As the population ages and more people require care at home, they rely on family caregivers more and more. As of 2023, 42 million Americans provide unpaid care to an adult family member. While this care is invaluable, it often creates financial strain.
Thankfully, various Medicare and government assistance programs can help ease this burden by providing financial support for family caregivers.
Whether you’re new to caregiving or have been supporting a loved one for years, understanding these financial resources is paramount. So let’s explore the ways these programs can provide financial assistance to family caregivers.
Contents
Medicare Coverage for Family Caregivers
To effectively support family caregivers, it’s essential to understand how Medicare can provide indirect assistance through its coverage of home health services.
Medicare benefits that support family caregivers
Medicare, the federal health insurance program for people 65 and older and some younger individuals with disabilities, doesn’t directly pay family members to provide care. But it offers some benefits that cover specific home health services.
Medicare Part A and Part B may cover eligible home health services if the recipient needs part-time or intermittent skilled care and is considered “homebound,” such as:
- Part-time skilled nursing care
- Physical therapy
- Occupational therapy
- Speech-language pathology services
- Medical social services
- Part-time home health aide care (when receiving other skilled services)
- Durable medical equipment and medical supplies
Denise M. Brown is Founder and CEO of The Caregiving Years Training Academy, a family caregiving agency that coordinates care across multiple systems. She says Medicare Part B reimburses for Caregiver Training, Community Health Integration Services and Principal Navigation Services.
Family caregivers can receive these services on behalf of a Medicare beneficiary if that beneficiary cannot participate in care planning because of their illness.
Medicare’s Consumer-Directed Personal Assistance Program
The Consumer Directed Personal Assistance Program (CDPAP) lets individuals manage their own care through self-directed services.
This program enables Medicaid beneficiaries to choose their own caregivers, including family members or friends, offering more flexibility compared to traditional home care services.
Unfortunately, Medicare does not typically cover CDPAP because it is a Medicaid program, not a Medicare program.
Coverage limitations and eligibility requirements
Bert Hofhuis of Sovereign Boss in the UK says that many insurance plans, including Medicare and private insurance, have limitations on what they cover for in-home care. “For example, Medicare may cover some home health services but often does not cover custodial care.”
To be eligible for Medicare home health benefits, a beneficiary must meet certain qualifications:
- They must be under a doctor’s care and receiving services under a plan of care established and regularly reviewed by a doctor.
- A doctor must certify that they need intermittent skilled nursing care or physical therapy, speech-language pathology, or continued occupational therapy services.
- The home health agency providing services must be Medicare-certified.
- A doctor must certify that the beneficiary is homebound, meaning leaving home is a considerable and taxing effort.
Note that Medicare’s coverage for home health services is limited. For instance, it doesn’t cover 24-hour-a-day care at home, meals delivered to the home, or homemaker services when this is the only care needed.
Medicare’s application process
To access Medicare home health benefits:
- Discuss your needs with your doctor. They can help determine if you qualify for home health services and can provide a referral.
- Choose a Medicare-certified home health agency. You can use Medicare’s Home Health Compare tool to find agencies in your area.
- The home health agency will schedule an appointment to talk about your needs and explain their services.
- The agency will keep your doctor updated on your care and will update your plan of care as needed.
While these services can provide some temporary relief, they don’t eliminate the need for family caregivers.
State-Specific Financial Assistance Programs
Beyond Medicare, various state-specific financial assistance programs can offer vital support to family caregivers, enabling them to receive compensation for their caregiving efforts.
Medicaid Self-Directed Care programs by state
While Medicare doesn’t directly pay family caregivers, many states offer Medicaid Self-Directed Care programs that allow beneficiaries to hire and pay family members as caregivers. These programs vary by state in terms of eligibility requirements and payment amounts.
For example, as of March 2024, all 50 states and D.C. have at least one program that provides assistance to elderly individuals living outside of nursing homes. A few examples:
- Alaska offers Personal Care Services (PCS) and the Alaskans Living Independently Waiver (ALI).
- Florida provides home care, including meal delivery, companion care, and homemaker services, under the Statewide Medicaid Managed Care Long-Term Care program.
- Michigan has several programs including the Choice Waiver and the Home Help Program.
State-specific caregiver compensation programs
Some states have implemented specific programs to compensate family caregivers. For instance, Oklahoma became the first state to pass an expansive tax credit for family caregivers in 2023. This trend might encourage other states to follow suit.
Home and Community Based Services (HCBS) waivers
HCBS waivers, also known as 1915(c) waivers, allow states to pay for care and support services for individuals residing outside of nursing homes. These waivers often cover personal care and chore services provided to elderly or disabled individuals living in their own homes or the homes of family members.
For example, Georgia offers two waiver options that help with home care: CCSP and SOURCE. Both waivers offer similar benefits and have similar eligibility requirements.
Local resources and support organizations
Local resources and support organizations can also provide valuable assistance to family caregivers, which may include:
- Area Agencies on Aging
- Local chapters of disease-specific organizations (Alzheimer’s Association)
- Community centers and senior centers
- Faith-based organizations
These organizations often offer resources, support groups, and sometimes even small grants or respite care services.
Direct Payment Programs for Family Caregivers
Beyond Medicare and tax benefits, several direct payment programs exist that can financially assist family caregivers, recognizing the crucial role they play in the care of their loved ones.
Veterans Administration caregiver benefits
The Department of Veterans Affairs (VA) offers several programs that can pay family caregivers of eligible veterans:
- Program of Comprehensive Assistance for Family Caregivers (PCAFC): This program provides a monthly stipend, access to health care insurance, mental health services, and respite care for eligible veterans and their family caregivers.
- Veteran-Directed Care (VDC) Program: This program gives veterans a flexible budget for long-term services and supports that can be managed by the veteran or their family caregiver.
- Aid and Attendance (A&A) Benefits: This is an increased monthly pension amount for qualified veterans and survivors who require the aid and attendance of another person.
Long-term care insurance policies
70% of people over 65 require some type of Long-Term Services and Supports (LTSS), which is not covered under Medicare or most private health insurance plans.
However, some long-term care insurance policies allow payments to family caregivers. For example, The Colorado Respite Commission has programs and a webinar detailing how caregivers there can get paid for their in-home caregiving services.
If your loved one has a long-term care insurance policy, check with the insurance provider for details on whether it covers care provided by family members.
Social Security benefits for caregivers
While Social Security doesn’t directly pay benefits to caregivers, there are a few ways caregivers might benefit:
- Spousal Benefits: If you’re caring for a spouse who receives Social Security benefits, you may be eligible for spousal benefits.
- Disabled Adult Child Benefits: If you became disabled before age 22 and are now caring for a parent who receives Social Security, you might qualify for benefits on your parent’s record.
- Supplemental Security Income (SSI): If you’re providing care and have limited income and resources, you might be eligible for SSI.
Personal care agreements
A personal care agreement is a contract between a family caregiver and their loved one that details the care provided and the payment for those services. While not a government program, this formal arrangement can help protect a senior’s eligibility for Medicaid and provide legal compensation for the caregiver.
Tax Benefits and Credits for Family Caregivers
Family caregivers may also find relief through tax benefits and credits that can help offset the costs associated with providing care for their loved ones.
The coordination of benefits between private insurance and Medicare/Medicaid is something Shawn Plummer, CEO of The Annuity Expert educates his customers about. For example, he explains that determining the primary and secondary payers can help maximize coverage and minimize out-of-pocket expenses. Additionally, exploring supplemental insurance options can fill gaps not covered by primary insurance plans.
Federal tax deductions
Caregivers may be eligible for several federal tax deductions:
- Medical expenses
- Dependent Care Credit
- Head of Household status
Medical expense deductions
You can include various medical expenses in your itemized deductions, such as:
- Payments for diagnosis, cure, mitigation, treatment, or prevention of disease
- Transportation to medical care
- Long-term care services
- Insurance premiums for long-term care insurance (subject to limitations)
You can only deduct the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. This can include expenses you pay for a qualifying relative.
Dependent care credits
The Child and Dependent Care Credit can be claimed if you paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing jointly) to work or actively look for work. If you’re caring for a spouse or dependent who is physically or mentally incapable of self-care, you might qualify for this credit.
For 2024, the credit is up to $3,000 of expenses for one qualifying individual or $6,000 for two or more qualifying individuals.
Head of household status
If you’re single and paying more than half the cost of keeping up a home for a qualifying person, you may be able to file as head of household, which comes with a higher standard deduction and lower tax rates.
State-specific tax benefits
Some states offer additional tax benefits for caregivers. For example:
- Oregon offers a credit for elderly care expenses.
- Maryland has a Long-Term Care Insurance Premium Tax Credit.
- Montana provides a credit for elderly care expenses for certain low-income individuals.
More tips to navigate complex insurance hurdles
Dr. Caryn McAllister of High Quality Therapy, Hofhuis and Plummer share more tips to navigate complex insurance issues:
- Understand the specifics of health insurance policies: Ask questions about things you don’t understand, and “seek plans that cover in-home care services, medical supplies, and home modifications to be prepared,” says Hofhuis. “It’s essential to review policy details and consider supplemental insurance to cover gaps.”
- Take notes: “When dealing with insurance representatives on the phone, always write down the name of the person you speak with, information regarding the call and a reference for the call. Write everything down and email as much as possible so you have proof of everything,” Dr. Allister says.
- Use HSAs and FSAs: When available, Plummer and Hofhuis recommend using HSAs and Flexible Savings Accounts (FSAs), which can provide tax-advantaged funds that can be used for medical expenses, including caregiving costs.
- Plan for long-term care: Consider purchasing long-term care insurance early to cover potential future caregiving needs.
- Keep records for tax purposes: Keep detailed records of caregiving expenses, as some may be tax-deductible, potentially easing your financial burden, Plummer and Hofhuis concur.
Always check with your state’s tax authority or a tax professional for the most up-to-date information on state-specific tax benefits.
Additional Financial Support Resources
In addition to direct payments and tax benefits, there are numerous financial support resources available that can provide caregivers with much-needed assistance and respite.
Respite care funding
Respite care provides temporary relief for primary caregivers. You may be able to access funding for respite care through:
- National Family Caregiver Support Program (NFCSP)
- State respite coalitions
- Disease-specific organizations (Alzheimer’s Association)
- Non-profit organization grants
Several non-profit organizations offer grants to caregivers. For example:
- The Alzheimer’s Foundation of America offers grants for respite care.
- The National Multiple Sclerosis Society provides grants for home modification and assistive technology.
Family leave benefits
The Family and Medical Leave Act (FMLA) provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year to care for a spouse, child, or parent with a serious health condition. Some states have expanded on this with paid family leave programs.
Emergency financial assistance programs
In times of crisis, emergency financial assistance may be available through:
- Local social services departments
- Community action agencies
- Faith-based organizations
- Disease-specific organizations
Applying for Caregiver Compensation
The application process for caregiver compensation can be complex, but understanding the necessary steps can simplify the journey toward receiving financial support.
Required documentation
When applying for caregiver compensation programs, you may need to provide:
- Proof of the care recipient’s medical condition
- Financial records
- Caregiver qualifications
- Detailed care plan
- Proof of relationship to the care recipient
Eligibility assessment process
The eligibility assessment typically involves:
- Initial screening (often over the phone)
- In-home assessment by a social worker or nurse
- Review of medical records
- Financial eligibility determination
Application timeline expectations
The application process can vary widely depending on the program and your location. It can take anywhere from a few weeks to several months. Be prepared for potential delays and follow up regularly on your application status.
Appeals process information
If your application is denied, you usually have the right to appeal. The appeals process typically involves:
- Requesting a hearing within a specified timeframe (often 30-60 days)
- Submitting additional documentation
- Attending a hearing (in person or by phone)
- Receiving a written decision
Navigating these programs can be complex. Don’t hesitate to seek help from local aging services professionals or elder law attorneys to understand all options and eligibility requirements in your specific situation.
Conclusion
Being a family caregiver shouldn’t mean sacrificing your financial security. By taking advantage of Medicare benefits, state programs, and various financial assistance options, you can continue providing essential care while maintaining stability. Start by exploring the programs most relevant to your situation, and don’t hesitate to reach out to local aging services for guidance. Remember, investing time in understanding these resources today can lead to better support for both you and your loved one tomorrow.
References
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