A host homes program places a person who needs daily support into the private residence of a trained host, where they live as part of the household under the oversight of a state-contracted agency. Funding comes primarily through Medicaid Home and Community-Based Services waivers for adults with intellectual or developmental disabilities, or through youth services for young people leaving foster care or experiencing homelessness. Participants keep a defined set of federally protected rights inside the home, and hosts receive a stipend that in many cases qualifies for a federal income tax exclusion.
Who Host Homes Serve
Two populations use this model, and the rules differ enough that it’s worth knowing which track applies to you.
Youth-focused programs, often funded through the federal Transitional Living Program, serve young people roughly 16 to 22 who are homeless or aging out of foster care. Placements center on life skills, education, and job readiness. Age ranges vary by state.
Adult programs serve people with intellectual or developmental disabilities through Medicaid HCBS waivers authorized under Section 1915(c) of the Social Security Act. These placements tend to be longer-term and focus on daily living support, community integration, and personal goals set by the participant.
A host home is a private residence where one or two participants live with a screened and trained host. Most states cap placements at one or two participants per household, which keeps the arrangement genuinely personal and distinguishes it from a shift-staffed group home.
Who Qualifies as a Participant
For youth programs, the person generally needs to be experiencing homelessness or housing instability and fall within the program’s age range. Participation is voluntary, and a case manager helps decide whether shared living fits better than options like a supervised apartment.
Adult programs use a more structured assessment. The person must have a documented disability that began before age 22, and their support needs must be significant enough to qualify for waiver services but manageable in a home setting rather than a nursing facility or intermediate care facility. The agency evaluates how much help the person needs with cooking, hygiene, money management, and getting around the community. That assessment produces a support level that drives both the placement and the daily rate paid to the host.
Either way, the person has to want to be there. The model depends on voluntary participation.
Participant Rights Inside the Home
Adults receiving services through a Medicaid HCBS waiver have rights that are protected by federal regulation and enforced by state surveyors. Because a host’s residence is a provider-controlled setting under the HCBS Settings Rule, it has to meet every condition in the rule, not just the ones that fit the household’s preferences.
- The participant’s bedroom must have an entrance door that locks, with keys held only by appropriate staff.
- The participant can have visitors of their choosing at any time. Blanket curfew-style visitor rules are not allowed.
- The participant must be free to access food at any time, not only at scheduled meals.
- The participant controls their own schedule and daily activities.
- If more than one participant lives in the home, each has a say in who they share space with.
- The participant can furnish and decorate their bedroom within the terms of the residency agreement.
- The participant signs a written residency agreement that provides eviction protections comparable to the jurisdiction’s landlord-tenant law.
These come from the federal HCBS Settings Rule and apply in every state that operates a 1915(c) waiver.1eCFR. 42 CFR 441.301 – Contents of Request for a Waiver
Any modification to these rights has to go through a formal process documented in the participant’s person-centered service plan. The plan must identify a specific assessed need justifying the restriction, show that less intrusive alternatives were tried and failed, record the participant’s informed consent, and set a time limit for review.1eCFR. 42 CFR 441.301 – Contents of Request for a Waiver A host who decides to lock the refrigerator overnight or restrict visitors because it’s more convenient is violating federal regulation, not managing their household.
The Person-Centered Service Plan
Every adult participant in an HCBS-funded host home has an individualized service plan. Federal rules require the planning process to be led by the participant to the greatest extent possible, held at a time and place that works for them, and conducted in plain language.2Medicaid.gov. Person-Centered Service Planning in HCBS: Requirements and Best Practices
The plan captures what is “important for” the person (health, safety, and functional needs identified through assessment) and what is “important to” the person (their preferences about how and by whom services are delivered).2Medicaid.gov. Person-Centered Service Planning in HCBS: Requirements and Best Practices The participant can invite family, friends, or advocates to the planning meeting. The plan also documents the setting options the person considered, so there’s a record that the host home was a real choice.
Hosts work from this plan daily. It tells them what help the participant expects with meals, medication, transportation, and personal care, and it tells them where to step back. If the plan says the participant manages their own finances, the host doesn’t quietly take over bill-paying because it seems easier.
What It Takes to Become a Host
Getting approved as a host typically takes several months. Details vary by agency and state, but the broad requirements are consistent.
Background Checks and References
Every adult in the household undergoes a criminal background check. Most states require fingerprint-based checks at the state and federal level. Applicants also provide personal and professional references, and some programs check child abuse and neglect registries, especially for youth-serving placements.
Home Environment Standards
The residence has to pass inspection. Common requirements include working smoke detectors in and outside every sleeping area and on each level, an escape route from upper floors, a fire extinguisher, and a private bedroom for the participant with a door that locks from the inside. The home must be physically accessible to the specific person being placed, which may mean ground-floor space or grab bars depending on their mobility. Hosts can rent or own, but renters need landlord approval and renter’s insurance. Homeowners typically need current homeowner’s coverage, and many agencies also require auto insurance and general liability coverage.
Training
Hosts complete agency training before a participant moves in. Standard topics include CPR and basic first aid, medication storage and administration, emergency procedures, positive behavior support, de-escalation, and mandatory reporting of abuse and neglect. Youth-focused programs add adolescent development, boundaries, and trauma-informed care. Total hours vary by state and agency. Certifications have to stay current, and refresher courses are the norm.
Hosts also need a valid driver’s license and reliable transportation, because getting the participant to medical appointments, work, and community activities is part of the job.
How Hosts Get Paid
Host home providers receive a stipend or daily rate covering both the participant’s room and board and the caregiving the host delivers. Rates are set by the state and tied to the participant’s assessed support level. Someone who needs help mainly with meals and transportation generates a lower rate than someone needing near-constant supervision. Rates vary by state and sometimes between urban and rural areas within the same state.
The Notice 2014-7 Tax Exclusion
Many host home payments qualify for a federal tax exclusion. Under IRS Notice 2014-7, Medicaid waiver payments made to a caregiver who lives with the person they support are treated as “difficulty of care payments” excludable from gross income under Section 131 of the Internal Revenue Code.3Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable From Income In practical terms, if your payments flow through a state Medicaid HCBS waiver and you share a home with the participant, you likely owe no federal income tax on that compensation.
The statute caps the exclusion at five adults (age 19 and over) or ten children per foster home, but since most host homes serve one or two people, the cap rarely applies.4Office of the Law Revision Counsel. 26 USC 131 – Certain Foster Care Payments
You may still receive a Form W-2 or 1099 reporting the payments even though they’re excludable. That doesn’t mean you owe tax on them; it means you subtract the excludable amount on your return.5Taxpayer Advocate Service. Certain Medicaid Waiver Payments May Be Excludable From Income
The Earned Income Tax Credit Election
Here is the piece many hosts miss. Excluding waiver payments from gross income also removes them from “earned income,” which can knock you out of the Earned Income Tax Credit and the Additional Child Tax Credit. Both credits are based on earned income, and if your only income is excluded Medicaid waiver payments, your earned income drops to zero. The IRS lets you elect to include all of your excluded payments back into earned income for purposes of calculating these credits, without losing the income tax exclusion on those same payments.5Taxpayer Advocate Service. Certain Medicaid Waiver Payments May Be Excludable From Income It’s all or nothing. You include all of the payments or none of them for EITC purposes. For hosts with qualifying children and moderate income, this election can be worth thousands. If your tax preparer isn’t familiar with Notice 2014-7, raise it yourself.
Matching and Placement
Once a host has finished training and cleared screening, the agency looks for a compatible participant. This is where the arrangement either succeeds or falls apart, and good agencies invest real time in it.
The agency reviews the host’s household composition, daily routine, location, pets, hobbies, and cultural practices, and compares them against available participants. If a participant observes dietary restrictions or communicates primarily in a language other than English, that gets factored in. The participant’s service plan documents their preferences, and those preferences carry weight.
When a potential match is identified, the agency arranges an introductory meeting in a low-pressure setting. If that goes well, most programs schedule progressively longer visits: a daytime visit, then an overnight, then a weekend. Either party can step away during this trial period without consequence.
When both sides agree to move forward, they sign a placement agreement covering daily support, household expenses, conflict resolution, and the participant’s goals. A case manager or program coordinator stays actively involved after placement begins.
Ongoing Support
Hosts aren’t left alone once a participant moves in. Agencies assign a program coordinator as the primary point of contact, and most also provide on-call nursing support and administrative help with paperwork and billing. Licensing compliance, service plan documentation, and coordination with the participant’s care team sit with the agency.
Respite care is one of the most important and most underused supports available. Providing daily care without breaks leads to burnout, and agencies know it. Most programs arrange temporary substitute caregivers so hosts can take vacations, handle personal business, or simply recharge. How many respite days per year, whether respite happens in or out of the home, and how far ahead it has to be scheduled all vary by program. Ask before you accept a placement, not after you’re exhausted.
When a Placement Ends
Either the host or the participant can end a placement, but it goes through the agency rather than happening unilaterally. When a participant decides to leave, the agency develops a transition plan to a new setting. When a host needs to end a placement because of personal circumstances, health, or an unsustainable caregiving load, they notify the agency, which finds an alternative arrangement.
The participant’s federal rights include protections comparable to landlord-tenant eviction procedures, so a host cannot simply ask someone to leave on short notice.1eCFR. 42 CFR 441.301 – Contents of Request for a Waiver The written residency agreement signed at the start of placement governs notice periods and dispute resolution.
Mandatory Reporting
Every state requires certain caregivers to report suspected abuse or neglect of vulnerable people to authorities, and host home providers fall squarely within those categories. If you observe or reasonably suspect abuse, neglect, or exploitation of the person in your care, whether by someone outside the home or inside it, you are legally required to report it to the designated state agency. You don’t investigate, you don’t wait to be certain, and you don’t clear it with the managing agency first if that would delay the report. The threshold is reasonable suspicion. Failure to report carries criminal penalties in many states.