AARP Massachusetts Offers Testimony on Caregiver Tax Credit bills to the Massachusetts Joint Committee on Revenue

AARP Massachusetts submitted the following written testimony to The MA Joint Committee on Revenue regarding the Family Caregiving Tax Credit bills:

December 13, 2021

The Honorable Adam G. Hinds, Chair
The Honorable Mark J. Cusack, Chair
Joint Committee on Revenue Joint Committee on Revenue
Massachusetts Senate Massachusetts House of Representatives
State House, Room 109
Boston, MA 02133 Boston, MA 02133

RE: HOUSE BILL NO. 3043 and SENATE BILL NO. 788 – An Act to Establish the Family Caregiving Tax Credit

Dear Chairmen Hinds and Cusack:

AARP is the nation’s largest nonprofit, non-partisan organization dedicated to empowering Americans 50 and older to choose how they live as they age. On behalf of the nearly 38 million members nationwide and 775,000 members here in the Commonwealth, we urge you to favorably pass House Bill No. 3043 and Senate Bill No. 788 - An Act to Establish the Family Caregiving Tax Credit because most of us are, have been, or will be a family caregiver or will need help to live independently.

This is an ageless and nonpartisan issue. Family caregivers are the backbone of services and supports in this country. They help make it possible for older adults and people with disabilities to live independently in their homes and communities.

Family caregivers provide unpaid care to adults who needed help with daily activities such as bathing, dressing, meal preparation, and transportation. Here in Massachusetts, over 70% of voters over age 45 are caregivers, or have been in the past. Over half of these caregivers use their own money to help provide care to their loved ones.

Caregiving can take not only a physical and emotional toll; it can have a financial one as well. A 2021 study by AARP shows just how much housing and medical expenses can add up — and disproportionately hurt those who can least afford it.

In the United States, about 48 million individuals provide unpaid care to an adult family member or friend. Nearly eight in 10 caregivers report having routine out-of-pocket expenses related to looking after their loved ones. The typical annual total is significant: $7,242. On average, family caregivers are spending 26% of their income on caregiving activities and more if they were caring long distance, or for someone with cognitive impairment, according to results of the
2021 national study. This spending by family caregivers saves taxpayer dollars by helping to delay or prevent more costly nursing home care and helping to prevent unnecessary hospital
readmissions.

The strain is even greater on Latinos and African Americans, and on younger caregivers, who have had less time to work and build up resources. Meanwhile, women, on average, spend more hours a week caregiving and have lower incomes. The cost of caring for female recipients is higher.

About half of caregivers say they used their own money for household-related expenses. Thirty percent covered rent or mortgage payments for their loved ones, while 21% financed home
modifications. Medical costs (paying for health care, therapists, in-home care, or medical equipment) accounted for 17% of caregiver spending. Only 5% of caregivers reported having no expenses in the past year with their loved one.

When a family member is assisting more than 10 hours a week or helping with activities of daily living, they often shell out more money than the average caregiver. Many employed caregivers face stress juggling both their jobs and caregiving. In addition to expenses, caregiving can cut into caregivers’ income. About one-third of respondents report two or more work-related strains, such as having to change their schedule or take leave, which leads to an average annual outlay of $10,525.

About half of caregivers say they have experienced financial setbacks. This may mean they have had to curtail their spending, dip into personal savings, or cut back on retirement contributions.

The recent COVID-19 pandemic magnified sacrifices for caregivers, with 42% of respondents spending more time and money on caregiving.

An Act to Establish the Family Caregiving Tax Credit would create a new, refundable state tax credit of up to $1,500 for eligible family caregivers to help address the financial challenges of caregiving. Eligible family caregivers caring for adult loved ones could receive the credit if the care recipient meets certain functional or cognitive limitations. Family caregivers would not be required to live with the care recipient, as many family caregivers may not reside with the person they are assisting. The credit would be capped per care recipient, so family members working together to care for a loved one would split the credit depending on who had incurred expenses.

As a state we should support family caregivers as they take on the costs and responsibilities associated with caregiving. A family caregiver tax credit is one way to help address these financial burdens and ensure that caregivers can keep their loved ones living in their homes and communities.

AARP urges the Committee to favorably pass this bill.

We look forward to working with you and would be happy to assist you in any way possible on these important issues. If you have any questions or concerns, please do not hesitate to contact Jessica Costantino, Director of Advocacy, at 617.305.0538 or Jcostantino@aarp.org. Thank you.


Very truly yours,

Michael E. Festa State Director
Sandra Harris State President