Getting Paid to Care for a Family Member: Medicaid Waivers Explained

Adult child caregiver and elderly parent reviewing Medicaid waiver paperwork and payment details at a sunlit kitchen table with a caseworker present

Medicaid waivers let many families receive payment when a relative provides hands‑on care — easing financial strain while keeping loved ones at home. This article explains how waiver programs work across U.S. states, steps to apply, payroll and tax basics, and practical self‑care and burnout‑prevention strategies for family caregivers who are also paid caregivers.

Why paid caregiving matters and how it reduces burnout

Family caregiving is the quiet force keeping the American healthcare system from collapsing. As of December 2025, over 53 million people are providing unpaid care to their family members. This is not a hobby; it is a full-time commitment for many. On average, these individuals spend 24 hours every week assisting with daily tasks. The economic value of this labor is estimated at $600 billion annually. This is a massive contribution that often goes unrecognized by the general public.

The financial burden on these families is heavy. Many caregivers have to reduce their working hours, and some quit their jobs entirely to stay home. Research shows that a caregiver can lose about $300,000 in lifetime earnings, including lost wages, Social Security contributions, and retirement savings. This loss creates a high-stress environment and makes the household vulnerable to poverty. When a person is constantly worried about money, their ability to provide quality care diminishes.

Paying family members through Medicaid waivers addresses these economic realities. It provides a way for the caregiver to earn a living while staying at home. In 2025, the average pay for these programs is around $22 per hour. This income can be a lifeline, helping cover the mortgage, groceries, and medical supplies. Beyond the money, getting paid changes the mental state of the caregiver. It validates their work as a professional service. Studies from the Urban Institute indicate that being paid can reduce caregiver burnout by 20% to 30%.

There is also the benefit of continuity. Professional agencies often struggle with high turnover, and a patient might see three different aides in a single month. This is confusing for people with cognitive issues. A family member provides a stable presence, understands the nuances of the patient’s needs, and knows the small signs of distress that a stranger might miss. This deep connection improves the quality of life for the person receiving care.

However, this path has its own challenges. The boundaries between being a relative and being an employee can get messy. It is hard to stop working when your workplace is your living room. Caregivers might feel they are always on the clock. There are also tax responsibilities. Since the caregiver is often considered an employee, they must deal with FICA taxes and report their income to the IRS. This requires careful record-keeping.

Family dynamics can also shift. If one sibling is getting paid and others are not, it can cause jealousy. It is important to have a clear plan where everyone understands the expectations and compensation. Without this, the payment can become a source of tension rather than a solution.

Accessing these programs is not always fast. In 2025, there are 607,000 people on waiting lists for these services across the country. The average wait time is about 32 months. For those with intellectual or developmental disabilities, the wait can be 37 months. You can find more information about these waiting lists for Medicaid home- and community-based services to understand the scope of the problem.

Urban Case Study
Maria lives in a small apartment in Chicago. She was working in a warehouse when her mother’s health declined. She was missing shifts and falling behind on rent. She applied for a self-directed Medicaid program. Now she earns $23 an hour to care for her mother. This pay allowed her to keep their home. She no longer has the stress of a commute and can focus entirely on her mother’s health. The payment did not remove the difficulty of the disease, but it removed the fear of homelessness.

Rural Case Study
David lives in a rural part of West Virginia. The nearest nursing home is an hour away, and there are no home care agencies that service his area. David became his father’s paid caregiver through a state waiver. This was the only way to keep his father out of an institution. The money helps David pay for the gas needed to drive to the specialist in the city. In this case, the waiver is the only thing keeping the family together.

Metric 2025 Data Point
Total Unpaid Caregivers 53 Million
Average Unpaid Hours 24 per week
Average Waiver Pay $22 per hour
Wait List Total 607,000 people
Burnout Reduction 20% to 30%

The ability to get paid helps caregivers access other supports. With a steady income, they might afford a few hours of private respite care. This gives them time to rest or see their own doctor. It prevents the physical and emotional exhaustion that leads to burnout. While the system is not perfect, it offers a practical way to support the people who do the hardest work in our society.

Medicaid waiver programs that allow paying family members

Understanding the legal framework of Medicaid is the first step toward getting paid for the care you already provide. Medicaid is not a single program with one set of rules. It functions through various authorities that allow states to move money away from nursing homes and into private residences. These authorities are often called waivers because the state asks the federal government to waive certain requirements, such as the rule that says care must happen in an institution. In late 2025, these programs are more vital than ever as the number of people seeking home care continues to rise.

1915(c) Home and Community Based Services Waivers
The 1915(c) waiver is the most common path for families. Every state manages these programs through its own Medicaid agency. They are designed for people who require a nursing home level of care but prefer to stay home. These waivers cover a wide range of services including personal care, help with household chores, and respite care to give you a break. Most states now offer a self-directed option within these waivers. This means the person receiving care acts as the employer. They can hire you, their family member, to be their caregiver. The payment is usually handled by a fiscal intermediary. This is a third-party company that manages the background checks, payroll taxes, and W-2 forms. It is important to note that many of these programs have enrollment caps. As of 2025, there are over 607,000 people on waiting lists for Medicaid services across the country. The average wait time for physical disability waivers is about 15 months, while those with intellectual disabilities may wait much longer.

1915(k) Community First Choice
The 1915(k) authority, often called Community First Choice, is a state plan option rather than a traditional waiver. This is a significant distinction because state plan services usually do not have waiting lists. If a person meets the medical and financial criteria, the state must provide the service. About 29 states have adopted this model by the end of 2025. It focuses on attendant care and supports that help people with activities of daily living. Like the 1915(c) waivers, this program frequently allows for self-direction. You would be hired as a personal assistant or attendant. The state Medicaid agency sets the hourly rates, which currently average between $20 and $30 per hour depending on where you live.

1915(i) and 1115 Demonstration Waivers
Some states use 1915(i) state plan amendments to provide home care to people who might not yet need a nursing home level of care but still require significant help. These programs are flexible and often allow family members to be paid for providing care. On the other hand, 1115 demonstration waivers are experimental projects. States use them to test new ways of delivering Medicaid. These are highly specific to each state. For example, some states use 1115 waivers to integrate long-term care into managed care plans. In these cases, you might deal with a private insurance company that manages the Medicaid benefits rather than the state agency directly.

Real World State Models
California and New York offer two of the most well-known examples of how these authorities work in practice. In California, the In-Home Supportive Services program, or IHSS, operates under a combination of authorities. It allows recipients to hire family members, including adult children and sometimes spouses, to provide care. They use a public authority model where the state acts as the employer for collective bargaining purposes, but the recipient remains the boss. In New York, the Consumer Directed Personal Assistance Program, or CDPAP, is a popular self-directed model. It allows the person receiving care to recruit and supervise their own assistants. Almost any family member can be hired under CDPAP, with the exception of a legal spouse or a parent caring for a minor child. These programs show that while the federal rules provide the funding, the state determines exactly who can get paid and how much.

Comparing Program Structures and Restrictions
The following table outlines the differences you will likely encounter when looking at these various Medicaid authorities in your state.

Program Type Eligibility Trigger Service Limits Family Restrictions
1915(c) HCBS Waiver Nursing home level of care Often capped by budget or hours Spouses often excluded
1915(k) CFC Institutional level of care Based on functional need Varies by state law
1915(i) State Plan Needs based criteria No enrollment caps Usually allows adult children
1115 Demonstration State specific goals Varies by project Highly restrictive or very open

Who can be paid and eligibility rules to check in your state

Confirming eligibility is the first hurdle in the process of becoming a paid family caregiver. You must verify requirements for the person receiving care and for yourself as the provider. These rules change depending on your state and the specific waiver program you choose.

Medical Necessity and Functional Assessments

The care recipient must meet a specific medical threshold known as an institutional level of care. This means a doctor or state assessor determines that the person would require placement in a nursing home or hospital if they did not receive help at home. The state uses a functional assessment to measure this need. Assessors look at Activities of Daily Living (ADLs) such as bathing, dressing, eating, and moving around the house. They also look at Instrumental Activities of Daily Living (IADLs) like meal preparation or managing medications. In many states, a person must need help with at least two or three of these tasks to qualify. Some programs require a specific number of hours of care per week to trigger eligibility. If the assessment shows the person is too independent, the application will be denied.

Financial Limits and Asset Rules

Medicaid is a program for people with limited financial means. For 2025, many states set the income limit for Home and Community Based Services at 300% of the Federal Benefit Rate. This usually equals about $2,829 per month for an individual. If the care recipient earns more than this, they might still qualify through a spend-down program. This allows them to deduct medical expenses from their income to meet the limit. Asset limits are even stricter. Most states allow a single person to keep only $2,000 in countable resources. A couple might be allowed $3,000. Countable resources include savings accounts, stocks, and second properties. A primary home and one vehicle are usually exempt. If assets exceed these limits, the family may need to engage in Medicaid planning to protect those resources legally.

Program Specifics and Enrollment Caps

Even if you meet medical and financial rules, you might not get into a program immediately. Many Medicaid waivers have enrollment caps. This means the state only pays for a set number of people at one time. When the slots are full, the state creates a waiting list. In 2025, over 600,000 people are on these lists across the country. You can find more details on these numbers here A Look at Waiting Lists for Medicaid Home – Revcare. Some states like Ohio have worked to reduce these lists, while others like Texas still have very long wait times. The average wait for older adults is about 15 months, but it can be much longer for individuals with developmental disabilities.

Who Can Be the Paid Caregiver

State laws dictate which family members can receive a paycheck. Most programs allow adult children, siblings, or grandchildren to be the paid provider. These relatives are not considered legally responsible for the care recipient in the eyes of the state. Spouses and parents of minor children face more restrictions. About 80% of programs do not allow a spouse to be paid for caregiving. The logic is that spouses have a legal duty to support each other. However, some states are changing this through specific 1115 demonstration waivers or 1915(k) Community First Choice programs. Parents of children under 18 are also frequently excluded. Once the child turns 18, the parent is often allowed to enroll as a paid caregiver. You must check your specific state plan to see if a legally responsible relative can be hired.

Required Documentation for Approval

Physician Orders
You need a signed statement from a doctor. This note must confirm the medical diagnosis and the need for home-based assistance.

Functional Assessments
The state will provide a copy of the assessment results. Keep this to ensure the care plan matches the identified needs.

Proof of Relationship
The state may ask for birth certificates or marriage licenses. This confirms how you are related to the person receiving care.

Care Plans
A formal document will outline every task you are expected to perform. This includes the number of hours approved for payment.

Practical Steps for Verifying Rules

Start by searching for your state Medicaid agency website. Use terms like HCBS waiver or self-directed care. You should also contact your local Area Agency on Aging. These offices have counselors who know the local enrollment caps and waiting list status. When you call, ask if the program is currently accepting new members. Ask if there is a spend-down option for income. Inquire about the specific rules for paying a spouse or a parent. If the intake staff mentions a waiting list, ask for the average wait time in your county. Getting these answers early prevents you from spending months on an application that might be stalled by a cap or a relationship restriction.

Eligibility Checkpoint What to Confirm
Medical Level of Care Does the person qualify for a nursing home?
Income Limit Is monthly income below $2,829?
Asset Limit Are countable resources below $2,000?
Relationship Rule Does the state pay spouses or parents?
Program Capacity Is there a waiting list or an enrollment cap?

Step by step how to apply become a paid family caregiver and payroll basics

Moving from the idea of being a paid caregiver to actually receiving a paycheck involves a specific set of administrative steps. You need to start by gathering the medical records of the person you are caring for. This includes recent doctor notes, a formal diagnosis, and a list of daily medications. You should also have proof of your relationship ready, such as a birth certificate or marriage license. These documents are the foundation for the entire application.

Requesting the Functional Assessment
Once the records are ready, you must contact the local Medicaid office or the Area Agency on Aging to request a functional eligibility assessment. A state representative or a nurse will visit the home to evaluate how much help the care recipient needs with activities of daily living. They look at things like bathing, dressing, and moving around. This assessment determines the number of hours Medicaid will pay for each week. In 2025, many states are facing waiting lists for these services. You might wait 15 months for older adult waivers or much longer for other programs. It is important to get on the list as soon as possible.

Choosing a Care Model
You will usually have to choose between agency-directed care and consumer-directed care. In the agency model, a home health company employs you. They handle the schedule and the paperwork. In the consumer-directed or self-directed model, the person receiving care acts as the employer. This second option is what allows most family members to get paid directly. It gives the family more control over who provides the care and when it happens.

Enrolling as a Caregiver
If you choose the self-directed path, the care recipient must enroll as an employer. Most states use a fiscal intermediary to help with this. The fiscal intermediary is a third-party company that handles the money. They will send you an enrollment packet. You will need to pass a criminal background check. Some states require a simple check while others like California or Florida require fingerprinting (Livescan or Level 2). You might also need to complete basic training. This training often covers safety, patient rights, and how to report abuse.

Payroll and Tax Realities
You are generally considered an employee of the person you are caring for, not an independent contractor. This means you will receive a W-2 at the end of the year. The fiscal intermediary will withhold Social Security and Medicare taxes from your check. They also handle the employer share of these taxes. You should ask if the state requires workers’ compensation insurance. Most states do. This insurance protects you if you get hurt while working. Unemployment tax obligations also vary by state.

Crucially, if you live in the same home as the person you care for, you may qualify for the Difficulty of Care tax exclusion under IRS Notice 2014-7. This could allow you to exclude that income from your federal gross income. You should verify this with a tax professional, as it can significantly impact your take-home pay.

Managing Timesheets and Logs
To get paid, you must keep detailed records of your work. You will fill out weekly or biweekly timesheets. These logs must show the exact hours you worked and the specific tasks you performed. You might list things like preparing meals or helping with a shower. Most programs now use Electronic Visit Verification (EVV). This might involve using a mobile app to clock in and out at the care recipient’s home. Accuracy is vital. Mistakes on timesheets are a common reason for delayed payments.

Application Timeline and Success Tips
The time from your first phone call to your first paycheck usually ranges from 30 to 120 days. The assessment and the background check take the most time. If the application is denied, do not give up. You have the right to appeal. Most states give you 30 to 90 days to file an appeal form.

Phase Key Action Typical Timeframe
Preparation Collect medical records and ID 1 to 2 weeks
Assessment State functional review 30 to 60 days
Hiring Background check and FI setup 2 to 4 weeks
First Pay Submit first timesheet 14 days after start

Troubleshooting Denials
Denials are common, with about 25% of initial applications being rejected. If you receive a denial letter, read it carefully to find the specific reason. It might be a lack of medical evidence or a simple clerical error. You can often speed up the process by calling the intake coordinator every week for an update. Ask if they have all the required documents. If something is missing, send it immediately via certified mail or a secure portal. Keeping a log of every person you speak with at the Medicaid office will help if you need to escalate the case.

If you face a denial, follow this checklist:

  • Request a written explanation for the denial immediately.
  • Review the functional assessment to ensure it accurately reflects the care needs.
  • Submit additional medical documentation within ten days.
  • Contact your local Area Agency on Aging for advocacy support.
  • Ask about 1915(i) state plan amendments which often have no enrollment caps.

Practical burnout prevention for paid family caregivers

Paid caregiving for a family member creates a unique pressure. You are an employee and a relative at the same time. This blur makes it hard to clock out. Burnout often happens when the lines between love and labor disappear. Managing this dual role requires specific strategies to protect your mental health.

Daily and Weekly Self-Care Routines

Focus on sleep hygiene first. Aim for seven hours of rest. Keep your bedroom cool and dark. Avoid screens for thirty minutes before bed. Use micro-breaks during your shift. Even five minutes of deep breathing helps lower cortisol levels. Physical activity is vital. A 10-minute walk outside can reset your mood. Nutrition matters too. Eat whole foods to keep energy stable. Avoid relying on caffeine or sugar to get through the day.

Boundary Setting at Work Versus Family Roles

Set specific work hours. When you are on the clock, focus on the care plan tasks. When the shift ends, try to transition back to your family role. This might mean changing clothes or taking a short walk to signal the end of the workday. Tell other family members when you are working. They should respect your paid hours and not interrupt with non-care tasks. Clear boundaries prevent the feeling of being on call 24 hours a day.

Using Respite Services and Backup Caregivers

Most Medicaid waivers like the 1915(c) program offer respite care. This pays for someone else to step in while you rest. You can often get up to 40 hours a month. Use this time for yourself. Do not use it for chores or errands. Contact the ARCH National Respite Network to find local providers. If you are in a consumer-directed program, you can hire a backup caregiver. This person should be trained and ready to step in if you get sick or need a vacation.

Time Management and Delegation

Use digital tools for activity logs. This saves time on paperwork. Delegate tasks that are not part of the care plan. Ask other family members to handle grocery shopping, lawn care, or laundry. Focus your energy on the medical and personal care needs of the recipient. A shared digital calendar helps coordinate appointments and medication refills.

Managing Shifts and Split Schedules

Many caregivers work split shifts. You might work four hours in the morning and four in the evening. Create a sample routine to stay organized.
7 AM to 9 AM. Morning care and breakfast (Paid hours).
9 AM to 10 AM. Personal break.
10 AM to 1 PM. Household tasks and medical appointments (Paid hours).
1 PM onwards. Family time.
Negotiate these hours with the care recipient and the case manager. Ensure the care plan reflects the actual times help is needed.

Emotional Health and Peer Support

Role reversal is tough. It feels strange to care for a parent. Guilt is common when you feel tired or frustrated. Therapy helps process these feelings. Look for therapists who specialize in caregiver stress. Peer support groups connect you with people who understand the struggle. The National Family Caregiver Support Program often funds these groups. Organizations like the Caregiver Action Network have over 50 state chapters that can help you find a community. Sharing your experience reduces the sense of isolation.

Funding Options for Backup Help

If waiver hours are not enough, look for other funding. The VA Caregiver Support program offers stipends for veterans. Some states have local grants for respite care. Check with your local Area Agency on Aging. They can help you find additional resources to pay for backup help. In 2025, over 600,000 people are on waiting lists for Medicaid home and community-based services. If you are on a list, these local programs are even more important.

Resources and Crisis Support

Keep a list of resources handy. Use the Eldercare Locator at 1-800-677-1116 for local services. Contact the ARCH National Respite Network for funding options. For immediate mental health support, call or text 988. This crisis line is available 24 hours a day. Do not wait until you are in a state of total exhaustion to ask for help. Early intervention is the best way to prevent long-term burnout.

Common questions on eligibility and impact

Many families feel overwhelmed when they first explore the possibility of getting paid for caregiving. The rules are often dense. This section addresses frequent questions people ask when navigating the Medicaid waiver system in late 2025.

Can I be paid if I am a spouse or a parent of a minor child?
In most states, the answer is no. About 80% of Medicaid waiver programs do not allow spouses to serve as paid caregivers. Parents of minor children face similar restrictions, with only about 5% of programs allowing this arrangement. States typically view this care as a legal obligation of the family role. However, some states are becoming more flexible through 1915(k) Community First Choice programs. Adult children, siblings, and other relatives are much more likely to qualify for payment. If you are a spouse, you should check if your state offers a specific veteran-directed program or a unique 1115 demonstration waiver that might provide an exception.

Why do the rules vary so much from state to state?
Medicaid is a partnership between the federal government and individual states. While the federal government sets broad guidelines, each state designs its own specific waiver programs. This is why a program in New York looks nothing like one in Texas. States decide which populations to serve, what services to cover, and how much to pay. They also set their own enrollment caps. These caps are the reason why over 600,000 people are currently on waiting lists for home and community-based services. You can find more details on these lists in the KFF Waiting List Report.

Will being paid affect our Medicaid eligibility or other benefits?
Yes, it can. The person receiving care must meet strict income and asset limits. In 2025, the income limit for many waivers is 300% of the Supplemental Security Income level, which is roughly $2,829 per month for an individual. For the caregiver, the pay is considered earned income. If you receive SSI, your earnings must stay below the Substantial Gainful Activity limit of $1,600 per month to keep your benefits. SNAP and SSDI have different rules. It is essential to consult a benefits counselor to ensure your new income does not disqualify you from necessary support.

How do I find local waiver program contacts?
Start by calling the Eldercare Locator at 1-800-677-1116. You can also search for your state’s specific HCBS waiver options on the official Medicaid website. If the situation involves complex assets or a difficult denial, it is time to consult an elder law attorney. They can help with spend-down strategies or formal appeals to protect your family’s access to care.

Essential resources for family caregivers

Balancing paid care and your personal health is a difficult task. You are doing important work that keeps your family together and saves public funds. It is okay to ask for more help. You should advocate for yourself just as hard as you advocate for your loved one. Better caregiver supports are becoming more common because people like you are speaking up. Stay focused on your wellbeing and use every resource available to you.

Authoritative Resources
You should consult these organizations for the most accurate information in 2025.

  • State Medicaid Website. This is the primary source for application forms and local rules.
  • Eldercare Locator. A public service of the U.S. Administration on Aging.
  • ARCH National Respite Network. They provide a service to find respite funding.
  • National Family Caregiver Support Program. This program funds training and support services.
  • RAISE Family Caregivers resources. They offer state plans for better caregiver support.
  • Veterans Affairs Caregiver Support. Veterans can get stipends up to $2,700 per month in 2025.

When to seek professional advice
You should talk to an elder law attorney if your family member has assets over $2,000. They can help with spend-down strategies. You should also seek legal help if the state denies your application. Financial counseling is useful for understanding how caregiver pay affects your taxes. Many fiscal intermediaries provide basic tax guidance for W-2 employees.

Sources

EMPTY