The Financial Costs of Family Caregiving

In 2007, the economic value of family caregiving was estimated at $375 billion, which exceeds the total amount of 2007 Medicaid expenditures ($311 billion) and approaches the total expenditures in Medicare ($432 billion) (AARP Public Policy Institute, 2008). Caregivers to individuals age 50 and older reported spending an average of $5,531 out-of-pocket in 2007. Long-distance caregivers had the highest annual expenses ($8,728), compared to co-resident caregivers ($5,885) and those who cared for someone nearby ($4,570) (National Alliance for Caregiving & Evercare, 2007). On average, the total annual health-care expenditures for children with special health-care needs were more than three times as much compared to other children (Newacheck & Kim, 2005), and children with disabilities are significantly more likely to live in families considered to be poor (Parish et al., 2008).

Financial worriesFamily members who assume caregiver roles following severe and sudden disability onset to a spouse or adult child often experience intense financial hardships as the medical costs accumulate, income dwindles with the loss of a major wage-earner in the family and limits for insurance coverage are realized. In some of these situations, families spiral downward into poverty as they simultaneously adjust to their roles as caregivers. There's also evidence that mid-life women in the labor force who begin caregiving are more likely to leave the labor force entirely than to reduce their hours (Pavalko & Henderson, 2006).

Family caregiving does provide some financial savings to care recipients, however. People who have family caregivers tend to have shorter hospital stays, while the absence of a family caregiver has been linked to hospital admissions. Informal care by adult children reduces Medicare inpatient expenditures of single older adults, as well as expenditures for home health and skilled nursing facility care (AARP Public Policy Institute, 2008).


AARP Public Policy Institute (2008). Issue Brief: Valuing the Invaluable: A New Look at the Economic Value of Family Caregiving, 2008 Update. Retrieved, November 1, 2010 from

National Alliance for Caregiving & Evercare (2007). Family Caregivers – What They Spend, what They Sacrifice: The Personal Financial toll of Caring for a Loved One. Minnetonka, MN: Evercare & Bethesda, MD: Author.

Newacheck, P.W. & Kim, S.E. (2005). A National Profile of Health Care Utilization and Expenditures for Children With Special Health Care Needs. Archives of Pediatric and Adolescent Medicine, 159, 10-17.

Parish, S. L., Magaña, S., & Cassiman, S.A. (2008). It’s just that much harder: Multilayered hardship experiences of low-income mothers with disabilities raising their children. Affilia: The Journal of Women and Social Work, 23, 51-65.

Pavalko, E.K. & Henderson, K.A. (2006). Combining Care Work and Paid Work: Do Workplace Policies Make a Difference? Research on Aging, 28, 3, 359-374.