The Caregiver Household: When the Coverage Unit and the Care Unit Are Not the Same Thing

The 2025 AARP and National Alliance for Caregiving report documents 63 million Americans providing unpaid care to adults or children with chronic, disabling, or serious health conditions, a nearly 50 percent increase since 2015. One in four U.S. adults is a caregiver. Seven in ten family caregivers are employed, but employment for caregivers is not static: 27 percent of working caregivers have reduced hours or shifted from full-time to part-time, 16 percent have stopped working entirely for a period, and 16 percent have turned down promotions. Women are five times more likely than men to leave the workforce because of caregiving. The Columbia University Mailman School of Public Health, in a 2024 study commissioned by Otsuka Pharmaceuticals, documented that caregivers who begin duties at younger ages face a risk of up to a 90 percent deficit in retirement savings by age 65. The Family Caregiver Alliance estimates that 10 million caregivers aged 50 and older who care for parents lose an estimated $3 trillion in cumulative wages, pensions, retirement funds, and benefits. The annual value of unpaid family caregiving labor has been estimated at $600 billion by AARP and at $873.5 billion by the Columbia analysis. The employment restructuring that caregiving produces moves caregivers out of employer-sponsored insurance and into the individual market or no coverage, precisely when their dependency on the older adult’s health system creates a coordination need the individual market cannot manage.

The Structural Reason the Architecture Misses Them

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ERISA group health plans cover spouses and children under 26. Not parents. The coverage unit is the nuclear household defined by marriage and birth, not the caregiving household defined by dependency and obligation. The care recipient is on Medicare for acute care and outside employer benefit reach for everything else. Medicare’s home health benefit covers skilled nursing and physical therapy following a qualifying hospitalization, for a defined period, under specific utilization controls. It does not cover custodial care: the assistance with activities of daily living that constitutes the actual work of most family caregiving. Medicare’s skilled nursing facility benefit covers up to 100 days of post-acute care following a three-day inpatient stay, with substantial cost-sharing after day 20. Dental, vision, and hearing are not covered under traditional Medicare. The parent’s primary care relationship, if one exists, is entirely separate from any coverage the caregiver can structure.

The coordination problem sits in the gap between the caregiver’s coverage system and the parent’s. The caregiver manages medication schedules across two coverage systems with different formularies. The caregiver manages specialist referrals across a Medicare Advantage network the parent is enrolled in and a health system the caregiver’s own plan may or may not include. The caregiver manages transportation, pharmacy runs, appointment scheduling, care transitions, and the administrative burden of benefits navigation across two completely separate coverage regimes. No product addresses this. No benefit structure funds the coordination work. The $873.5 billion in annual unpaid labor occurs entirely outside the coverage architecture because the architecture was built around the employment unit, and the caregiving household is organized around the care unit.

What Current Law Allows

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Two partial paths exist within current law that are almost entirely unused because no product has been built to make them accessible.

The first is the IRC Section 152 qualifying relative dependency test. Under Section 152(d), a qualifying relative is an individual whose gross income for the calendar year is below the exemption amount (approximately $5,200 for 2025, per IRS Revenue Procedure 2024-40) and for whom the taxpayer provides more than half of total support. If the dependency relationship is established, the employer can contribute toward the parent’s health coverage on a tax-excluded basis under IRC Section 106. The parent’s Medicare premiums, Medigap premiums, and qualifying out-of-pocket medical costs can be reimbursed through a properly structured HRA, tax-free, provided the dependency test is met. The mechanics work. The legal foundation is solid. The practical barrier is the gross income threshold: a parent receiving $22,000 in Social Security and $5,000 in pension income will exceed the threshold in most calculations. The dependency test is available to a subset of caregiving households where the parent’s income is genuinely low, but unavailable to the broader population where the parent has moderate retirement income. The tax architecture was designed to address tax filing dependency, not caregiving dependency.

The second path is DPC membership. A direct primary care practice will enroll any individual who pays the monthly membership, regardless of insurance status. A parent on Medicare can be a DPC member at $70 to $90 per month. The parent continues to use Medicare for hospitalizations, specialist referrals, and acute care. The DPC physician handles primary care: medication management, chronic disease monitoring, care coordination, the phone call when something changes at 7 PM on a Tuesday. The employer cannot fund this on a tax-excluded basis unless the dependency test is met, but the parent can purchase the DPC membership directly. No plan document, no TPA, no claims. The DPC physician coordinates across the Medicare and individual market coverage systems because they are not party to either.

The Gap as Opportunity

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The coverage components exist separately. Individual market for the caregiver. Medicare for the parent. DPC for both. Medigap for the parent. The actuarial risk is already underwritten by the programs that handle each component. The medical insurance function is not what is missing. What is missing is the coordination layer: the entity that treats the caregiving household as a single unit for health support, that manages information across coverage boundaries, that provides the DPC infrastructure for both the caregiver and the care recipient, and that handles the administrative work that currently falls entirely on the caregiver as unpaid labor.

The employer who understands the Section 152 path and builds ICHRA contributions around it, layers DPC for both caregiver and care recipient, and contracts with a care coordination platform that spans both the individual market and Medicare systems creates a genuine differentiator for a workforce segment that is growing and that no employer has explicitly designed around. The employer’s total expenditure need not exceed what a conventional small group plan would cost. The value delivered to the employee is more aligned with what that employee actually needs than a standard group plan. The companies that build this product will not come from the group insurance market. They will come from the elder care, care coordination, and independent workforce benefits spaces, recognizing that the intersection of aging demographics, workforce fragmentation, and coverage architecture gaps creates a population of tens of millions whose needs are not currently served by any existing product.