Medicare doesn’t cover most in-home caregiving expenses, which can be prohibitively expensive over the long term. As a result, it’s very common for family and adult children or close friends to serve as unpaid caregivers for someone frail, elderly, disabled, and/or with developing dementia issues. According to the Family Caregiver Alliance (FCA), nearly 80% of adults who live at home and receive long-term care assistance depend solely on relatives and friends.
Here are two ways to get modestly compensated or reimbursed for caregiving:
- Get paid by Medicaid: Providing unpaid care isn’t an easy task, emotionally or financially, since many people in this role still need to make ends meet. However, if you are a caregiver, you might be able to get paid by Medicaid if the person needing care is already receiving Medicaid or is found eligible for the program. All 50 states and the District of Columbia offer programs that allow family caregivers to receive some financial compensation. There are multiple types of programs, and eligibility requirements vary. Contact your state Medicaid office for more information.
- Claim tax deductions and tax credits for eligible caregiving services. Keep good records and receipts of expenses when providing care for others. It may be worth your while to consult a tax advisor when you expect to provide a lot of care:
- Tax Credit for Other Dependents. This credit allows taxpayers to claim up to $500 as a nonrefundable tax credit (in effect through the 2025 tax year) if the other dependent meets IRS requirements. That can include elderly parents that you care for and who depend on you for more than 50% of their living expenses.
- Deduct a dependent’s medical expenses that you paid for. You can deduct money you paid to cover a loved one’s unreimbursed medical expenses if the expenses you list for yourself, and the other dependents claimed total more than 7.5% of your adjusted gross income for the year and if your total itemized deductions are more than your standard deduction. (Check IRS Publication 502 to learn what is and isn’t deductible.)
Resources:
Family Caregiver Alliance https://www.caregiver.org/caregiver-resources/faq/
