Getting Paid by Medicaid for Caring for a Family Member

Seniors who are frail, disabled or suffer from dementia will likely need to move into a nursing home or assisted living unless they get help with the basic activities of living, like eating and bathing. The job of providing that help usually falls on spouses, family members or friends. These caregivers are rarely paid, but that doesn’t have to be the case. Family members and other loved ones can be compensated for their caregiving efforts through multiple Medicaid programs.


Almost every state has a Medicaid-funded program with a benefit that allows for Consumer Directed Care, or something with a similar name, like Self Directed Care, Participant Directed Care, or Cash & Counseling. This type of benefit lets the Medicaid recipient direct their own care, primarily by hiring a caregiver of their choice, within certain parameters. These caregivers can be friends or family members in most states and programs, and Medicaid will actually pay them for their care, which many of them were already providing. Some Medicaid programs will even pay spouses to be caregivers.

The amount of money a loved one can be paid for caregiving under Medicaid Consumer Directed care programs is usually determined by two factors:

  • average caregiver wages in one’s specific state or region
  • care needs of the Medicaid recipient

Medicaid recipients will be evaluated by their state of residence to determine their level of care of needs, and what specific long-term care services and supports their situation requires. If it requires personal care assistance, and it usually does with frail seniors who are living independently, the Medicaid beneficiary can use the Consumer Directed Care option to hire, and pay, a family member or loved one.


Which Medicaid Programs Allow Loved Ones to be Paid as Caregivers?

Medicaid is a state-run health insurance program, and in every state it provides an option for loved ones, meaning friends or relatives, to become paid caregivers. The specifics can vary quite a bit, however, as there is a lot of variance between how Medicaid works in each state. (Medicaid is even known by a different name in many states, like “Medi-Cal” in California and “MassHealth” in Massachusetts.)

Though the names and specific details will differ depending on the state, the following programs will help individuals get compensated for caring for aging loved ones:

Home and Community Based Service Waivers

Home and Community Based Service (HCBS) Waivers provide long-term care benefits to seniors who require some level of nursing care but choose to live at home or elsewhere in the community (like the home of a loved one) instead of moving into a nursing home. HCBS Waivers can provide a wide-range of benefits, including Consumer Directed personal care assistance with the Activities of Daily Living (mobility, bathing, dressing, eating, toileting) and the Instrumental Activities of Daily Living (shopping, cooking, housekeeping, medication management, etc.). This means the Medicaid beneficiary can hire a personal caregiver of their choice, including family members and loved ones (in most states), and the HCBS Waiver will provide the funds to pay the caregiver. State Medicaid officials will also help HCBS Waiver beneficiaries who use the Consumer Directed option with the financial responsibilities that come with paying someone – tracking hours, calculating taxes, issuing paychecks, etc.

To be eligible for HCBS Waivers in most states, seniors must need a Nursing Facility Level of Care, which means they require the kind of care provided in a nursing home in order to survive. Some states only require applicants to be at risk of nursing home placement to be eligible for HCBS Waivers. To be clear, the word “waiver” means something like voucher in this instance. Think of it as a voucher that will pay for long-term care benefits for seniors who live in the community, which can include the beneficiary’s home, the home of a loved one, adult foster care, assisted living, or memory care facilities for people with Alzheimer’s disease and other related dementias. Other benefits of HCBS Waivers include adult day care, case management, meal delivery, home modifications (like adding a wheelchair ramp), and transportation. The type of benefits, and the settings where they can be provided, depend on the state, the waiver, and the individual.

HCBS Waivers have a limited number of enrollment spots. Once those spots are full, additional eligible applicants are placed on a waitlist. Most seniors come off HCBS Waiver waitlists and enroll in the program within two months, but it can take as long as two years. Some waitlists are prioritized on a first-come, first-serve basis, some are prioritized by need, and some use different methods. It all depends on the specific HCBS Waiver.

For a step-by-step guide to applying for Medicaid HCBS Waivers, click here.


Aged, Blind and Disabled Medicaid

Aged, Blind and Disabled (ABD) Medicaid provides health care for anyone over age 65 (or blind or disabled) of limited financial means. ABD Medicaid also provides long-term care services and supports for beneficiaries who might need them to avoid nursing home placement. These long-term care benefits can include Consumer Directed personal care assistance with the Activities of Daily Living (mobility, bathing, dressing, eating, toileting) and the Instrumental Activities of Daily Living (shopping, cooking, housekeeping, medication management, etc.). Again, this means the Medicaid beneficiary can hire a personal caregiver of their choice, including loved ones (in most states). ABD Medicaid will provide the funds to pay the caregiver, and it will also provide help with the financial responsibilities that come with paying someone – tracking hours, calculating taxes, issuing paychecks, etc.

In some states, including California and New York, ABD Medicaid will provide Consumer Directed funds through its Community First Choice (CFC) program. CFC can also be called the 1915 (k) state plan option. CFC benefit plans are personalized, so Consumer Directed care is not always part of the plan, but it can be.

ABD Medicaid can sometimes be referred to as State Plan Medicaid or Regular Medicaid for Seniors, but it should not be confused with the Regular Medicaid that is available for financially limited people of all ages.

Unlike HCBS Waivers, ABD Medicaid is an entitlement. This means that anyone who meets the requirements is guaranteed by law to receive healthcare coverage without wait. Receiving long-term care benefits through ABD Medicaid depends on the availability of programs, funds and caregivers in the beneficiary’s area.

For help with the process of applying for ABD Medicaid, click here.


Child Caregiver Exception

The Child Caregiver Exception does not pay family members for caregiving, but it does compensate them in a different way, and it provides some potential benefits for the Medicaid applicant/recipient, as well. The Child Caregiver Exception allows a senior parent to transfer ownership of their home to a qualified adult child without the home being subject to Medicaid’s Estate Recovery Program, or Medicaid’s Look-Back Period. An adult child qualifies for the Child Caregiver Exception if they have lived in the home with the parent for at least two years and have provided a certain level of care, which depends on the state and the senior.

Medicaid Estate Recovery Programs (MERPs) are obligated by law to seek reimbursement for Medicaid recipient’s health care costs after their death. The home is a common way for the MERPs to collect that reimbursement (by forcing a sale of the home), but homes transferred using the Child Caregiver Exception are protected from MERPs.

Medicaid’s Look-Back Period prevents applicants from giving away assets, or selling them at less than fair market value, simply to get under the asset limit in an attempt to become financially eligible for Medicaid. A senior could not just give their home to their adult child, or sell it to them for $1, without violating the Look-Back Period and becoming Medicaid ineligible. However, if the adult child is qualified and the senior parent transfers the home using the Child Caregiver Exception, the transaction will not violate the Look-Back Period.

The Child Caregiver Exception is also known as the Caretaker Child Exception and the Adult Child Caregiving Exemption, and its rules can vary by state. The steps to execute the Child Caregiver Exception correctly can be complicated, and anyone considering this option should contact a Certified Medicaid Planner for help with the process.


Money Follows the Person

Money Follows the Person (MFP) programs help Medicaid beneficiaries move out of full-time nursing homes and return to living in the community. MFP programs ensure that participants receive the same level of care in the community that they received in the nursing home. One way to do this is through Consumer Directed Care, which might include the ability to hire and pay personal caregivers of their choice, including family members. This means Medicaid will provide the senior with the funds to pay their family member (including spouses in some states) for their caregiving efforts. MFP programs will also provide help with the financial responsibilities that come with employing someone – tracking hours, calculating taxes, issuing paychecks, etc.

MFP rules vary by state, like which family members are eligible to be paid caregivers. Even the name of the program can change by the state – it’s called Open Doors in New York and HOME Choice in Ohio, for example.


Adult Foster Care

In some states, Medicaid will reimburse family members, other than spouses, for providing an Adult Foster Home setting for a Medicaid beneficiary. Usually, the Medicaid beneficiary moves into the home of the family member, who then provides the necessary full-time care, as well as room and board, and is compensated by Medicaid for their work and expenses. The family member can also move into the home of the Medicaid beneficiary. This option can also be called Adult Family Living or Adult Family Care. As with all Medicaid programs, rules and availability for Adult Foster Care vary by state.


What Are the Eligibility Requirements to be Paid by Medicaid as a Caregiver?

Some states require family members to complete certain medical care certification classes in order to be paid as a caregiver by Medicaid. Some may require a background check for potential family caregivers. Some do not allow people who serve as Power of Attorney for the Medicaid beneficiary to also be their caregiver. And some states do not have any of these requirements.

As mentioned above, some states allow spouses to be paid as caregivers through Medicaid, while some do not. The rules on friends, foster children, stepchildren, and step-siblings also vary by state. It is believed that adult children (biological or adopted) and grandchildren, nieces, nephews, and siblings may be caregivers in any state and the District of Columbia.


How Much Payment Do Caregivers Receive?

Medicaid’s pay rate for family member caregivers paid through Medicaid depends on a number of factors. First, state Medicaid officials will usually assess the beneficiary and determine what kind of long-term care services and supports they might need, how many hours they might need them for, and how much money they have to spend via Consumer Directed Care. Some Medicaid programs may also have budget limits on how many hours or dollars worth of healthcare they can provide per participant. Those factors will determine a total amount per month or year the family member caregiver can be paid, but the hourly rate they can be paid is determined by state of residence.

For example, home health aides in Alabama, for example, earn about $13 per hour on average, while wages for the same job in Rhode Island are typically $18 per hour. So, Medicaid would pay a caregiver less money in Alabama than in Rhode Island. Medicaid typically does not pay as much as the hourly average for a given geographic area. Instead, 75% of the regional average is a good rule of thumb.


How to Apply & What to Expect

The first step to receiving payment for caregiving through one of these programs is to ensure that the senior who needs help is Medicaid-eligible. For specific eligibility criteria by region, use our Medicaid Eligibility Requirements Finder.

Even someone who does not appear to be eligible because of the income and/or assets requirements can take steps to become eligible through Medicaid planning. For a guide to techniques that can help with Medicaid eligibility when exceeding financial limits, click here.

It’s a good idea to contact your nearest Medicaid eligibility office for help determining exactly which program is best for your family. Click here for contacts.

The program in most states most likely to provide Consumer Directed care and therefore allow for a loved one to be paid as caregiver is Home and Community Based Services waivers. For a step-by-step guide on how to apply for these waivers, click here.