I had to take care of two very sick parents. The money it costs is enormous, but the amount of time it takes is so exhausting that it can cost more in emotional health than you can even imagine.
That’s not a statistic. That’s my life. And if you’ve been a caregiver, this is probably yours too.
Two new studies published in January 2026 – one in JAMA network opened and one inside Health affairs scientist– finally provide figures on what millions of informal caregivers already know: this crisis is destroying people financially, and no one is ready for it.
The numbers that should wake everyone up
$7,242Average annual out-of-pocket costs
44%Higher risk of housing instability
According to AARP’s 2025 Caregiving in America report63 million Americans – nearly 1 in 4 adults – provided ongoing care to an adult or child with a complex medical condition in the past year. That’s an increase of 50% since 2015.
The average healthcare provider spends $7,242 per year out of pocketwhich represents approximately 26% of their income. If you’re caring for someone with Alzheimer’s disease or dementia, that jumps to almost $9,000 per year.
Debt is what’s left when the math doesn’t add up. Caregiving is a game changer for millions of families, and no one sees it coming.–Steve Rhode
Medical debt now threatens your housing
The JAMA Network Open Researchled by researchers at Johns Hopkins and Washington University in St. Louis, followed 1,515 American adults from 2023 to 2025. What they discovered is alarming:
- Medical debt was associated with a An increase of 5 to 9 percentage points in the subsequent housing instability
- Adults with medical debt had a 44% higher risk of housing problems – difficulty paying rent, eviction, eviction or losing their home
- Among people with medical debt 23.5% experienced housing instability the following year – compared to just 5.8% of those without medical debt
- About 1 in 6 adults reported having medical debt in 2024
The healthcare pitfall that no one talks about
The study from the University of Washingtonpublished in Health affairs scientistsurveyed 2,020 nationally representative adults and found:
- Nearly 60% of American adults (over 155 million people) expect future healthcare responsibilities
- 25% care provided in the past year; 20% currently provide informal care
- Men now make up 40% of healthcare providers – the gender gap is closing
- Researchers identified a pattern of “serial caregiving”—people who provide care repeatedly throughout their lives as family members age
Sandro Galea, dean of the University of Washington School of Public Health, called informal care “the hidden backbone of American healthcare.” He’s right. Family caregivers Are the long-term care system in this country. And they pay for it out of their own pocket.
The financial pressure is crushing
AARP’s research paints an even more detailed picture of the financial devastation:
The financial toll
- 78% of healthcare providers regularly have out-of-pocket expenses
- Average expenses: $7,242/year (26% of income)
- 1 in 4 informal caregivers has debts as a result of informal care
- 1 in 5 cannot afford basic needs such as food
- 47% experienced financial setbacks (cutting health care, removing savings, reducing pension contributions)
The hidden costs
- Almost 1 in 4 provides more than 40 hours of care per week
- 1 in 3 raises children while caring (“sandwich generation”)
- Working caregivers with workloads spend $10,525 per year, double the average
- Direct care workers cost between $5,700 and $6,300 per month, often borne by the family
Why informal care debts are different
This is what makes healthcare debt so destructive: it’s invisible, it’s gradual, and it hits you when you’re most emotionally vulnerable.
You don’t sit down one day and decide to take on $50,000 in debt. It creeps up. A missed day of work here. A prescription copay there. Gasoline to drive to appointments. Home adjustments. Hire help if you can no longer physically do it on your own.
And here’s the cruel irony: 1 in 5 caregivers self-report poor health. Caring for someone else literally makes caregivers sick. Which means more medical bills. Which creates more debt. Which threatens the stability of housing construction.
It’s a cycle and designed to grind you down.
What you can do now
If you are (or expect to be) a caregiver, here’s where to start:
- Don’t plunder your pension. I know it’s tempting when the bills pile up. But cashing out your 401(k) or IRA to cover healthcare costs is almost never the right move. That money is protected in the event of bankruptcy. The opportunity cost is enormous. Protect your future.
- Know what Medicare actually covers. Medicare does NOT cover nursing home care. Medicaid does, but the eligibility rules are strict. Don’t assume, but verify.
- Follow every issue. Keep a record of all healthcare costs. Some may be tax deductible if you list your parent as a dependent. The proposed Credit for Caring Act would provide a $5,000 tax credit for qualifying caregivers.
- Talk about money early. The most difficult conversation is the first. Ask your parents about their insurance, savings, long-term care plans, and legal documents while they can still participate in the discussion.
- Get help before you drown. If healthcare costs are leaving you with debt you can’t handle, explore ALL your options. That includes debt management, settlement, and yes – bankruptcy if it’s the right choice. There is no shame in using legal protections designed for exactly this situation.
Key Takeaways
- 63 million Americans are caregivers, spending an average of $7,242/year out of pocket (26% of income)
- Medical debt increases the risk of housing instability by 44%, according to a study by the JAMA Network Open
- 62% of Americans incorrectly believe that Medicare covers nursing home care, but that is not the case
- The financial toll of caregiving is invisible, gradual, and hits when you are most vulnerable
- Protect your retirement, know what Medicare actually covers, and explore ALL debt relief options if you’re overwhelmed
Frequently asked questions
How much does informal care cost out of pocket?
According to AARP’s researchthe average caregiver spends $7,242 per year – about 26% of their income. Caregivers of people with Alzheimer’s disease or dementia spend nearly $9,000 per year. Working caregivers who face work-related stresses spend more than $10,500 annually.
Does Medicare pay for nursing home care?
No. Medicare covers a limited stay in a skilled nursing facility (up to 100 days after a qualifying hospital stay), but not reimburse long-term care. Research shows that 62% of Americans do this mistakenly believe that Medicare covers nursing homes. Medicaid is the primary public payer of long-term care, but eligibility must meet strict income and asset limits.
Can Medical Debt Cause You to Lose Your Home?
Yes. A January 2026 study in JAMA Network Open found that medical debt was associated with a 44% higher risk of housing instability, including difficulty paying rent or mortgage, eviction, eviction, or loss of housing. Medical debt can damage credit, lead to wage garnishment, and in some states, lead to property liens.
What financial assistance is available for caregivers?
Options include: Medicaid home and community-based services (if eligible), the VA’s Caregiver Support Program (for veteran families), state-level caregiver support programs, respite care through Area Agencies on Aging, and possible tax deductions if you claim your care recipient as a dependent. The proposed Credit for Care Act would provide a $5,000 federal tax credit for eligible health care providers.
Should I use retirement savings to pay for a parent’s care?
Almost never. Retirement accounts (401(k), IRA) are protected in bankruptcy. Using them to pay for health care costs eliminates that protection and destroys decades of compound growth. If healthcare debts become unmanageable, bankruptcy allows you to keep your retirement savings while giving you a fresh start with unsecured debt. Explore all options before tapping into retirement funds.
(Source: Washington University in St. Louis | JAMA network opened | AARP Healthcare Delivery in the US 2025)
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