Informal caregivers are family, friends or volunteers who provide care for a loved one. Informal caregivers are rarely paid directly for their services. They may receive indirect payment through sharing a loved one’s income or assets. Although informal caregivers may provide services in a facility, in most cases they are providers of care in the home. The chart below indicates that 80% of all informal caregivers are a spouse, a daughter or daughter-in-law or a son or son-in-law. The other 20% of care may be provided by friends, volunteers, siblings, grandchildren or nieces and nephews.

The financial impact on informal caregivers depends on who the informal caregiver is. For a spouse there is typically no financial cost since income and assets will be the same with or without a need for care. However, if a spouse offering informal care is employed and has to quit his or her job to provide care there is a significant impact on that family’s finances.

Despite the fact that there may be no significant financial impact on a spouse caring for the other spouse at home, there can be significant impact on the emotional and physical health of the caregiving spouse. Because of the strain and burnout often associated with caregiving it may be that the healthy spouse may become unhealthy and need long-term care as well. And in some cases healthy spouses have succumbed to the pressures of caregiving and died prematurely, well before their care recipients have died.

A caregiver other than a spouse, in many cases, may have to suffer financial sacrifice in order to provide long term care for a parent, an aunt or uncle or a grandparent. In most cases this means giving up or cutting back on paid employment in order to provide the care. This financial sacrifice is often offset by the fact that the non-spouse caregiver may move in with the care recipient and receive free room and board.

Or it is very common for the care recipient to move into the home of the caregiver. In this case the caregiver is reimbursed by having his or her loved ones provide their income to help with the cost of care in the home. If full-time employment needs to be sacrificed, this extra income from a loved one may help to compensate for the loss of earned income. And as has been mentioned, the stress of caregiving can often be much more detrimental than the financial loss.

Certain government programs will also help cover the cost of family members providing care in the home. These might be personal-care arrangements to pay family members during Medicaid spend down or money directly from Medicaid often called “directed services payments” or “money follows the person.” Finally, the Department of Veterans Affairs can pay up to $1,843 a month to qualifying veteran households or to single surviving spouses of veterans to pay family members to provide long term care in the home.

Martin V. Higgins,CFP,CLU,AEP AEP is a financial practitioner who specializes in helping people prepare financially for long term care.

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