Donald Trump’s plan to help families offset the costs of caring for young children and adult dependents has brought the elder care issue squarely into the limelight. The plan would create new tax-deductible Dependent Care Savings Accounts (DCSAs), in which families could invest money over the years in order to pay for caregiving costs later.
To help low-income families, the government would match half of the first $1,000 each year.
Right now, the only option for this type of savings is through Dependent Care Flexible Spending Accounts (FSAs), available just through employers. These accounts also have a limit of $5,000. The average caregiver for the elderly usually spends about $5,531 in out-of-pocket expenses each year. That’s more than 10 percent of the median income for most of these families.
Under Trump’s plan, the DCSA accounts would accumulate over the years — and the appreciation would be tax-free. The money would be available to cover a variety of needs, such as in-home nursing expenses and long-term care. And unlike a 401K retirement plan, funds would be available for withdrawal at any time without a tax penalty.
The DCSA accounts could also be used for child care expenses and development. Parents could withdraw the money to cover day care expenses, after-school programs, and school tuition. And in another nod to low-income families, Trump has also promised child care rebates of up to $1,200 for those parents who don’t earn enough to pay federal income taxes. Stay-at-home parents would also be eligible for the same tax deductions working parents currently receive.
“Now that we can keep people alive for an extra 20 years, addressing ways to carry that cost burden warrants consideration,” said one elder American.
This plan could be especially beneficial for women. The National Alliance for Caregiving says that about two-thirds of all caregivers are women. More than a third of those women are also shouldering care for their children or grandchildren — as well as their elders. These women are more than twice as likely to live in poverty.
Gordon and Shirley Jones of Thousand Oaks, California, are a typical middle-class couple. They have seven children, two of whom were in college when Gordon’s parents, Thomas and Nellie Jones, needed additional care. The Joneses knocked out a wall in their master bedroom so that they could add a kitchenette and living area where Gordon’s parents could move in. They also made a space for Gordon’s brother, Steven, who has Down syndrome.
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At first, the older parents were self-sufficient and required little care. But when Thomas Jones developed Alzheimer’s disease, his personality changed, and he needed a caregiver constantly at his side.
“He got combative with his dementia,” Shirley Jones remembers. “His tone changed. He had always been mild-mannered before that.” The two Jones women, Shirley and Nellie, shouldered the main burden of caring for Thomas — dressing him, feeding him, taking him for walks, attending to his hygiene. Then, for two months before his passing, he needed professional in-home nursing care.
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All of this came at a high price. It wasn’t so much the out-of-pocket costs, which were mostly covered by hospice — but in caregiving hours and burdens.
When Nellie Jones became terminally ill after a stroke 10 years later, Shirley Jones again shouldered heavy caregiving responsibilities while also working from home as a bookkeeper for their small family business. “I was with her almost all day every day, and slept in a mattress in her room at night. We wanted her to know that somebody was there to help her,” said Shirley Jones.
But all of this caregiving took its toll on their small business — which they sold shortly after Nellie Jones passed away. They couldn’t afford to outsource the care to others because it would have increased their expenses by thousands of dollars every month.
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Of Trump’s plan for elder care, Gordon Jones said he thinks it could be a great benefit for families in their situation.
“I think it’s a good idea. I think they may find it actually lowers the government’s liability with regard to hospice. It might reduce the amount that they have to pay to help people in the long run. If they can encourage people to do it more — it might get some of the burden off the federal government.”
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Then he added, with a laugh, “Maybe I could take advantage of it in case I go senile and [my wife] needs to put me in a care facility.”
He continued, “Now that we can keep people alive for an extra 20 years, it seems like addressing ways to carry that cost burden warrants consideration.”
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