To get paid by the state as a family caregiver, the main route is a Medicaid Home and Community-Based Services (HCBS) waiver with a self-directed option: the person receiving care gets a Medicaid-funded budget and uses it to hire, train, and pay a caregiver, including a relative. Veterans’ families have a separate track through the VA. Pay, rules, and wait times vary by state, but the path is the same one almost everywhere.
The Two Main Ways Families Get Paid
Medicaid Self-Directed Care
Most states run HCBS waivers that fund care at home instead of in a nursing facility, and most of those waivers include a self-directed option. Under self-direction, the person receiving care (or their legal representative) acts as the employer. They recruit, hire, train, and supervise their own caregiver, and federal rules give them decision-making authority over how the Medicaid service budget is spent.1Medicaid.gov. Self-Directed Services2eCFR. 42 CFR 441.740 – Self-Directed Services
You don’t run payroll yourself. A fiscal intermediary processes payroll, withholds taxes, and handles employment paperwork. You provide care, log your hours, and the intermediary issues your paycheck.
Not every relative qualifies in every state. Some programs won’t pay a spouse. Some won’t pay a parent to care for a minor child. Check your state’s specific waiver rules before assuming you’re covered.
VA Programs for Veterans’ Caregivers
If the person you care for is a veteran, two VA programs can pay you. The Program of Comprehensive Assistance for Family Caregivers (PCAFC) pays a monthly stipend to a primary caregiver of an eligible veteran. The stipend is tied to the federal GS-4, Step 1 pay rate for the area where the veteran lives. Level One caregivers receive 62.5% of that monthly rate; Level Two caregivers, who look after veterans unable to sustain themselves in the community, receive the full monthly rate.3VA Caregiver Support Program. PCAFC Monthly Stipend for Primary Family Caregivers Fact Sheet In a mid-cost area, expect roughly $1,800 to $2,900 per month. PCAFC caregivers may also get health insurance (if otherwise uninsured), mental health counseling, and respite care.4Department of Veterans Affairs. VA Caregiver Support Program Home
The second option, Veteran Directed Care (VDC), works more like the Medicaid self-directed model. The veteran gets a budget based on assessed needs and uses it to hire helpers, including family members, for daily activities like bathing, dressing, and meal preparation.5U.S. Department of Veterans Affairs. Veteran Directed Care
Who Qualifies
The Person Receiving Care
Medicaid programs apply a medical test and a financial test. Medically, most HCBS waivers require a “nursing facility level of care.” In plain terms, that means hands-on help with several activities of daily living: bathing, dressing, eating, toileting, transferring between bed and chair, or moving safely. A state assessor or nurse evaluates these needs before approval.
Financially, the federal SSI resource standard is $2,000 for an individual, and most states use that as their asset limit for long-term care Medicaid. Some states have raised the limit, and at least one large state has eliminated the asset limit entirely. A primary residence is usually exempt as long as home equity stays under the state’s threshold. For income, states using the “income cap” method set the ceiling at 300% of the federal SSI benefit. In 2026, the SSI monthly benefit is $994, putting that cap at $2,982 per month.6Social Security Administration. SSI Federal Payment Amounts for 2026 States using different methods have different thresholds, so confirm the exact numbers with your state Medicaid agency.
The Caregiver
You generally have to be at least 18 and pass a criminal background check. Most states require some training before you start providing paid care. Requirements range from a few hours of online instruction on infection control and safe lifting to a formal personal care certification. Your program coordinator or fiscal intermediary will tell you exactly what’s needed.
For VA programs, the caregiver doesn’t need to be a blood relative but must be designated by the veteran. PCAFC requires the veteran to need in-person personal care for at least six continuous months, either because they can’t perform activities of daily living or because they need ongoing supervision and protection.
What You Can Expect to Be Paid
Medicaid self-directed programs pay an hourly rate that varies by state and often by county. Rates typically fall between $10 and $25 per hour. Higher-acuity care generally pays more. Hours are capped based on the approved plan of care, so you won’t be paid for unlimited hours even if you’re providing round-the-clock support.
VA PCAFC pays a flat monthly stipend rather than an hourly wage, pegged to the local GS-4, Step 1 pay scale. Veteran Directed Care instead gives the veteran a monthly budget, and the veteran sets the hourly rate within it.
Covered activities usually include bathing and grooming, dressing, meal preparation, medication reminders, and transportation to appointments. Skilled medical tasks like wound care or injections generally require a licensed professional and aren’t covered by family caregiver payments.
How to Apply
Gather Your Documents First
- Medical records showing diagnoses, functional limitations, and the need for daily help. A letter from the care recipient’s doctor describing the level of care needed helps.
- Financial records: bank statements, tax returns, and records of investments or property. Medicaid reviews finances going back 60 months.
- Identification: Social Security numbers, state IDs, and proof of residency for both of you.
- Any training certificates, CPR cards, or first-aid course records you already have.
Where to File
For Medicaid, start with your state Medicaid agency or your local Area Agency on Aging. The federal Eldercare Locator (1-800-677-1116) will connect you with the right agency. Most states accept applications online, by mail, or in person.
For VA programs, the veteran should call the Caregiver Support Line at 1-855-260-3274 or speak with a social worker at their VA medical center. PCAFC applications are filed jointly by the veteran and the caregiver.7Veterans Affairs – VA.gov. The Program of Comprehensive Assistance for Family Caregivers
What Happens Next
Expect the process to take several weeks to several months. After you submit, the agency typically schedules an in-home assessment where a nurse or caseworker evaluates the care recipient’s functional abilities. That assessment determines eligibility and the number of approved paid hours. Keep copies of everything you submit.
Expect a Waitlist
This is where many families hit a wall. HCBS waivers in most states cap enrollment, and demand runs well past supply. As of the most recent national count, nearly 700,000 people were on HCBS waiting lists across 38 states, with an average wait of about 36 months.8The Commonwealth Fund. CMS Is Taking Steps to Identify Unmet Need for Medicaid HCBS Some states move faster, others slower. The takeaway: apply as soon as you think you might qualify. Many states process applicants in the order they applied, so getting on the list now is the only way to get services later.
While you wait, ask whether your state runs any interim programs or state-funded respite grants. Your Area Agency on Aging is the best place to find out what’s available.
Put a Written Caregiver Agreement in Place Before Any Money Changes Hands
When someone applies for Medicaid long-term care, the state reviews the previous 60 months of financial transactions. Any assets given away or sold below fair market value during that window can trigger a penalty period during which Medicaid won’t pay for care. The penalty length equals the total transferred amount divided by the average monthly cost of nursing home care in the state.
Informal payments between relatives are exactly what Medicaid scrutinizes. If your parent has been paying you $2,000 a month for caregiving with no paperwork, the state can treat those payments as gifts and impose months of ineligibility.
The fix is a written personal care agreement, sometimes called a caregiver contract. Sign it before caregiving and payments begin. It should spell out the specific services you’ll provide, how often, the hourly or monthly rate, and the payment schedule. Set the rate in line with what home care agencies charge in your area. Keep detailed logs of when you provided care and what you did. With a proper agreement, the payments are compensated transfers rather than gifts, and they won’t trigger a look-back penalty.
Taxes on Caregiver Pay
If you’re paid through a Medicaid HCBS waiver and you live in the same home as the person you care for, your payments may be fully excluded from federal income tax. IRS Notice 2014-7 treats these “qualified Medicaid waiver payments” as difficulty-of-care payments under Section 131 of the Internal Revenue Code.9Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable From Income The core requirement is a shared home. If you travel to someone else’s home to provide care, the exclusion doesn’t apply.10Internal Revenue Service. Notice 2014-7 The exclusion covers federal income tax only; state treatment varies.
On the employment tax side, a Medicaid self-directed program’s fiscal intermediary usually handles the paperwork. Family relationships still matter, though. You don’t owe Social Security or Medicare taxes on wages paid to your spouse, your child under 21, or (in most situations) your parent. Those same family members are also exempt from federal unemployment tax.11Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees These exemptions can save both sides real money. For non-exempt family caregivers, the $3,000 cash-wage threshold triggers Social Security and Medicare withholding for 2026.12Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
If You’re Denied
A Medicaid denial must come in writing, and it must include instructions and a deadline for requesting a fair hearing. Depending on the state, you’ll have between 30 and 90 days from the notice to request the hearing.13Medicaid.gov. Understanding Medicaid Fair Hearings
If the care recipient was already receiving services and the agency is cutting or ending them, act fast. Requesting a hearing within the advance notice period (typically 10 days) generally keeps benefits at the current level until the hearing decision. Miss that window and services stop while you wait.
At the hearing you can present medical evidence, bring witnesses, and challenge the agency’s reasoning. Level-of-care denials are the most common type, and they’re often reversed when families come in with stronger medical documentation than the agency saw the first time. If you lose at the hearing, the written decision must inform you of your right to seek judicial review in state court.
For VA caregiver denials, the route is different. The veteran and caregiver can file a clinical appeal through the Patient Advocate at the treating VA medical center. That appeal focuses on whether the clinical assessment accurately captured the veteran’s care needs.
Where to Start Today
Every state structures its programs differently, so start local. Call the Eldercare Locator at 1-800-677-1116, a free federal service that will connect you to your Area Agency on Aging. That agency can tell you which waiver programs your state offers, whether there’s a waitlist, and how to apply. You can also go directly to your state Medicaid agency; most state Medicaid websites list HCBS waivers and note which ones allow self-direction. For veterans, the VA Caregiver Support Line at 1-855-260-3274 covers both PCAFC and Veteran Directed Care.