In the U.S. health care system, long-term care for adults who cannot live independently is largely provided through unpaid labor by friends and family members. During 2024, about 37 million Americans acted as unpaid family caregivers to adults every month, according to a survey by AARP.

LDI Senior Fellow Norma Coe and colleagues performed an analysis of earlier data (1998 to 2012) to gauge the total cost of a middle-aged daughter providing care for her mother, a common scenario. “Our estimates are that long-term care costs the daughter about $80,000 to $100,000 per year in a combination of actual lost earnings, job advancement, and other life quality losses,” said Coe, Associate Professor of Medical Ethics and Health Policy at the Perelman School of Medicine.

There are other steep costs. Informal caregivers experience high rates of depression, isolation, sleep disorders, fatigue, financial losses, and relationship stress. “Relying on unpaid caregivers to hold together our long-term care system is not sustainable. And it is wrong,” stated LDI Executive Director Rachel M. Werner.

In the current political climate, serious change to long-term care policy remains unlikely. But researchers have found evidence-proven ways to reduce the burden on both caregivers and their wards.

Medicaid is the Main Payer for Informal Caregivers

“Family caregivers who receive even modest compensation report lower burden and higher quality of care,” said LDI Senior Fellow Nancy Hodgson, Claire M. Fagin Leadership Professor of Nursing and Professor of Biobehavioral Health Science at Penn Nursing. Payment, however, is not common. The main route for family members to receive reimbursement goes through Medicaid, which has strict eligibility limits.

The Medicaid system is based on a model of long-term care that barely exists. When Medicaid was set up, states had to cover care in institutions. Payment for care outside of institutions—known as home and community-based services (HCBS)—was and remains optional and often requires waivers from the federal government. For the last 25 year or so, Congress has increasingly encouraged states to favor HCBS over institutions. By 2013, Medicaid expenditures for HCBS exceeded those for institutional services, noted Senior Fellows Coe, Pilar Gonalons-Pons, Allison Hoffman, and others in a 2024 Health Affairs article.

Most of that money goes to trained providers, but all states and D.C. have paths to pay family members for caregiving. Since HCBS is tacked onto Medicaid on a state-by-state basis, the program has a bewildering variety of rules. “Sometimes the same job can be compensated if a child does it, but not for a spouse,” said Coe. “Just figuring out if you’re eligible can be quite complex.”    

Last year’s federal reconciliation budget is estimated to reduce Medicaid spending by $911 billion over the next decade. LDI experts expect extreme cuts in the optional HCBS programs. Charges of fraud in HCBS, triggered by a huge jump in the program’s expenditures from 2018 to 2024, provide one reason to gut these efforts. “It’s possible there’s some fraud, but I suspect it’s not nearly at the level that some would lead you to believe,” said Werner.

Federal Legislation Stalls For Caregivers

Several members of Congress have introduced bills that could financially assist all family caregivers, not just those with patients on Medicaid. The Credit for Caring Act, H.R. 2036, would provide a tax credit up to $5,000 for working family caregivers. Lowering Costs for Caregivers Act, H.R. 138, would amend the IRS code to allow caregivers to deduct medical expenses for their patients. Catching Up Family Caregivers Act, S. 5149 “allows qualified family caregivers to make catch-up contributions to a retirement account for up to five years,” according to a Congressional summary. All of these bills are stalled in committees.

However, in February, the Lifespan Respite Program was renewed through 2030. The program provides grants to states so that they can offer respite care to family caregivers. “It’s a real positive that this bipartisan legislation passed in a difficult climate,” said Hodgson.

Some States Step Up for Caregivers

Can states make up for federal inaction? Caregivers on average pay about $7,200 a year on out-of-pocket costs, and, in seeking to ease their burdens, at least six states  — Georgia, Missouri, Montana, New Jersey, North Dakota, and South Carolina — provide tax credits on state income tax, not federal for those expenditures.

The state of Washington has gone further in trying to meet the needs of people who can no longer function independently. Funded by payroll deductions, the Washington Cares Fund, started in 2019, will begin paying its first benefits this July. The fund provides up to $36,500 to pay for care, including that given by family members, once need is established. The program has been criticized for providing insufficient funds. “While a positive step, this is not going to pay for much of the care that many people need,” said LDI Senior Fellow Allison Hoffman, a law professor at Penn’s Carey Law School.

Lessons Learned on Improving the Care of Caregivers

A significant body of research shows that providing coaching, support, and self-care tips for informal caregivers can improve their well-being, even if they are not paid for their time. For instance, a study led by LDI Senior Fellow Barbara Riegel, Professor Emerita at Penn Nursing, tested an online health coaching program for caregivers of people with heart failure, a challenging condition. After being trained on self-care methods for six months, the experimental group showed less stress and engaged in healthier lifestyle behaviors than a control group.

Similarly, Hodgson has closely studied the Alzheimer’s Association National Helpline, which is staffed with trained care consultants.  “We found that a single supportive call can meaningfully reduce caregiver distress but the effect is stronger and more durable when follow-up callbacks are made proactively,” she said.

Tailored interventions can help care recipients as well as caregivers. A continuation of Riegel’s research on online health coaching for caregivers of heart failure patients looked at the effects of the program on care receivers. “Improvement in heart failure caregiver self-care was associated with a 67% decrease in patient hospitalizations,” the authors wrote.

Spreading the Word to Caregivers

While research shows that health coaching and caregiver hotlines provide much help, potential users need to know of their existence to use them. Pennsylvania has taken a step in that direction. The 10-year strategic plan Aging Our Way, PA, unveiled in 2024, coordinates aging resources in the state. A key element is caregiver support, and last year, the state government released its PACareKit for informal caregivers, giving them a comprehensive guide to available services. “We went across the state doing focus groups, listening sessions, and surveys, then created this plan to address what we heard caregivers really need,” said Hodgson, who was appointed Academic Research Representative to the Pennsylvania Long-Term Care Council. “We’ve been holding town halls across the state sharing the kit with people, typically at public libraries.”  While the state government does not pay family caregivers, it offers some reimbursement for their expenses.

Other states with strong outreach efforts include California, Wisconsin, Massachusetts, and Maryland.

Caregivers Shoulder a Special Burden in Treating Dementia

An estimated 10% of Americans over 65 experience dementia, and nearly 13 million Americans provide unpaid care for them. “There’s a lot of data showing that caregivers for dementia patients are more physically and emotionally strained than other types of caregivers,” said Hodgson. That’s partly because the care often lasts long — over half of dementia caregivers provide care for four or more years — and demands significant time (92 hours of care a month versus 65 for caregivers of people without dementia).

Programs have been developed that help caregivers work more effectively and with less stress. “I’ve spent years working on the COPE program,” Care of Persons with Dementia in their Environments, said Hodgson. “It’s a home-based, skills-building intervention with an occupational therapist and a nurse that trains caregivers to understand the person with dementia’s remaining abilities and design meaningful activities around them. These programs consistently reduce behavioral symptoms and caregiver burden. The gap is in implementation.”

Hodgson, in conjunction with Trinity Health, seeks to fill that gap by taking the COPE program to health systems, adult day programs, and clinicians. Connecticut uses a Medicaid waiver to pay for the program. Occupational therapists can directly bill Medicare for their services, but Medicaid billing depends on the state. “Reimbursement rules vary significantly across the country,” said Hodgson.

New Help for Dementia Caregivers from Medicare

Evidence-based caregiver programs like COPE have been bundled with other coordination services to form the GUIDE Model, launched under Medicare in 2024. Hodgson described it as a comprehensive approach to dementia similar to how cancer care centers wrap medical treatment, support services, and care navigation around both the patient and family, rather than treating the disease in isolation.” So far, over 300 centers have signed up for this eight-year experiment.

“Each multidisciplinary GUIDE team must include a care navigator to help individuals access clinical and non-clinical services and supports, such as person-centered assessments and care plans, care coordination, caregiver training and education, meals and transportation through community-based organizations, and respite care services,” noted the Alzheimer’s Association. In addition, the centers must include access to a 24/7 helpline. The Penn Memory Center has launched a GUIDE program. “Given the fragmentation of care for people with dementia and their caregivers, GUIDE is a promising development,” Hodgson said.

Looking Ahead to a Different Policy Climate

“This is the time to start building ideas about long-term care and caregivers,” said Hoffman.

Some examples:

1. Restore Medicaid Cuts

“There’s not the political will now, but a future Congress and administration should reinstate some of what’s been deleted from Medicaid,” said Hoffman.  

2. Boost Medicare Payments

“Right now, Medicare benefits for home-based care are not comprehensive. If we increase the amount of care that Medicare pays for, it would help decrease the work required of family caregivers,” Werner said.

3. Reconfigure At-Home Long-Term Care as a Mandatory Program

“Instead of having optional programs, states could make caregiving a consistent benefit for everyone who qualifies,” said Hoffman. “This could be part of Medicare. It could be an expansion of Medicaid. It could be its own separate program. The best solution is something that’s simple and universal, that people can understand, and that meets people’s needs. And we’re very far from that right now.”

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