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Unpaid caregivers spend a quarter of their annual income providing help. A new caregiver tax credit was axed from Biden’s budget plan.

Minority and young caregivers spend an even higher percentage of their annual income on caregiving

A tax credit for caregivers was cut from President Biden's budget plan. At one point the credit was as much as $5,000. (Fat Camera/iStock)

I was just 21 when I became the caregiver for my brother, who was three years my junior.

I understood why my grandmother, Big Mama, transferred his care to me after I graduated from college. The cost to care for my brother in her retirement would have been too much. And she had been caring for us all — five grandchildren — for nearly two decades.

Mitchell had epilepsy, and his grand mal seizures couldn’t be controlled with medication. His frequent seizures prevented him from keeping a job, even though he was determined to maintain full-time work. Over my objections, my brother took a job that required him to take two buses and then walk a mile from the bus stop to get to work. He didn’t want to be a financial burden, he said. He wanted to try to make it on his own.

He lost that job as a caregiver at a nursing home within a few months, after a particularly bad seizure at work sent him to the hospital. It was the last time he held a paid position. (He would later volunteer regularly for the American Red Cross.)

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I knew just about every hospital emergency room in Baltimore because of my brother’s seizures. After a few group homes, he eventually came to live with me. I covered what his Social Security disability payments didn’t. When I got married and moved for my job, my husband and I paid my brother’s monthly housing costs, including utilities.

After 14 years of caring for my sweet-tempered brother, he died at 32 from a massive seizure. My husband and I had budgeted to care for him until his old age.

I don’t regret the money I spent caring for my brother or that it meant less going to my own savings and retirement. I was okay financially. But so many others are not. Unpaid caregivers struggle under the economic burden of caregiving, sometimes having to quit their jobs, risking their own retirement security.

There was hope that a new tax credit for caregivers would be part of President Biden’s budget plan. It would have provided a tax credit of up to $2,000 for eligible caregivers. At one point, the credit was as much as $5,000. But in fierce negotiations to get something through Congress, the credit was cut from Biden’s budget plan. It could have offered some relief for the millions of unpaid caregivers in the United States.

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“It’s out as of right now, but maybe phoenix-like it will rise from the ashes before they vote,” said Nancy LeaMond, AARP’s executive vice president and chief advocacy and engagement officer. “The absence of anything on paid leave or credit for caring really concerns us. Family caregivers are probably the backbone of the health-care system.”

In the United States, about 48 million individuals provide unpaid care to an adult family member or friend. An AARP study this year found that three-quarters of the family caregivers reported that they regularly spend their own money on caregiving expenses. On average, family caregivers spend $7,242 annually, or 26 percent of their income.

AARP found young adults are also carrying an even bigger financial burden for caretaking, spending, on average, $7,462 per year. This is especially concerning because they have less of a savings cushion given their limited time in the workforce. People taking care of someone with dementia report spending close to $9,000 annually.

These are just averages. Many caregivers spend much more.

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Minority caregivers, who often have lower household income than White caregivers, spend an even higher percentage of their annual income on caregiving. Hispanic caregivers spent, on average, 47 percent of their household income on caregiving, and expenses for Black caregivers totaled, on average, 34 percent of income, according to AARP.

The latest KFF Health Tracking Poll found that 42 percent of unpaid caregivers experienced financial strain because of their inability to work. The caregivers are more likely to be Black or Hispanic compared with those who are not unpaid caregivers. About 8 in 10 unpaid caregivers don’t have a college degree, and about half have household incomes under $40,000, according to KFF.

As was the case with my brother, much of the money caregivers are spending goes to help with housing costs. Rent or mortgage payments on behalf of care recipients accounted for 30 percent of caregivers’ out-of-pocket costs. Home modification costs made up 21 percent of their outlays. Medical costs amounted to about one-fifth of their spending. Assisted-living costs made up 7 percent.

“Some caregivers may even be incurring debt because they are spending more on caregiving expenses than their income can support,” the AARP report said.

There’s a possibility the caregiver credit could be resurrected.

“Whether it lives for another day on another vehicle, I think we’ll have to see,” LeaMond said. “It does have an advantage of being bipartisan. Family caregivers are of all political stripes.”

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The AARP study showed an increase of about 8 million caregivers from 2015 to 2020. The pandemic will certainly make the situation worse, as covid-19 survivors struggle with long-term health problems.

Every little bit of help a caregiver can get eases stress and worry about their own financial situation. Axing the caregiver tax credit only adds to what is becoming an almost unsurmountable burden for tens of millions of Americans who are helping the people they love.