Quick Answer: New research from Washington University and Johns Hopkins shows that medical debt increases the risk of housing instability by 44%, and 63 million Americans are now family caregivers—spending an average of $7,242 per year out of pocket. The financial toll of caregiving is one of the fastest-growing drivers of personal debt, yet almost nobody plans for it.
I had to take care of two very sick parents. The money it costs is staggering, but the amount of time it takes is so draining 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, it’s probably yours too.
Two new studies published in January 2026—one in JAMA Network Open and one in Health Affairs Scholar—finally put numbers to what millions of family caregivers already know: this crisis is breaking people financially, and nobody’s ready for it.
The Numbers That Should Wake Everyone Up
According to AARP’s 2025 Caregiving in the U.S. report, 63 million Americans—nearly 1 in 4 adults—provided ongoing care for an adult or child with a complex medical condition in the past year. That’s up 50% since 2015.
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The average caregiver spends $7,242 per year out of pocket, which represents about 26% of their income. If you’re caring for someone with Alzheimer’s or dementia, that jumps to nearly $9,000 per year.
Debt is what is left over when the math is broken. Caregiving breaks the math for millions of families—and nobody sees it coming.— Steve Rhode
Medical Debt Now Threatens Your Housing
The JAMA Network Open study, led by researchers at Johns Hopkins and Washington University in St. Louis, followed 1,515 U.S. adults from 2023 to 2025. What they found is alarming:
- Medical debt was associated with a 5 to 9 percentage point increase in subsequent housing instability
- Adults with medical debt had a 44% higher risk of housing problems—difficulty paying rent, eviction, foreclosure, or losing their home
- Among people with medical debt, 23.5% experienced housing instability the following year—versus just 5.8% of those without medical debt
- About 1 in 6 adults reported having medical debt in 2024
Key Insight: As lead researcher Kyle Moon of Johns Hopkins put it: “For many people, receiving health care can lead to medical debt, and then to housing instability.” Think about that. Getting the medical help you need can put you at risk of losing your home.
The Caregiving Trap Nobody Talks About
The Washington University study, published in Health Affairs Scholar, surveyed 2,020 nationally representative adults and found:
- Nearly 60% of U.S. adults (155+ million people) expect future caregiving responsibilities
- 25% provided care within the past year; 20% are currently caregiving
- Men now make up 40% of caregivers—the gender gap is narrowing
- Researchers identified a pattern of “serial caregiving”—people providing care repeatedly across their lifetime as family members age
Sandro Galea, dean of Washington University’s School of Public Health, called caregiving “the hidden backbone of U.S. health.” He’s right. Family caregivers are the long-term care system in this country. And they’re paying for it out of their own pockets.
The Planning Gap: According to the WashU research, nearly 50% of older adults underestimate their long-term care needs. And 62% mistakenly believe Medicare covers nursing home care. It doesn’t. Expected long-term care costs per person are nearly 6 times the average annual Social Security benefit.
The Financial Strain Is Crushing
AARP’s research paints an even more detailed picture of the financial devastation:
The Financial Toll
- 78% of caregivers have regular out-of-pocket expenses
- Average spending: $7,242/year (26% of income)
- 1 in 4 caregivers are taking on debt due to caregiving
- 1 in 5 cannot afford basic needs like food
- 47% experienced financial setbacks (cutting healthcare, draining savings, reducing retirement contributions)
The Hidden Costs
- Nearly 1 in 4 provide 40+ hours of care per week
- 1 in 3 are raising children while caregiving (“sandwich generation”)
- Working caregivers with job strain spend $10,525/year—double the average
- Direct care workers cost $5,700-$6,300/month—often borne by the family
Why Caregiving Debt Is Different
Here’s what makes caregiving debt so destructive: it’s invisible, it’s gradual, and it hits you when you’re at your 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. Gas to drive to appointments. Home modifications. Hiring help when you physically can’t do it alone anymore.
The Math Nobody Does: A caregiver spending $7,242/year for 5 years = $36,210 out of pocket. If that money came from retirement savings instead of being invested, the opportunity cost at retirement (assuming 7% annual returns over 20 years) is over $140,000. Caregiving doesn’t just cost you now—it costs your future.
And here’s the cruel irony: 1 in 5 caregivers report poor health themselves. Caring for someone else is literally making caregivers sick. Which creates more medical bills. Which creates more debt. Which threatens housing stability.
It’s a cycle, and it’s designed to grind you down.
What You Can Do Right Now
If you’re a caregiver—or expect to become one—here’s where to start:
- Don’t raid retirement. I know it’s tempting when bills pile up. But cashing out your 401(k) or IRA to cover caregiving costs is almost never the right move. That money is protected in bankruptcy. The opportunity cost is enormous. Protect your future.
- Know what Medicare actually covers. Medicare does NOT cover custodial nursing home care. Medicaid does, but eligibility rules are strict. Don’t assume—verify.
- Track every expense. Keep records of all caregiving costs. Some may be tax-deductible if you claim your parent as a dependent. The proposed Credit for Caring Act would provide a $5,000 tax credit for eligible caregivers.
- Talk about money early. The hardest conversation is the first one. 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’re drowning. If caregiving costs have put you in debt you can’t manage, explore ALL your options. That includes debt management, settlement, and yes—bankruptcy if it’s the right fit. There’s no shame in using legal protections designed for exactly this situation.
Not Sure Where to Start? If caregiving costs, medical bills, or other debts are overwhelming you, take the Find Your Path quiz. It walks you through your specific situation and shows you every option available—not just the ones someone profits from.
Key Takeaways
- 63 million Americans are family caregivers, spending an average of $7,242/year out of pocket (26% of income)
- Medical debt raises the risk of housing instability by 44%, according to a JAMA Network Open study
- 62% of Americans wrongly believe Medicare covers nursing home care—it doesn’t
- The financial toll of caregiving is invisible, gradual, and hits when you’re 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 family caregiving cost out of pocket?
According to AARP’s research, the average family caregiver spends $7,242 per year—about 26% of their income. Caregivers of people with Alzheimer’s or dementia spend nearly $9,000 per year. Working caregivers experiencing job-related strain spend over $10,500 annually.
Does Medicare pay for nursing home care?
No. Medicare covers limited skilled nursing facility stays (up to 100 days after a qualifying hospital stay) but does not cover long-term custodial care. Research shows 62% of Americans mistakenly believe Medicare covers nursing homes. Medicaid is the primary public payer for long-term care, but eligibility requires meeting 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, foreclosure, or loss of housing. Medical debt can damage credit scores, lead to wage garnishment, and in some states, result in property liens.
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What financial help is available for family caregivers?
Options include: Medicaid home and community-based services (if eligible), the VA’s Caregiver Support Program (for veterans’ families), state-level caregiver support programs, respite care through Area Agencies on Aging, and potential tax deductions if you claim your care recipient as a dependent. The proposed Credit for Caring Act would provide a $5,000 federal tax credit for eligible caregivers.
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 caregiving costs eliminates that protection and destroys decades of compound growth. If caregiving debt becomes unmanageable, bankruptcy allows you to keep your retirement savings while getting a fresh start on unsecured debts. Explore all options before touching retirement funds.
(Source: Washington University in St. Louis | JAMA Network Open | AARP Caregiving in the U.S. 2025)
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