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Debt and caregiving

Too many caregivers struggle in silence about the financial woes of caregiving. When there are so many seemingly more pressing demands (both physically and emotionally) that are present when providing care, the cost of it all can easily become an afterthought. The truth is that the financial impact of providing care is one of the most lasting impacts for many caregivers, but it can be really hard to admit that you’re struggling. In this article, we’ll bring the hidden issue of debt to light and offer tips to manage your finances while providing care.

The Issue: Debt and Caregiving

Many caregivers are catapulted into the role unexpectedly - a sudden injury or diagnosis that creates an immediate need for support. Others find themselves gradually taking on more and more tasks to help out until they one day find themselves in a position of being depended on for care.

Though most of us will find ourselves in this position at some point in our lives, the truth is that very few of us plan for it. 78% of caregivers incur out-of-pocket expenses as a result of providing care at an average of $7,000 per year according to AARP. When paired with time away from work (or having to leave your job) to provide care, personal expenses, and unexpected costs (for example, home repairs), it can quickly feel like a sinking ship.

How to Prepare and Manage Finances

Preparing or making adjustments to protect your financial wellbeing may feel like an unimportant or self-indulgent task. It’s important to remember that you need to put your own needs and future first. Though the care you provide is appreciated, it’s important to remember that even the loved one you’re caring for wouldn’t want or ask you to sacrifice your wellbeing on their behalf. Here’s how to make sure you don’t make that mistake.

Get Legal Documents in Order For example, a power of attorney. A power of attorney essentially makes you an “agent” for your loved one, which separates your personal financial affairs from the actions you take on behalf of your loved one. If you check a loved one into a care facility as their “agent” or fiduciary, it ensures you will not be on the hook for the bills in the end.

Without these documents, you should be cautious before signing anything on behalf of your loved one as you may unknowingly sign yourself up as the one responsible to pay. You can recognize this on a contract by looking at the verbiage. Are they requesting you sign as the “responsible party” “co-signer” or “guarantor”? If so, you are financially tying yourself to it.

Create a Budget

It is important to keep contributing to your retirement savings (such as an IRA or 401(k)) as you can, so create a budget and see where you have opportunities to cut costs. For example, creating a grocery and meal plan, downgrading a television or phone plan, canceling unused subscriptions, or reducing utility use. These small changes can help offset the increases in expenses you may incur providing care.

Explore All of Your Options

There are government and social programs that may be available to you (such as Medicaid) to reduce the costs and burdens of care.

It’s possible and normal that you - in the thick of providing care - may feel that you can’t possibly take on one more thing in learning how to navigate the application process. If that’s the case for you, consider enlisting the help of friends, family, or hiring an attorney or Medi-Cal specialist to help you.

These programs are designed to help you, but they can only do so if they can find you. Give them the opportunity to help (even if it means asking someone to do it for you).

Ask for Help

This goes hand-in-hand with the last tip - it is important to ask for help when you need it. As a caregiver, you may feel that you’re better off handling everything yourself. You can ask friends or advisors for help with things like verifying bills for legitimacy, taking on a task so you don’t have to take off additional days of work, etc.

Verify Debts

Sometimes you’ll receive multiple versions of the same bill as things are adjusted which can lead to you accidentally paying a bill twice. Other times, you’ll be sent a bill that you’re under no actual obligation to pay (especially if the loved one in your care has passed away).

Always take steps to ensure first that you are the responsible party (i.e. your name is on the bill or you are the account holder) before paying bills sent to you.

If it is the case that you are not the responsible party, you’ll instead want to check if the debt can be sent to the state probate first instead of paying out of pocket.

Don’t Ignore Creditors

If you’re unable to pay a bill, don’t ignore the creditor.

It’s likely that you will be able to negotiate a lower bill or work out a payment plan with the creditor, but without communication, they may tack on fees, interest rates, or send the debt to collections (which may result in wage garnishment, lawsuits, and additional costs and debts).

Closing Thoughts

If you’re feeling as though you’re drowning as the debts pile up, don’t wait until it’s too late. Contact a bankruptcy attorney or consumer advocate to explore your options (many offer a free consultation). While bankruptcy is a great option for many, there are a lot of other ways to make your finances more manageable, and discussing it with a professional will help you determine the right path for you.

If you provide regular care to your loved one, we at CRC Orange County are here for you. We invite you to check out our library of information for family caregivers by clicking here for further reading and resources. You are also welcome to give us a call at 800-543-8312 to find out more about how we can support you in your caregiving journey.


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