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Caring for an adult child or aging parent can be a blessing, but it also can be a burden. Providing care to a family member may save money, but it also may prove to be financially and professionally challenging to the caregiver. And as much as caregiving can be empowering and rewarding, it also can be emotionally draining.

In short, caregiving is a complicated issue—particularly when it comes to finances. Research shows that caregivers suffer lost wages and job benefits, while also sacrificing retirement savings and Social Security benefits. What’s more, the family caregiving issue is one that could very well affect you if it hasn’t already. An estimated 29 percent of the U.S. adult population, or close to 66 million people, find themselves in the role of providing care to someone with special needs, according to the National Alliance for Caregiving and AARP.

Given the financial ramifications, it’s vital for families with a caregiving need—whether it involves an adult child or an aging parent—to take financial planning steps to keep the caregiving situation from causing monetary problems and strife within families.

Five key issues to discuss in a caregiving situation:

1. Is there a person (or more than one person) in the family who’s willing and able to become a care provider? Someone in the family must have the wherewithal and the willingness to commit to becoming a caregiver. Depending on the needs of the person requiring care, the potential caregiver may also need some level of training to provide for those needs.

2. The direct costs of care and who will cover them: The costs of providing care to someone with special needs can mount fast, so it’s worth sitting down with relevant family members, a financial planner you trust, and/or a caregiving specialist (such as an elder care advisor) to come up with a budget that lists all the costs of caring for the person, along with a plan for covering those costs. The budget should include items such as medical/health care, additional care (in-home or at a facility), transportation, food, housing, special equipment, home updates, and more. Once the budget is in place, the discussion can turn to paying those expenses.

3. Compensation for the family caregiver(s): In many caregiving situations, the caregiver is paid by the family as an independent contractor for the care he or she provides. If that’s the case, it often makes sense to set up a retirement plan, such as a Simplified Employee Pension (SEP), for the care provider as part of their compensation package.

4. The indirect and opportunity costs of care: The financial ground a caregiver may lose in order to provide care can be substantial and difficult to regain, which is why it’s important to carefully weigh the impacts of becoming a caregiver.

How might leaving a job affect the potential caregiver’s household income and retirement savings? What employee benefits might be lost and at what cost can they be replaced?

These are just some of the financial issues to consider in weighing whether to become a caregiver. In cases where the costs of becoming a caregiver outweigh the benefits, other alternatives (arranging for another family member or an outside caregiver to provide care) are at least worth considering.

5. Identifying plan B (and C): Families in a caregiving situation need to develop a contingency plan that specifies living arrangements and guardianship if the caregiver passes away. Establishing a life insurance-based trust makes sense to cover caregiving costs should the caregiver die (using the insurance policy death benefit to do so). A special needs trust is a viable option for families who have an adult with special needs. Those families should also have a “letter of intent” that details the special-needs person’s daily routine, wants, needs, likes, dislikes, preferences, hobbies—essentially anything that the caregiver’s successor should know, just in case.

Get access to support for caregivers through LifeSolutions.

We understand that taking care of a loved one can be emotionally challenging and difficult. Please know that you are not alone, and we are here to support you throughout the process. As an Alliance Health Plan member, you have access to LifeSolutions, our employee assistance program. LifeSolutions offers a variety of resources to assist caregivers, including financial aid, legal consultations, and educational information. If you need help, please do not hesitate to contact them at (844) 833-0527 (TTY 711) or visit to learn more about their services. We care about you and your family and are committed to helping you find the support you need.

Workpartners administers the Wellness and Employee Assistance (EAP) Programs for our Alliance domestic health plan participants. They are an innovative health, wellness, and productivity company that assists The Alliance Health Plan in transforming the well-being of their participants. Their customizable, integrated workforce planning solutions enable organizations to maximize employee engagement, lower healthcare costs, and improve overall employee health.


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