As our population ages, disability-related caregiving for family members will increase, but, as a society, how well are we able to cope? From meal preparation and household chores to time off for appointments with doctors or to deal with financial matters, the commitment in caring for the sick, the disabled and dying is enormous and it is exhausting. This demanding area is an opportunity for tax and financial advisors to provide both compassion and much-needed help.
First is the opportunity to discuss the actual costs of caregiving and any potential tax savings. The financial consequences can include loss of economic activities for the caregiver, such as income from employment and self-employment. In addition, the caregiver may require supports at home as a result of caregiving: child care for the nuclear family, personal and respite care needs and, in addition, resources for specialized nursing care if publicly-provided home care is unavailable or inadequate.
Second, it is important that attention be given to the physical and psychological toll on family caregivers, which is also huge: up to 75% will develop psychological illnesses; 15 to 32% suffer from depression. These are significant numbers. Having important, proactive conversations about legal matters can provide a huge service to your emotionally-stressed clients (for example, is there a health-care directive in place, powers of attorney, a will?).
Consider a post-tax-season checklist of concern, and an invitation to speak in a private and confidential manner about the following:
- CPP Disability Payments: Individuals are eligible after a three-month waiting period for severe and prolonged disabilities.
- Employment Insurance: You may be entitled to receive benefits from Employment Insurance for up to 15 weeks as a result of your inability to work. These benefits are taxable. They can amount to up to 55% of your average insurable earnings to a dollar maximum. Lower income families can receive up to 80% of the average insurable earnings. However, applying for them involves a qualification process with Service Canada, including health information with a doctor’s certificate, as well as detailed employment records. If you are eligible, the payments will start in 28 days, after a two-week waiting period. There is also EI relief for caregivers: compassionate care benefits can be received for up to six months if you are caring for someone who is sick or disabled.
- Other income sources: Complications arise when EI is received in conjunction with other income. For example, any money you receive during the two-week waiting period will be deducted from the benefits you are entitled to receive for the first three weeks, dollar for dollar. Likewise, if you work while receiving EI sickness benefits—or receive commissions, compensation under a work accident plan, group health or group wage loss replacement plan, payments under an accident insurance plan, or retirement income under a public or private plan—the amount you earn will be deducted dollar for dollar.
- Tax preferences: Save all receipts. A long list of medical expenses can be claimed on the tax return if health care plans or deductibles don’t cover all the costs. In addition, a new Home Accessibility Tax Credit available in 2016 can help defray up to $1500 of home modification costs (15% of the cost up to $10,000). Finally, moves to more accessible housing can be facilitated by tapping into the first-time Home Buyers Plan under the RRSP rules.
If you are a financial or tax advisor, know that your help in bringing financial supports to the emotionally difficult and financially draining task of caregiving can be a great value-added service—one that your clients and their families will greatly appreciate.
If you are a family going through something like this, don’t forget that your qualified tax and financial professionals are there for you to help. Give them a call today.