Being a caregiver is a hard job. It gets a lot harder if the person you're caring for is running out of money.
And if that person doesn't qualify for Medicaid or Social Security Disability Insurance — and neither of you are multimillionaires — then you and your loved one are going to have to make some difficult choices about how to get more money.
Caregiving costs outside the family are daunting. Nursing homes run an average of $7,756 a month for a shared room, and assisted living facilities average $4,300 a month, according to insurance company Genworth's 2020 survey on the cost of long-term care.
Medicare generally doesn't cover nursing homes, although it can cover some home health care if the recipient is homebound. If the person you're caring for doesn't have long-term care insurance, you'll have to find ways to get more money.
Homeownership is one path to help
For most people, the biggest source of untapped funds is their home. The average homeowner between the ages of 55 and 64 had home equity of $133,000 in 2018, according to the most recent U.S. Census Bureau data available. Those 65 and older had average home equity of $174,000.
If the only real option for a loved one who's receiving care is an assisted living residence or nursing home, then selling the home is an ideal way to raise money. Someone who needs extra money to pay for home-based care could buy a smaller, less expensive house or condominium and use the profit to pay the extra medical expenses.
In many cases, profits from the sale of a primary residence — a home you've owned and lived in for at least two years — are tax-free. There is no capital gains tax on up to $250,000 of profit on a home sale for a single homeowner and up to $500,000 for a married couple.
However, many people don't want to leave their longtime homes, especially if that means leaving nearby family and friends. Those people have three other options, none entirely satisfactory: a home equity loan, a home equity line of credit and a reverse mortgage.
A home equity loan is a lump-sum loan secured by the paid-up portion of a home, the amount left over once the mortgage balance is subtracted.
Nonprofit organizations such as AARP have toll-free support lines to provide answers to questions, make referrals and point to resources for caregivers.
• AARP. 877-333-5885, 7 a.m. to 11 p.m. ET weekdays; Spanish language: 888-971-2013, also 7 a.m. to 11 p.m. weekdays.
• Alzheimer's Association. 800-272-3900, advice on Alzheimer's and other dementias 24 hours a day every day.
• SeniorLiving.org. 866-901-4858, advice on dementia, finances and senior housing, 7 a.m. to 11 p.m. ET daily.
A home equity line of credit (HELOC) is a preset amount of money that the home equity secures. The borrower can tap it periodically, like a credit card.