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5 financial questions every caregiver should ask


Five questions to help you prepare for what may be one of the most important roles of your life.

Living until you’re 80 or 90? A century ago, the odds were strongly against it, but today we take greater longevity almost for granted. The extra years can be a wonderful gift, providing more time to spend with loved ones and pursue fulfilling activities. But longevity also has added costs, among them a greater chance of needing expensive long-term care. Many caregivers have also been surprised by how much care and care-related expenses cost, and only one-third of adults over 40 say they have money set aside to pay for their long-term care.1

While all chronic illnesses come with financial and emotional costs, Alzheimer’s disease can be especially challenging. Alzheimer’s patients frequently end up in nursing homes, where a semi-private room costs, on average, $82,000 per year.2 Whether someone in your family ends up suffering from Alzheimer’s or an equally devastating illness, you may be called upon to help out, providing both hands-on care and financial support.

There are no simple answers to the financial and legal questions related to caregiving, but advance planning can help. Cynthia Hutchins, director of Financial Gerontology for Bank of America Merrill Lynch, and Amanda Ross, managing director, National Sales Manager, Bank of America, suggest gathering your family and considering the answers to the following five questions.

Question #1: How can I prepare for the financial challenges of caregiving?

Answer: It’s never too early to talk with family members about what-if scenarios, Ross says. “What if your parents need to move in with you, for instance? That might require that you retrofit your home to make sure that it’s safe for them. Or what if they live hundreds of miles away and you need to visit them often to make sure they are being cared for properly? You’ll have to figure out how that will affect your career, what problems it might create if you have kids of your own who still need you around and whether the cost of regular travel might be a burden.”

Future caregiving responsibilities could affect your overall financial strategy. Depending on your family history, you may want to begin saving now for potential caregiving costs. “Try to avoid finding yourself in a position where you have to quit your job or reduce your hours at work,” says Hutchins. “That could leave you paying for your own health insurance, and you might lose other benefits as well, including money from your retirement plans, if you haven't met vesting requirements.”

Question #2: What if my parent or spouse doesn't have long-term-care insurance?

Answer: “Taking an inventory of your loved one’s assets may help you find sources of money to help cover caregiving costs,” suggests Ross. Could they afford to move into an assisted living facility? What other assets or resources might they be able to draw upon to cover ongoing expenses such as a home health aide, or a large one-time expense like a stair lift? Try to avoid tapping your own retirement funds. “If you shortchange your financial future, you could inadvertently become a financial burden to your own family,” adds Ross.

Question #3: Is Medicaid an option?

“People who aren’t familiar with Medicare and Medicaid regulations may be surprised to discover what is and isn’t covered—especially what isn’t.”

—Amanda Ross, managing director, National Sales Manager, Bank of America

Answer: Eligibility for Medicaid, which covers the cost of most long-term care in the U.S., is determined by state and federal rules. In general, assets must be reduced to a set limit in order to qualify, with federal “spousal impoverishment” rules protecting the healthy spouse from having to spend down all of the couple’s assets to pay for nursing home care. “An elder-law attorney could help you and your spouse or parents navigate these extremely complicated rules,” says Hutchins.

“People who aren’t familiar with Medicare and Medicaid regulations may be surprised to discover what is and isn’t covered—especially what isn’t. So it’s worth spending some time researching what these programs actually pay for," adds Ross. Visit to learn about these programs, and more.

Question #4: What if my parents live far away?

Answer: Consider researching programs that can help locate a nursing home and identify benefits programs. Check the Eldercare Locator, managed by the U.S. Administration on Aging, for local caregiving services, suggests Hutchins. Call 800.677.1116 or visit

Question #5: What if I need to transfer management of a relative’s finances to myself or a trustee?

Answer: Taking responsibility for a parent’s or spouse’s legal, medical and financial affairs will be easier if you’re able to have this conversation while your loved one still has the cognitive ability to understand the situation. Make sure to review and update relevant legal documents, Hutchins advises, including a will, an advance medical directive (describing end-of-life treatment preferences), a durable power of attorney (which designates someone to make legal and financial decisions) and a health-care proxy (transferring legal authority for medical decisions).

A Trusteed Individual Retirement Account may also make sense for your situation. With it, the financial institution you name as trustee can continue to provide professional investment management, which includes investing IRA assets, ensuring that required minimum distributions are made and paying bills, among other services. “It’s a valuable tool that can provide security in the event of incapacity,” says Ross.

One last tip, adds Hutchins: If you do become a caregiver, don't forget to take care of yourself. “Caregivers go through a lot of stress. Taking advantage of community services such as adult day care or respite care can make a huge difference.”

Learn more and take action

  • Caregiving often includes managing a second set of finances. These tips can help you get off to a good start.
  • Use the Family Life Organizer to document and organize important information that can help you and your family manage through unexpected changes.

1 Age Wave/Merrill, "The Journey of Caregiving: Honor, Responsibility and Financial Complexity," 2017.

2 Ibid.

Merrill, its affiliates, and financial advisors do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice. If you have questions regarding your health care concerns, please contact a professional in that field.

Long-term-care insurance coverage contains benefits, exclusions, limitations, eligibility requirements, and specific terms and conditions under which the insurance coverage may be continued in force or discontinued. Not all insurance policies and types of coverage may be available in your state.


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