Financial Tips for New Caregivers: What to Expect and How to Find Your Way

A 9-part series on guidance for new caregivers

When one suddenly becomes a caregiver, the challenges can be immense and confusing. Aside from the varied emotional and medical stresses, caregivers must deal with sudden and unexpected financial changes.

When Janet Dodson, a Kathi Koll Foundation award recipient, lost her mother, Dodson and her stepsister became the caretakers for Dodson's stepfather, who has Parkinson's disease. Aside from the family's grief, the financial and legal stresses were immense as the sisters worked to understand the many aspects of not just his medical and physical care, but the requisite legal and banking adjustments and varied costs.

The legalities are horrifying, Dodson said. When someone has died, you have to deal with banks, insurance, and lawyers at the worst possible time. It's the last thing everybody wants to do. It makes it extra special awful.

In order to make this process just a little bit easier, here is a list of matters to consider while working one's way through this maze.

1. Take stock of assetsA good first step is simply to take stock of your loved one's current financial status and list any available resources (such as retirement accounts or long-term care insurance) as well as resources that may be missing or needed. If possible, talk to the patient and discuss potential financial issues that need to be addressed and what plans may already be in place, such as savings accounts or a will. Each patient's assets will be different, but it's best to be prepared by knowing exactly what is already available and what is lacking.

2. Talk to the expertsTake some time to ask doctors, nurses and hospital staff what your loved one will require in medical care and/or rehabilitation, including home modifications (such as ramps or grab bars), medical equipment (a wheelchair, for example), and in-home care. Also ask them what resources might be available and where you can go locally for help. Contact the bank to find out how to be added to the patient's accounts. Call an attorney to see what legal issues you should address, such as getting a power of attorney or creating a will. Ask a financial advisor about potential tax changes that might occur. It's best to know what you are facing, so ask as many questions as you need to feel more confident in both providing care and paying for it.

3. Tally needed expensesWill your loved one need a caregiver at home? If so, caregiving can range from periodic check-ins to round-the-clock care. The expenses will thus vary widely. Create a list of your loved one's caregiving needs plus any new costs that may occur if you take on the job of caregiver. More than 75 percent of caregivers incur expenses associated with caregiving, and you may need to look at the benefits and costs of hiring help while working outside the home versus taking on the role of caregiver yourself. On average, caregivers spend about 20 percent of their income on caregiving, and the average out-of-pocket cost is about $7,000 annually, according to a 2016 AARP report.

4. Examine the patient's health and long-term care insuranceLook at the specifics of your loved one's policies. Read every word and find experts who can help you understand any confusing parts. Take time to learn the exact benefits to be provided by the long-term care policy. Investigate the out-of-pocket expenses for health insurance. Look into how Medicare can help. Also, will your loved one want better coverage at the next opportunity to upgrade? Have an insurance agent look at the coverage and suggest alternatives that may be more cost effective.

5. Expect resistanceInsurance benefits unfortunately can be difficult to fully access. Dodson found her family initially dealt with six months of incredibly stressful battles in order to get her stepfather the coverage to which he was entitled. A friend's family gave up without getting a dime of needed long-term care coverage, because the insurance company was so challenging. Also, her mother's hospital sent them a more than $670,000 bill and repeatedly phoned with stern collection calls, which upset her stepfather, even though the hospital knew that Medicare was covering these expenses. Expect that you will encounter something similar, take a deep breath and make your way through it. Your family deserves those insurance and Medicare benefits.

5. Assess medical costs not covered by insuranceMedical expenses account for 25 percent of a caregiver's expenses, while household expenses, including rent/mortgage and home modifications account for 41 percent, according to the AARP report. Medical costs include not only insurance and varied medical bills, but also nurses and aides who may provide medical and/or other assistance in the home. Hiring someone from a home health agency may cost $20 an hour for basic assistance with cooking, laundry, transportation and personal hygiene. Even if help is only needed for 10 hours each week, the cost will be $200 weekly.

Once you get a handle on your base costs and your available resources, you can begin to look into additional needs. Caregiving can be challenging on so many levels, and the financial aspect can be particularly trying to manage. However, it can be done with some creative thinking and careful analysis.

Good luck!