Several government programs and private options can pay you to care for a family member, but the path depends on your loved one’s insurance, veteran status, and which state you live in. Medicaid self-directed care programs are the most common route, available in some form in most states. The process typically involves your family member qualifying for services, then designating you as their paid caregiver through a formal program.
Medicaid Self-Directed Care Programs
The most widely available option is Medicaid’s consumer-directed personal assistance programs, sometimes called self-directed services. These programs give your family member control over their care budget, including the authority to recruit, hire, train, and supervise the people who provide their services. In many states, that means they can choose you.
States run these programs under several different Medicaid authorities, including Home and Community-Based Services waivers, Community First Choice, and Self-Directed Personal Assistance Services. The details vary significantly by state, but the general structure is the same: your family member receives an individualized budget based on their assessed needs, and they direct how that money is spent on care. You would essentially become their employee, paid through that budget.
To get started, your family member needs to be enrolled in Medicaid and meet their state’s criteria for needing long-term services. That qualification is based on an assessment of how much help they need with daily activities. Assessors look at basic tasks like bathing, using the bathroom, getting dressed, eating, and moving around the house. They also evaluate more complex skills like managing money, cooking, doing laundry, and taking medications. The more help your family member needs, the more likely they are to qualify, and the larger their care budget will be.
One important caveat: not every state allows spouses to be paid caregivers, and some states restrict the number of hours a family member can work. Contact your state’s Medicaid office to ask specifically about their consumer-directed program and whether your relationship to the care recipient qualifies.
Expect a Wait for Medicaid Waivers
The biggest obstacle to Medicaid-funded caregiving isn’t the paperwork. It’s the waiting list. In 2018, 41 states reported having a waiting list for at least one Home and Community-Based Services waiver, with more than 819,000 people waiting nationwide. The average wait was 39 months, but the range is enormous: some states process applications in under a year, while others have waits stretching to 14 years.
Wait times also differ within the same state depending on the specific waiver program. If your family member isn’t already on Medicaid, factor in time for that application as well. Most states screen people for waiver eligibility before placing them on the waiting list, so you’ll at least know early whether your family member qualifies. Apply as soon as possible, because your place in line starts the day the application is submitted.
Programs for Veterans
If your family member is a veteran, two VA programs can pay you as their caregiver. The Program of Comprehensive Assistance for Family Caregivers (PCAFC) provides a monthly stipend and additional benefits like health insurance and respite care. To qualify, the veteran must have a VA disability rating of 70% or higher, need at least six continuous months of in-person personal care, and be enrolled in VA health care. You must be at least 18, and you need to be a family member or live full-time with the veteran (or be willing to).
You and the veteran apply together using VA Form 10-10CG, which you can submit online, by mail, or in person at a VA medical center. Both of you must sign and date the application.
The second option is the Veteran-Directed Home and Community-Based Services program, which works more like Medicaid’s self-directed model. The veteran receives a flexible budget and, with guidance from a counselor, can hire a family member to help with daily activities. Additionally, the Aid and Attendance Benefits program provides monthly payments on top of a VA pension that can cover caregiver costs.
Structured Family Caregiving Programs
A handful of states offer a more formalized option called Structured Family Caregiving, where a professional agency oversees and pays family caregivers directly. Georgia, Missouri, and South Dakota currently run these programs. An agency handles the administrative side: assessing the care recipient’s needs, training you, creating backup plans for emergencies, and processing your pay.
The compensation is based on daily rates paid to the agency, with a required percentage passed through to you as a stipend. In Georgia, the agency receives about $99 per day and must pass on at least 60% to the caregiver. Missouri’s agencies receive roughly $75 per day, with at least 65% going to caregivers. South Dakota has three daily rate tiers ($73, $91, or $102 depending on the care recipient’s needs), and at least 50% goes to the caregiver. These programs also require agencies to provide at least eight hours of caregiver training per year and ongoing coaching.
You’ll document daily notes through an electronic system the agency provides, which they use to monitor your family member’s health and ensure you’re getting the support you need.
Long-Term Care Insurance and Paid Leave
If your family member has a long-term care insurance policy, check whether it allows family members to be paid caregivers. Some policies do, though the terms vary widely. Ask the insurance agent for a written confirmation of benefits so you know exactly what’s covered before you make plans around that income.
Some states also offer paid family leave programs that compensate you while you take time off work to care for a relative. Eligibility, pay amounts, and the length of leave all vary by state. Your state labor office can tell you what’s available where you live.
What the Pay Looks Like
Compensation for family caregivers varies widely depending on the program, your state, and how many hours of care your family member is approved for. For context, the national average hourly rate for in-home caregivers is $22.42. State averages range from about $15.63 per hour on the low end to $26.49 in Washington state. California, Hawaii, Maine, Massachusetts, and New Hampshire all average above $25 per hour.
Medicaid self-directed programs typically pay less than private market rates, and the total hours you can work are capped based on your family member’s care plan. Still, for many families, even partial compensation makes it possible for a caregiver to reduce outside work hours without losing all income.
Tax Rules for Caregiver Payments
Caregiver income is generally taxable, but there’s a significant exception. Under IRS Notice 2014-7, Medicaid waiver payments can be excluded from your gross income if you live in the same home as the person you’re caring for. The IRS treats these as “difficulty of care” payments, and they’re tax-free as long as the care recipient lives with you and receives services under a Medicaid waiver plan of care.
If you have your own separate home and go to your family member’s house to provide care, the exclusion does not apply. The care must happen in what the IRS considers “the provider’s home,” meaning the place where you live and carry out your regular daily life, like sharing meals and holidays. Multiple caregivers living in the same home with the care recipient can each claim the exclusion. Payments made directly from a family member’s private funds, rather than through Medicaid, are never eligible for this exclusion.
Steps to Get Started
- Determine your family member’s coverage. Check whether they have Medicaid, VA benefits, or long-term care insurance. Each opens different pathways.
- Contact the relevant program. For Medicaid, call your state Medicaid office and ask about consumer-directed or self-directed personal assistance programs. For VA benefits, call the Caregiver Support Line at 1-855-260-3274 or visit your nearest VA medical center.
- Get your family member assessed. A care assessment will determine what daily activities they need help with and how many hours of paid care they qualify for.
- Complete the enrollment process. This includes a person-centered care plan, background checks in most states, and any required caregiver training.
- Set up payroll. Most Medicaid programs use a fiscal intermediary, a third-party agency that handles your paychecks, tax withholding, and workers’ compensation. You typically won’t manage this yourself.
The entire process, from first phone call to first paycheck, can take anywhere from a few weeks (for VA programs or states without waiting lists) to several years (for states with long Medicaid waiver backlogs). Starting the application early, even before you’re certain you’ll need it, protects your place in line.