22:18They are concerned about their retirement savings getting squeezed from all directions. So Generation X, which is the current generation that's sandwiched, which is me, we have two really big generations on either side of us that we are caring for. And sometimes I'll add one more sandwich to you. It's a club sandwich. There are a lot of people out there caring for children, caring for their parents, and caring for their grandparents who are still alive. but their parents are now too old to take care of their parents. And so people my age really have it hard. And we have, you know, digging into your retirement savings should be something that's the worst case scenario, last thing possibly that you do, because you can't replenish those funds the way you can other savings out of income.

23:09And we are the generation that doesn't have pensions. We are the first generation of the 401k only, and we didn't start early enough. And so Generation X is way behind the eight ball on retirement savings in ways that millennials and younger generations are not because they got the benefit of auto-enrollment and auto-escalation, which were two additions to the 401k system that came after my age group, also Roth IRAs. So, you know, when I was 20 and starting out in the workforce, I had none of those benefits. And so people my age who contributed to 401ks, if they did it at all, did it at the sort of barest bones rate of contribution.

23:55And we're behind now and getting squeezed. We're discussing the financial costs of caregiving. We'll be right back.

24:07Let's get back into the discussion with this message we got from Barbara who says, I'm not sure where people are coming up with the money to pay a caregiver to come into their homes around the clock. I have someone who comes in three days a week for six hours, and it's$144 a day. If I had them come in for 24 hours a day, it would be over$700 a day. My husband has Parkinson's, and he's had it for over 10 years and could live another 10 years. It is taking a toll on my mental health. Quite honestly, I don't see an end in sight. Danilene, again, as we've said, your 25-year-old daughter, Millie, will likely require 24-7 care for the rest of her life.

24:43What does planning for her future look like as she gets older? Yeah, so, you know, as I said, I had to disinherit her. I had to really think ahead. People in my position think a lot about what will happen after they die. I don't really think a lot about my retirement. I think about my death, you know, and that's kind of the important financial issue for me. You know, I'm incredibly privileged. I'm lucky. I will probably be able to retire. But at the same time, this conversation is a great reminder of all the things that could happen to me. You know, what if I get dementia like my mother and my grandmother before her?

25:21You know, what if all of my assets are drained by that? what if the stock market crashes at the same time as services are radically cut? And I think the last caller just makes it clear, this is extremely expensive. I have assets, but they'll be drained pretty quickly, right? So I think it's really important to underline. And I think we'll get to this. We'll get to the part where we're talking about suggestions for society. But the level of insecurity created by the way we handle care, it's like anyone. It's like you cannot have enough assets really to handle all of the things that could come your way.

26:01Beth, when offering financial advice around caregiving, how do you balance the personal finance piece with the structural realities of the country's health care system? It can be really hard. And the thing that we get uncomfortable with mostly is the message to everybody is save, save, save. And there's not a lot of psychology or planning around spending that money. And I think for a young person, when you have a long lifespan, it's incredibly difficult because you have to plan out for so long. When you're dealing with spending down assets for somebody who's older and it's their money that you're talking about.

26:40So my mom and dad saved all their lives. They were teachers. They put away money very diligently. When it came time to spend that money, it made everybody really uncomfortable. But that's what the money was for. That money was so that they didn't have to suffer in their older years, that they could have the care that they needed. And the money was there for that. But it makes people uncomfortable to watch a pile of money dwindle. It's really psychologically like a ticking time bomb as somebody in my book described it to me. And that was what Dana Lynn was talking about. There are very few fortunes that can survive$15 ,000 a month of dementia care for somebody who's going to live 10 to 12 years.