9/20/2023 | By Ella Vincent

More than 38 million Americans provide unpaid caregiving to seniors and other loved ones, spending an average of more than $7,000 a year on out-of-pocket costs, according to a 2021 AARP survey. For many, there may be ways to lower caregiving costs.

Many middle-class families make too much money to qualify for Medicaid, which means they must pay for expenses Medicare doesn’t cover. Those include everything from home health care to incontinence products.

A Transamerica Institute survey of 3,000 caregivers found that only 56% of respondents described their financial status as stable. Eighteen percent said they had to take out hardship loans and early withdrawals from their retirement accounts to cover expenses.

Fortunately, there are steps you can take to lower caregiving costs.

Tips to help lower caregiving costs

Tax breaks

If one or both of your parents live with you, you may be able to claim them as dependents on your tax return, which will significantly reduce your tax bill. To claim your parents as dependents, their income must have been less than $4,400 in 2022, they must be U.S. citizens, and you must have provided more than half of their support for the year.

Even if you can’t claim your parents as dependents, you may be able to deduct their out-of-pocket medical expenses, as long as you provide more than half of their support. You must file an itemized tax return and can deduct those medical expenses that exceed 7.5% of your adjusted gross income.

Help from employers

Talk to your employer about programs or benefits that support caregivers, such as flexible schedules and remote work.

If your employer offers a dependent care flexible spending account, you can contribute up to $5,000 a year to cover expenses related to caring for your parents. The money is exempt from federal income taxes, as well as Social Security and Medicare taxes; it may also avoid state income taxes. Your parents must live with you and be incapable of caring for themselves. To use the account, you must also be able to claim them as dependents on your tax return.

Caregiver feeding senior woman in wheelchair. For article on how to lower caregiving costs.

You may also be able to take advantage of the federal Family and Medical Leave Act. This law requires employers to give you up to 12 weeks of unpaid leave per year to care for a family member who has a serious health condition. Your job and health benefits are protected during the leave. You’re eligible for family leave if your employer has at least 50 employees, you have worked for your employer for at least a year, and you worked at least 1,250 hours over the past 12 months. Your state may offer more assistance.

Government support

Even if your parents are ineligible for Medicaid, they may qualify for other programs that will help defray caregiving costs. If your parent is a veteran, the U.S. Department of Veterans Affairs could help pay for some expenses to reduce the costs of paying for home health aides, says Amy Goyer, a caregiving expert for AARP.

President Biden recently issued an executive order that offers support to caregivers by providing home health aides after veterans are discharged from the hospital.

Ella Vincent is a staff writer at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit

©2023 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

Read more about caregiving on Seniors Guide: Self-Care and Caregiving: Accepting Help

Ella Vincent