Proposed Tax Credit Supports Family Caregivers, Holds Down Medicaid Costs

AARP has announced support for legislation to grant targeted tax credits to low- and middle-income Nebraskans who are caring for loved ones in their homes.

On Jan. 26, the Legislature's Revenue Committee held a hearing on LB 65, which would provide up to $300 in annual tax credits to family caregivers with incomes below 400 percent of the federal poverty level. That’s $67,080 for a two-person household. The caregiver also would need to be caring for a person with income under 200 percent of poverty – up to $23,760 for an individual – to receive the tax credit.

Nebraska’s family caregivers provide unpaid care to their loved ones valued at $2.5 billion annually while saving the State of Nebraska millions of dollars in Medicaid costs. Home care is about one-third the cost of institutions.

AARP Nebraska Advocacy Director Mark Intermill said a mix of policies including a caregiver tax credit would help older and disabled residents stay in their homes and avoid or delay a move into a nursing home. Most Nebraskans rapidly exhaust their life savings after moving into institutional care with Medicaid picking up the cost.

“The state has a financial interest in the efforts of family caregivers. Every day that a person who needs long-term care can live at home is a day that the Medicaid spend-down process is delayed,” Intermill said. “LB 65 targets benefits to those caring for individuals who are most likely to qualify for Medicaid shortly after admission to a nursing facility.”

A 2016 report from AARP found that live-in caregivers spend on average $8,616 in out-of-pocket costs per year, which is 29 percent of the average income for that group. Intermill estimated that about 25,000 Nebraska caregivers would benefit from the tax credit proposed by State Sen. Matt Hansen of Lincoln.