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Medicaid Supports the Health and Economic Well-Being of Paid and Unpaid Caregivers and is Vital to Older Adults and People with Disabilities

Medicaid is essential to the health and wellbeing of people in the United States at every stage of life. Medicaid is much more than a health insurance program: it is the primary source of funding for long-term care in the nation, paying well over half of the $415 billion spent on long-term care, providing coverage to more than 9 million people for long-term services and supports. This includes 7.8 million older adults and people with disabilities who rely on home and community-based services (HCBS), seeking to live and age with dignity in their own homes and communities where most people would prefer to receive their care. Medicaid dollars also support family caregivers struggling with costs and workers providing essential services for people with long-term care needs.

Medicaid Plays a Critical Role in Supporting the Economic Stability of Family Caregivers

More than 105 million adults are caregivers in the U.S.—over 40% of the adult population. Their time is largely uncompensated. Women, especially women of color, play a pivotal role in providing unpaid care for children, family members and friends including those who are aging or disabled. These and other factors make Medicaid critical for many family caregivers, who often experience economic barriers and health challenges and rely on Medicaid for coverage and access to care. Medicaid also helps families afford aging and disability care, including costs for direct care workers as well as critical emergency back-up care and much-needed respite services.

A 2021 AARP study found that 78% of family caregivers report having out-of-pocket costs related to caregiving, with an average of $7,242 annually. On average, family caregivers spend 26% of their income on caregiving needs with higher levels of financial strain for Black and Hispanic caregivers. For those providing care for aging or disabled family members and young children, also known as “sandwich-generation caregivers,” the lack of affordable, accessible child care and absence of policies, such as paid leave, create additional economic barriers. Medicaid serves a crucial role in supporting family caregivers and their loved ones.

Medicaid Pays for the Vast Majority of Direct Care Workers, One of the Fastest Growing Occupations in the Country

The direct care sector is one of the fastest-growing occupations in the nation. Today, this includes over 5 million direct care workers, including personal aides, home health aides, direct support professionals, and nursing assistants, all of whom provide services and support to older adults and people with disabilities. They support day-to-day activities such as getting dressed, preparing meals, taking medications, participating in employment, assisting with communication, using transportation, and providing respite services for family caregivers. As the primary source of funding for long-term care, Medicaid is key to paying for direct care workers and addressing shortages of these workers. Consistent support from Medicaid decreases turnover and training costs for employers, and provides the consistency and reliability of care that older adults, people with disabilities, and family caregivers need. Existing flexibilities within Medicaid also help families and the direct care workforce by supporting self-directed care models that allow individuals to hire their own caregivers, including family members. Without support for caregivers, many older adults and people with disabilities would be unable to live independently and safely and participate fully in their communities.

Medicaid Supports the Health and Well-Being of Family Caregivers and Direct Care Workers

Medicaid provides affordable health care for family caregivers and direct care workers, supporting healthy, thriving communities. Family caregivers are more likely to experience financial strain and their own personal health challenges while providing care, and less likely to receive health insurance through their employer or spouse. Medicaid is also critically important in providing health coverage for over 30% of direct care workers who rely on the program to access affordable health care. Medicaid reduces out-of-pocket costs, increases access to healthcare, and improves overall health outcomes for individuals covered by the program, including caregivers, who may rely on the Medicaid expansion for coverage.

The Support that Family Caregivers and Direct Care Workers Provide is Essential and a Driving Force in the Economy

Care is the work that makes all other work possible. Much of this is uncompensated, with a value exceeding $1 trillion annually and with women performing two-thirds of this labor. Medicaid helps family caregivers maintain employment, especially with the consistent, reliable support from direct care workers. Every day in America, 10,000 people turn 65 years old, and the number of older adults over age 85 is expected to more than double by 2040. These and other factors, including most people’s preference to live and age at home, makes the direct care sector one of the fastest growing in the U.S. economy. Estimates indicate that 8.9 million total direct care job openings will need to be filled by 2032. Family caregivers, direct care workers, older adults, and people with disabilities rely on Medicaid and aging and disability care in the home and community to help ease the cost of giving and receiving care. Supporting Medicaid is foundational to supporting families and the long-term care system.

Endnotes

“America’s family caregivers put family first, helping their parents, spouses and others stay at home,” said Nancy LeaMond, AARP Executive Vice President and Chief Advocacy & Engagement Officer. “They spend thousands of dollars every year on this care, while juggling work and family responsibilities. We urge Congress to put money back into the pockets of hardworking family caregivers by passing the Credit for Caring tax credit.”

Making sacrifices

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When Maylia Tsen took on the role of family caregiver for her parents, one thing quickly became apparent: She wouldn’t be able to simultaneously keep up with the demands of her career (she’s held high-level sales/marketing positions at Pepsi-Cola, Bausch & Lomb and Sprint); the business travel, alone, made her schedule unpredictable from one week to the next. Thinking she could draw on her years of experience and generate a comparable income — with the added bonus of working flexible hours — she left the corporate world around 2005. She struck out on her own right around the time her parents relocated from New York to Laguna Nigel, California, to live near her.

More than 25 years later, she’s still caring for her now 97-year-old father (her mother died of complications from Parkinson’s in 2014), and making around 10 percent of the six-figure salary she once earned. ​​“I’ve given up a lot,” says Tsen, who works part-time as an online tutor and occasional business consultant. “All the struggles and challenges in juggling to make ends meet have been tough. I have short windows of maybe an hour or two for myself, but unless you can afford a caregiver, which is very costly, you pretty much have to be with (your loved one) all the time. I wear at least five hats at any given time.” Tsen is typically up at 7 every morning and, over the course of a typical day, helps her dad dress, provides meals, takes him to appointments and tends to his medical needs, including helping care for his diabetes-related wounds.

Maylia Tsen has been a caregiver for her father for 25 years. They recently celebrated the Lunar New Year together. Courtesy of Maylia Tsen

Arguably the worst part: “I’ve gone through all my savings, retirement, everything,” she says. “I have to continue to work; there’s no way for me to retire.”

Tsen’s experience is far from unusual. According to a 2021 AARP report, nearly half of all family caregivers in the U.S. have experienced at least one financial setback — among the most common, dipping into their savings — due to caregiving and around one in five had to cut back on their health care spending or reduce the amount they save for retirement.

Struggling to rebound

On average, caregivers spend 26 percent of their personal income on caregiving expenses. One in three dips into their personal savings, like bank accounts, to cover costs, and 12 percent take out a loan or borrow from family or friends. Some, like Amy Goyer, run up credit card debt to meet the financial demands of caregiving.

After more than a decade of caring for her father, who had Alzheimer’s, and her mother, who had a stroke, Goyer was saddled with high-interest credit card debt. On the advice of bankruptcy attorneys and financial advisors, she ended up filing for bankruptcy in 2019, a year after her father died. Now 64, she’s still trying to rebound financially, heading toward her retirement years with no savings. “When you’re in your late 40s and 50s, you should be focused on saving for retirement,” says Goyer, AARP’s national family and caregiving expert. “I couldn’t do that. So now I’m working with a financial advisor to figure out if I can ever retire.”

Parents are struggling under the weight of caregiving, facing financial strain, emotional exhaustion, and impossible choices. Care.com CEO, Brad Wilson, digs into the findings of our 12th Annual Cost of Care Report, which reveals the true cost of care and why families can’t bear this burden alone.

“The stress and mental health challenges faced by parents aren’t always visible, but they can take a steep toll. It’s time to recognize they constitute a serious public health concern for our country,” declared former U.S. Surgeon General, Dr. Vivek Murthy, six months ago. As a father, this statement hit me like a tidal wave–alarming, yet deeply validating. I thought about the sleepless nights, the endless juggling of work and family, and the quiet moments of doubt that creep in. For millions of families, this struggle is constant and unrelenting.

Enough is enough.

For too long, our culture has celebrated the ideal of the American family while ignoring the daily reality for parents. As the leader of Care.com, I knew we had to act. We had to shine a brighter light on the care crisis, to amplify the voices of families, and to push for policies and solutions they deserve.

This year, we’ve expanded our 12th annual Cost of Care Report to do just that. It’s no longer just about the financial burden of child care–it’s about the hidden costs of caring for the whole household that erode mental health, strain relationships, and threaten the very foundation of families across the country.

The full picture: Caregiving’s hidden costs

My experience as a father is just one of many parents that are battling the financial, emotional, and social costs of caregiving. The data paints a sobering picture: the average parent manages five different care arrangements, with nearly a third (28%) belonging to the sandwich generation, juggling both children and aging parents. With older adults projected to outnumber children in the U.S. within the next decade, this number is only set to grow.

Caregiving trails only financial related challenges as the most common top source of stress in their lives, with devastating consequences: 90% of parents losing sleep, 80% crying, 75% feeling a sense of dread, 71% experiencing health issues, and 29% even considered suicide or self-harm. That’s solely due to the stress of caring for the whole household.

The root causes of this stress are clear. Families are sending an exorbitant 40% of their household income on care–with over half (22%) going to child care costs alone. More than half (52%) of parents anticipate spending two months or longer trying to find a caregiver, caught in a relentless cycle of searching and waiting. Beyond the financial and logistical burden, caregiving often erodes parents’ sense of self. They typically only have three hours a day to themselves, with 46% missing out on time with their significant other and 52% losing their time with friends.

When parents are sacrificing their health, their passions, and their relationships just to make care work, we have to stop and ask: how much more can they give? The answer is painfully clear–they just can’t. When caregiving responsibilities are this overwhelming, they ripple out to workplaces, the economy, and the health and wellbeing of the loved ones in their care.

Families are reaching their breaking point, and it’s time we stopped asking them to bear this burden alone.

Taking action: What Care.com is doing to help

Caregiving is a fundamental part of life, yet the systems meant to support it are falling short. As leaders in this space—over 45 million families and caregivers have turned to Care.com over the years—we don’t just want to highlight the challenges families and caregivers face through our research. We are committed to providing solutions. Here’s what’s top of mind for Care.com heading into 2025, for families, caregivers, and the caregiving industry as a whole:

Lifting the mental load of caregiving for families

With an average of 5 different care arrangements to make, today’s parents are navigating an overwhelming patchwork of caregiving options. While 86% of parents say that finding many types of care on a single platform is helpful, the average parent is juggling three or more apps to find what they need.

We’re addressing this by offering families a single platform that connects them to child care, senior care, adult care, pet care and housekeeping all in one place. We’re also making sure we address parents’ holistic needs by moving beyond just in-home care—which satisfies only part of what families need—and launching new and improved directories to help families find center-based options like for daycares, activities & camps, and senior living communities.

Sometimes, however, the biggest challenge isn’t just finding the right care—it’s about figuring out how to get started and understanding your options in the first place. We see this especially in senior care, where families often feel lost navigating their care options. That’s why we’re gradually rolling out a Senior Care Advisor service that pairs families with masters-level social workers to create tailored care plans. This service, which has previously been available to our enterprise clients, is now being offered to some consumers–a crucial step as 73% of families seeking senior care find personalized advisor support helpful.

We hope to expand this program over time—and continue to find other ways to offer families even better, more guided support in their care searches in the future. Stay tuned.

Empowering and supporting professional caregivers

Caregivers are the backbone of the caregiving system, enabling parents to stay in the workforce and providing families with critical support. Yet their contributions are too often undervalued and underpaid.

Through our platform, we help caregivers find flexible, meaningful work that aligns with their skills and schedules–whether they’re providing child care, senior care, pet care, or housekeeping. We also empower caregivers with tools to promote their services, manage bookings, and–through HomePay–receive legal payment. This aids them in gaining access to essential protections like Social Security, worker’s compensation and unemployment insurance.

While the rising cost of care is a challenge for families, it’s clear they value caregivers’ work with 61% believing caregivers deserve higher wages. This underscores the need for systematic solutions that balance affordability for families with fair compensation for caregivers.

Championing systemic change

Families cannot tackle these challenges alone, with 87% rating expanded tax credits for care expenses as helpful in solving the challenges of finding and managing care. That’s why we’re using our role as an industry leader to push for real policy change at every level.

Existing care-related tax credits and programs are tremendously out of date and have not had an update for decades. In January, Congress will be considering tax policy as they address the upcoming expiration of the 2017 Tax Cuts and Jobs Act. We are working hard to ensure families’ interests are at the forefront of these discussions. As part of these efforts, we have already begun conversations with the Ways and Means Republican Tax Teams about critical care-focused tax policies, including the Child and Dependent Care Tax Credit, Dependent Care Assistance Programs, and the Employer-Provided Child Care Tax Credit.

Employers also play a pivotal role, with 79% of parents citing subsidized caregiving benefits as helpful. That’s why, through Care for Business, we partner with more than 775 employers to support their employees through services like subsidized Backup Care, Care Spending Account, and free premium membership to Care.com. Benefits like these save employees nearly $3,000 annually on child and senior care each while helping them balance work and family responsibilities.

Enough is enough

This report is more than a diagnosis of the caregiving crisis–it’s a rallying cry for change. The findings reveal the profound emotional, financial, and social weight of caregiving, but also illuminate the opportunities to build a better, more supportive system.

Policymakers can use this data to craft family-centered legislation that meets parents and caregivers where they are. Employers can reimagine how they support working parents with innovative policies and resources. And as Care.com, we can create innovative solutions that help families thrive.

Let’s build a future where caregiving is no longer a crisis, but a cornerstone of a thriving economy. Change is possible.

Toolkits for families and caregivers

For the first time ever, we’ve taken an additional step by creating actionable toolkits for parents and caregivers, with steps to reduce the stress and cost of care—including ways in which Care.com can help, information on tax credits and subsidies, and tips on how to advocate for care support with employers and lawmakers.

Download the toolkits here: