Caring for an aging loved one who’s unable to care for themselves can be mentally and physically taxing. On top of that, it’s an expensive commitment. Often people who care for a loved one spend their own money on supplies and dedicate their time and energy to their loved one’s well-being. As a result of that commitment, many caregivers miss out on paid work opportunities and ultimately find themselves taking a large hit to their finances. Luckily, there are programs that provide financially for family caregivers. 

In this guide, we explain the different ways caregivers can obtain financial help while taking care of an aging or disabled family member. It’s important to note that each program has its own eligibility requirements, and as such, not all people will be eligible.

Getting Paid by Medicaid to Take Care of a Loved One

If you’re caring for a senior who’s enrolled in your state Medicaid program, they may be eligible to receive funding to pay you for your services. While each state has different eligibility requirements and waivers, most states provide programs for older adults that allow them to access self-directed care. In some cases, that means the participant can choose to employ a family member or another loved one to provide personal care services, and Medicaid will pay for the services they provide. There are four self-directed care options available for states to offer their Medicaid members. 

Community First Choice

The Community First Choice (CFC) program makes it easier for states to provide Medicaid services to members in their homes or out in the community, specifically for those who would otherwise need to be placed into an institutional setting to obtain care. States that offer CFC programs receive federal funding that goes toward paying care providers for their services, and they are required to allow Medicaid members to direct care and choose their own care attendant. 

Mandatory services provided through CFC can include:

  • Instrumental activities of daily living (IADLs) like shopping, money management, cleaning, and cooking
  • Activities of daily living (ADLs) like eating, washing, ambulating, and using the bathroom

Optional services the CFC may provide include: 

  • Paying for the cost of transitioning out of a facility
  • Repayment for items that promote independent living

Home and Community-Based Services State Plan Option

Under the State Plan Home and Community Based Services (HCBS) benefit, Medicaid members can receive services in their own home or within their own community rather than within an institutional setting. People with intellectual, developmental, physical, or mental disabilities are the groups these programs aim to serve. Eligible Medicaid members are given the freedom under HCBS to choose their services, where they will receive them, and who will provide them. States are held accountable to ensure that those receiving HCBS are able to maintain privacy, freedom, independence, and protection from evictions.

Self-Directed Personal Assistance Services Plan Option

The Self-Directed Personal Assistance Services (PAS) Plan Option gives eligible Medicaid members the option to direct their PAS themselves using a State-approved services plan and budget. Beneficiaries are responsible for hiring, supervising, and training the people they employ as PAS providers. That means they also take responsibility for the firing of staff, documentation of services, and management of finances. 

To qualify for this benefit, Medicaid members must start the authorization process with their primary physician. Before being approved, members must show they can manage their finances and create a contingency plan if their chosen provider is no longer able to work.

Home and Community-Based Services Waiver Programs

Most states offer an HCBS waiver program. These waivers allow states to identify specific groups of people with particular needs to receive personalized healthcare within their own homes or in the community instead of a skilled nursing facility. States are able to provide as many HCBS waivers as they like but must show that the waivers ensure a Medicaid member’s health and welfare are prioritized, that it doesn’t cost more than the same services they could receive in a facility, that an individualized plan of care is being used, and that the waiver adequately meets the member’s needs. 

Although each authority has different guidelines on eligibility, it’s common that most applicants must:

  • Be within a certain age range
  • Have income below a specified level
  • Require a nursing facility level of care
  • Have a specific diagnosis

What To Expect When Using Medicaid Self-Directed Services

Seniors and other adults who direct their own care as part of a Medicaid program described above are required to follow certain rules and regulations when selecting their caregiver and determining the services they’ll receive. These rules are determined by the state and are different with each program; however, most include provisions for person-centered planning, written service plans, budgeting, and case management. Some of the most commonly held guidelines are: 

  • Person-Centered Planning: Individuals who receive Medicaid self-directed services are required to create an annual Person-Centered Plan. These plans are created by the beneficiary receiving state services, allowing them to take control of their care. PCPs outline who provides care, where they receive that care, and what services they need. These plans must also account for what to do in the event of emergencies and who will care for them if their selected caregiver calls out sick or is no longer able to care for them.
  • Assigned Budget: Each Medicaid participant who qualifies for services will be assigned an individual budget. The budget is developed in accordance with the Person-Centered Plan created by the individual, taking into account their needs and preferences specified in the plan. The state must disclose how they calculate the dollar amount, how they will make adjustments to the budget when any changes in the PCP occur, and how they will evaluate expenditures.
  • Support: States must provide support in the form of information and/or support consultants for each individual who pursues self-directed Medicaid services. Information must be provided upon request as to how programs work, available resources, training, and individual rights and responsibilities. Support consultants act as a liaison between the Medicaid program and the individual, providing assistance wherever needed. 
  • Financial Management Services: Financial management services are often available for those who direct their own care. Although some states and waivers allow participants to oversee their own budgets, financial management services are recommended to help with cost management and expenditure tracking. Additionally, financial managers can complete payroll for caregivers, ensuring taxes are withheld appropriately and pay is distributed in a timely manner.
  • Quality Assurance: States are responsible for making sure they have an effective and reliable way of assuring the improvement and quality of their performance in providing self-directed Medicaid services. Critical incidents or events that affect Medicaid members must be documented, remediated, and improved upon. Each state’s quality requirements will vary, so it’s important to check and know what is and isn’t a quality concern for your state.

Veterans Benefits for Family Caregivers

Seniors receiving benefits from Veterans Affairs (VA) may be able to enroll in benefits to help them pay for a family caregiver. If you’re caring for someone who has served in any branch of the U.S. military, they should receive a monthly pension from the VA that can be partially used to pay for their care. Additionally, there are several other benefits that exist to help veterans pay for personal care services that a family caregiver provides. 

Below, you can learn more about the VA programs that pay caregivers for taking care of a family member.

Program

Availability

Contact

Veteran Directed Care

This program is available to all veterans if they meet the clinical need for the service and it is available.

Aid and Attendance and Housebound Allowance

Qualified veterans and survivors may be eligible if they meet further criteria listed on the VA website.

Program of Comprehensive Assistance for Family Caregivers

Veterans who have incurred or aggravated a serious injury in the line of duty on or before May 7, 1975 or on or after September 11, 2001 may be eligible if they meet further criteria listed on the VA website.

Veteran Directed Care

Veteran Directed Care is a benefit available to all veterans, regardless of their age or income, provided they have a proven clinical need for care and live within the service area. This program provides veterans with funding to help them access home and community-based services while directing their own care and may be used to provide a salary for a family caregiver. 

Aid and Attendance and Housebound Allowance 

The Aid and Attendance and Housebound Allowance benefits are provided by Veterans Affairs. These two benefits provide monthly payments to veterans or qualifying dependents with a proven need for personal care. The payments must be used to pay for personal care services and may be used to provide a salary for a family caregiver. To qualify for Aid and Attendance benefits, one must be either a veteran or surviving spouse who requires help with daily tasks such as bathing, grooming or other activities of daily living. The Housebound Allowance is available to veterans required to remain at home due to a permanent disability. 

Program of Comprehensive Assistance for Family Caregivers

Veterans who have long-term or permanent disabilities sustained while in the line of duty may be eligible for funding from the Program of Comprehensive Assistance for Family Caregivers. Funds are distributed to help caregivers cover travel costs, caregiver education and other expenses while providing assistance for a loved one.

Tax Benefits for Caregivers

The IRS provides several provisions for claiming dependents, including those you’re providing care to, such as elderly parents or other relatives, on your annual income tax return. If you choose to take advantage of any of these benefits, be sure to keep detailed records and copies of receipts for any related medical expenses. 

Credit for Other Dependents

If you’re caring for a loved one and paying their expenses out of your own pocket, you’re likely eligible to claim the Credit for Other Dependents on your income taxes, which is a $500 non-refundable credit. This provision allows you to claim dependents provided both you and the individual you’re caring for are U.S. citizens with valid identification numbers, and their income is not greater than that year’s tax cutoff amount. Additionally, your loved one must be dependent on you, meaning that you pay a minimum of 50% of their living expenses, and they must have lived at the same address as you for the entire tax year. If you’re claiming a dependent under this provision, you may not be claimed as a dependent by anyone else. 

Head of Household Status

The IRS allows single taxpayers claiming dependent relatives to claim as the Head of Household, which raises the standard deduction amount. To claim as the Head of Household, a dependent relative needs to have lived in your residence for a minimum of half the tax year. 

Deductions for Medical Expenses

If you’re paying for medical expenses for a dependent loved one and those costs aren’t reimbursed by insurance or other benefits, you can claim the amount on your tax return, provided the total expense is in excess of 7.5% of your adjusted gross income. A variety of healthcare expenses, including medications, copayments and adult day care, are covered under this provision.

How to Get Paid As a Caregiver In Each State

Click on your state on the map below to see which organizations and programs may be available to help you get paid for taking care of your loved one.

Frequently Asked Questions

How can I get paid to take care of my parents? 

Speak with your parents about benefits they may be eligible for, such as Medicaid waivers and Veterans Affairs programs that can help them pay for in-home care. Some of these programs allow elderly adults to direct their own care, which means they have the option of hiring family caregivers and using the benefits to pay for your services. 

Are there tax benefits for caregivers?

If a loved one is dependent on you, you may be able to claim some expenses related to their care. That includes medical expenses that you’ve paid for on their behalf. Additionally, if your loved one is living in your home, you may be eligible to claim the Credit for Other Dependents, a $500 tax credit that’s available to those providing full-time care to a family member or friend.

Does Medicaid pay family caregivers?

While standard Medicaid doesn’t provide payments for family caregivers, there are waiver programs available in most states that allow beneficiaries to self-direct their care. Under these waivers, beneficiaries may be able to select a family caregiver, and Medicaid will provide funding to pay for their services.

Does Medicare pay for a family caregiver?

Medicare does not typically pay for long-term family caregivers; however, it may provide funding for caregiver training for family members, assistance with case management or funding for short-term care if a loved one is recovering from an illness or injury.