As the population of older Americans continues to grow at a historic rate, more and more children, grandchildren, and other family members find themselves in the position of caregiver to an aging family member in an effort to avoid the need for nursing home care. Family caregivers frequently face physical and mental exhaustion as they try to balance a job outside the home, the needs of their immediate family, and their duties and responsibilities as a caregiver. In addition, family caregivers often struggle with financial hardship because of their caregiving efforts. As the Indianapolis attorneys at Frank & Kraft explain, legislation, in the form of the “Lowering Costs for Caregivers Act of 2023,” may provide financial relief to family caregivers.
Family Caregiver Facts and Figures
To understand why legislation like the Lowering Costs for Caregivers Act of 2023 is so important, it helps to learn more about the struggles faced by family caregivers. Consider some family caregiver facts and figures published by the Center for Disease Control and Prevention (CDC):
- 22.3% of adults reported providing care or assistance to a friend or family member in the past 30 days.
- One in three caregivers (31.3%), provided 20 or more hours per week of care and over half (53.8%) have given care or assistance for 24 months or more.
- 10.4% of caregivers reported providing care or assistance to friends or family members with dementia or other cognitive impairment disorders.
- 14.5% of caregivers reported experiencing 14 or more mentally unhealthy days in the past month.
- 17.6% of caregivers reported experiencing 14 or more physically unhealthy days in the past month.
The financial burden that family caregivers shoulder is also substantial. A recent article in U.S. News and World Report found that 13 percent of respondents who were caregivers – the vast majority of whom were unpaid – had to quit their job to become one due to caregiver shortages, and nearly a quarter (24%) cut their work hours. Nearly half (47%) said being a caregiver is a financial burden. It is this financial burden that the Lowering Costs for Caregivers Act of 2023 (the “Act”) is aimed at addressing.
How Can the Proposed Legislation Help Family Caregivers?
Many people take advantage of flexible spending accounts (FSA) and health reimbursement accounts (HRA) that allow individuals to set aside pre-tax money to pay for qualifying medical expenses. For HRAs, only employers provide funding, while both employers and employees can fund FSAs. Currently, funds in an HRA or FSA can only be used to pay the account holder’s medical expenses or expenses for a spouse or dependents. Those funds cannot be used to pay for expenses related to medical care for a parent. The Act is aimed at taking some of the financial strain off caregivers by allowing them to use HRA and FSA funds to cover medical a parent’s medical expenses.
The financial benefit of the ACT would be significant for caregivers. A survey conducted by AARP in 2021 highlighted the economic plight facing caregivers finding that unpaid family caregivers spend an average of $7,200 per year on caregiving expenses. In addition, over 75 percent of caregivers report incurring routine out-of-pocket costs with caregiving-related expenses consuming more than 25 percent of the annual income of an average family caregiver.
Expenses covered by caregivers can run the gamut; however, more than half of the funds spent on an aging parent go to housing, including paying rent, mortgage payments, assisted living fees, and utility bills as well as covering the costs associated with making necessary modifications to a parent’s home. Another 20 percent of funds spent by caregivers goes to medical costs with the average caregiving spending more than $1,200 per year on medical expenses. These expenses include things such as direct payments to medical providers, purchasing medical equipment, and paying for in-home health services.
The bipartisan legislation would lower costs for caregivers by allowing individuals to use tax-free health savings accounts and flexible spending accounts on medical expenses for their parents and loved ones. Currently, caregivers are unable to take advantage of these tax-free accounts unless their parents are classified as dependents for tax purposes.
The Lowering costs for Caregivers Act of 2023 would allow funds in an HRA or FSA to be used to cover medical expenses incurred by a parent. While it will not eliminate the financial burden caregivers struggle with on a daily basis, it is certainly a step in the right direction. The bill is currently being considered by the Committee on Finance in the Senate and a companion bill has been introduced by the House.
Do You Have Family Caregiver Questions or Concerns?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about issues related to being a family caregiver, contact the experienced Indianapolis elder law attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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