5 Ways to Reduce the Financial and Emotional Cost of Caring for Aging Parents
“If we care about someone, it’s going to have a financial impact, an emotional impact, and a physical impact,” admits Chris Cooper, a certified financial planner in San Diego.
This isn’t exactly news for most adults who care for their aging parents. But Cooper points out that it is possible to lighten the emotional and financial load that comes with caregiving by enlisting help from financial pros, technology, and other caregivers.
Here are 5 tactics you can try to help reduce the cost of caregiving:
1. Tap rebates and cost-reduction programs: Ask your parent’s doctor about drug and device rebates and pharmaceutical company programs that can reduce the cost of prescriptions and supplies. A few dollars off may not seem like much on one item, but if your parent is like most older folks, there’s a long list of medications and supplies to be purchased. The savings start to be significant. Medicare maintains a list of companies offering pharmaceutical assistance programs.
2. Secure additional financial assistance: Many government agencies and nonprofits offer financial help to seniors and their families meeting a variety of criteria. Check with your local department of aging and at area senior centers for options, or refer to the U.S. Department of Health & Human Services’ Eldercare Locator under Financial Assistance.
3. Take advantage of tax credits and deductions: This may be the only time you want to think about your taxes. You or your parents may qualify for cost-reducing tax deductions and credits, so ask your CPA about:
- The Medical Expense Deduction: “Qualifying costs, other than just hospital and doctor bills, often amount to a much larger medical deduction than expected,” explains Martinsville, NJ-based CPA Gail Rosen. “Other items you should take into account can include health insurance payments, transportation, therapists, eyeglasses, dental work, weight loss programs if undertaken for a disease diagnosed by a physician, smoking-cessation programs, etc.” You can claim this deduction when unreimbursed medical costs exceed 10 percent of your adjusted gross income. “However, a more favorable 7.5 percent of adjusted gross income threshold applies if your or your spouse reached age 65 before year-end,” she adds. Get more information on deducting medical expenses and the 7.5 Percent Rule in IRS Publications 501 & 502.
- Long-Term Care Expenses: Some expenses related to long-term medical care and insurance premiums can be taken as medical expenses.
- Renovation Costs: Costs associated with renovating your or your parent’s home – like wheelchair ramps or bathroom grab-bars and handrails – may be allowed as medical expenses.
- The Dependency Deduction for Aging Parents: You can get additional deductions if your parent qualifies as a dependent. “He or she need not live with you as long as you provide more than half their support and they [otherwise] qualify as your dependent,” Rosen notes. Learn whether you can claim your parent via the Who Can I Claim as a Dependent worksheet from the IRS.
- Child & Dependent Care Tax Credit: This credit applies if you pay for a parent’s in-home or out-of-home care to be able to go to work or look for a job. The maximum credit for an individual is $3,000, and $6,000 for joint filers. Get more information from IRS Topic 602.
4. Invest in peace of mind: Wearables and medication dispensing systems take a lot of the worry out of caregiving. Medical alert systems give seniors immediate access to call for help with the push of a button – and devices with automatic fall detection can detect falls and call for help even without a press. Services range from $539 to $659 per year. Medication dispensers help you and your parent use the right medications at the right time, avoiding complications from dosing errors, emergency medical care and additional prescriptions.
Bonus: Systems that maintain medical information may be deductible as a medical expense, so check with your CPA.
5. Share the responsibility. You don’t have to go it alone. In addition to working with a CPA or CFP, engage other family members to help out. This can free up time for you to tend to your own well-being, but it can also lower the stress related to finances. Investigate a multiple support agreement between you and your kin. “Any group member providing more than 10 percent of the support can qualify to claim the exemption,” Rosen says. Learn more about multiple support agreements on IRS Form 2120.
Tip: Even if you’re the only family member involved, buy some time for yourself by hiring respite care, using a drop-in or day-care facility or coordinating with a nonprofit or faith-based visitation program.
The most important advice is to get professional help, “an objective third party to help guide you as this is a highly emotional and highly fragmented area,” says Cooper. Look for bonded caregivers and certified public accountants and certified financial planners who specialize in eldercare and gerontology – they’re the most familiar with the financial and emotional costs of caregiving.