It is very common for family, especially spouses and adult children, as well as close friends to serve as informal (unpaid) caregivers for loved ones who are frail and elderly, disabled, or have Alzheimer’s disease or a related dementia. In fact, according to the Family Caregiver Alliance (FCA), nearly 80% of adults who live at home and receive long-term care assistance depend solely on relatives and friends. Unfortunately, the role of informal caregiver isn’t an easy one to take on, particularly since many persons serving in this role still need to be employed to make ends meet. However, there is good news. If you are a caregiver of a loved one, you might be able to be paid by Medicaid to provide this service!
All 50 states and the District of Columbia offer some type of Medicaid-funded consumer directed personal care assistance program. “Consumer directed” means the care recipient, to an extent, can choose their caregiver. Many of these states allow participants to hire friends and relatives to provide the needed assistance. Commonly, it is an adult child who is paid via Medicaid to provide care, but more and more states are providing funds for spouses to be paid caregivers! These states include Alabama, Arizona, California, Colorado, Delaware, Florida, Hawaii, Indiana, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Vermont, and Wisconsin. Generally, the amount of funds received are dependent on an assessment of the elderly individual’s needs and the average wage for a home care aide in the state and geographic region in which one lives.
There are multiple types of Medicaid programs under which family members or friends can receive compensation. Caregivers may have to meet specific state requirements or become certified Medicaid providers in the state in which they reside in order to be paid by Medicaid. There are also eligibility requirements for the Medicaid recipient, which can be found below under the “Medicaid Eligibility” section.
Medicaid Programs through which Family Can Be Paid
Medicaid State Plans
Medicaid State Plans, also called Regular Medicaid, provide one option for becoming a paid caregiver for a loved one. While every state has a state Medicaid plan, the name of the Medicaid program is sometimes state-specific. For instance, the following states all use alternative names for Medicaid: California (Medi-Cal), Massachusetts (MassHealth), Missouri (MO HealthNet), and Washington (Apple Health). See other state specific Medicaid names. Regardless of the name of the Medicaid program, all state Medicaid plans are entitlement programs. This means that anyone who meets the eligibility requirements is able to receive services via their state’s Regular Medicaid program.
Through many of the Medicaid State Plans, personal care services are available, and many of the states allow program participants to self-direct their own care. With self-direction, program participants are able to hire, train, manage, and even fire, the caregiver of their choosing. This means that relatives and friends who serve as informal caregivers can become paid caregivers through Medicaid’s State Plan. Depending on the state in which one resides, there are several options for self-direction of long-term care assistance under a state’s Medicaid plan. These include the Home and Community Based Services (HCBS) State Plan Option, the Community First Choice Option (CFCO), and the Self-directed Personal Assistance Services (PAS) State Plan Option.
Home and Community Based Services State Plan Option
The HCBS State Plan Option, also called the 1915(i) State Plan Option, allows states to offer home and community based services through their Medicaid State Plan. Unlike with HCBS Medicaid Waivers, applicants do not have to require the level of care consistent to that provided in a nursing home facility. With the HCBS State Plan Option, individualized care plans are created, such as the need for homemaker and personal care services, and budgets may be given to program participants to self-direct their care. This allows program participants to hire the caregiver of their choosing, including relatives.
Community First Choice (CFC) Option
Community First Choice, also called the 1915(k) State Plan Option, allows program participants who require an institutional level of care (i.e., Nursing Home Level of Care) to receive personal attendant services via the state Medicaid plan. While there is an option for agency provided long-term care, there is also an option for self-direction. This allows program recipients to hire a friend or family member to provide them with personal care services, such as assistance with Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs). Examples of such activities include bathing, grooming, dressing, mobility, light housecleaning, laundry, meal preparation, and transportation. The following nine states have implemented the CFC option: Alaska, California, Connecticut, Maryland, Montana, New York, Oregon, Texas, and Washington.
Self-Directed Personal Assistance Services (PAS) State Plan Option
The Self-Directed PAS State Plan Option, also called the 1915(j) Authority, allows program participants to choose, train, and manage the personal care assistant of their choosing. Based on the budget they receive, program participants are able to choose the pay rate they would like to pay their caregivers.
With the 1915(j) Authority, program participants work together with fiscal intermediaries to handle the financial employment aspect of hiring caregivers, such as paying taxes. With the other self-directed options, program participants are not responsible for the financial aspects of having an employee.
This is not a program in and of itself, rather it is an option that states can utilize giving program participants an individualized budget based on personalized need. The 1915(j) Authority not only allows states to give cash to program participants who self-direct their own care via the Medicaid State Plan, but also under a Home and Community Based Services Medicaid Waiver. To be clear, this option is only available under existing Medicaid programs. With the 1915(j) Authority, states can limit the number of program participants who are able to self-direct their care, as well as limit consumer direction to specific geographic regions within the state. The state can also elect whether certain relatives can be hired as the caregiver, such as spouses and adult children.
Home and Community Based Services Waivers
Home and Community Based Services (HCBS) are also provided via Medicaid Waivers. This includes 1915(c) Waivers, also called HCBS Medicaid Waivers, and 1115 Demonstration Waivers, also called Research and Demonstration Waivers. While not all states offer HCBS Waivers, the majority of the states do. As with the names of state Medicaid programs, names of HCBS Waivers are not consistent across states. For instance, Iowa has the Elderly Waiver, Indiana has the Aged and Disabled Waiver, and the District of Columbia has the Elderly and Persons with Physical Disabilities Waiver.
HCBS Medicaid Waivers nor 1115 Demonstration Waivers are entitlement programs. This means there are caps on the number of program participants for any given Medicaid Waiver and waiting lists may exist. Many of these Waivers allow for participant-direction, meaning participants are able to hire the personal care assistant of their choosing, including friends and relatives. A variety of other services may also be available via these Waivers, including case management, homemaker services, adult day care, home health aides, personal emergency response systems, and respite care. Adult day care and respite care may prove especially helpful for caregivers of persons who need regular supervision, allowing caregivers a break from providing care.
Structured Family Caregiving
In some states, Structured Family Caregiving (SFC) is another option via Medicaid. SFC goes by a number of names and may be called adult foster care, adult family living, monitored in-home caregiving, or coordinated caregiving. This Medicaid-funded benefit provides financial support for unpaid primary caregivers in exchange for providing the Medicaid beneficiary with 24-hour supervision, assistance with daily living activities (i.e., bathing, dressing, personal hygiene, eating), and homemaker services. Caregivers are provided with training and respite care. For eligibility, the caregiver and care recipient must live together.
While the caregiver does not have to be family member, it is often the care recipient’s adult child who serves in this role. Some states even allow a spouse to be paid for providing care. The following states offer Structured Family Caregiving: Connecticut, Georgia, Indiana, Louisiana, Massachusetts, Missouri, North Carolina, and South Dakota. SFC could be available via a HCBS Medicaid Waiver or the state’s Regular Medicaid Plan.
Caretaker Child Exception
While not specifically a Medicaid program, the Caretaker Child Exception is a Medicaid exemption that allows an adult child to be “paid” for providing care assistance for an aging parent. Payment for care is not in the form of financial assistance via Medicaid, but rather this exemption allows the parent’s home to be transferred to the adult child as a form of payment. The adult child must have lived with their parent for at least two years immediately preceding nursing home placement and provided a level of care that delayed the parent’s need to relocate to a nursing home facility.
When considering this option, it is very important that the transfer is done correctly and all requirements are met. If not, it can violate Medicaid’s Look-Back Rule, resulting in a period of Medicaid ineligibility. It is strongly advised that anyone considering this option seek counsel from a Professional Medicaid Planner. Find a Medicaid Planner here.
Eligibility for Medicaid for long-term care services, and hence Medicaid programs that pay for personal care assistants (caregivers), look at both an applicant’s financial (income and assets) situation, as well as their functional ability. Medicaid eligibility requirements are not consistent across states nor are the eligibility requirements for differing Medicaid programs within a state consistent. In most cases, the eligibility requirements for a HCBS Medicaid Waiver is less restrictive than are the requirements for Regular Medicaid.
As a general rule of thumb, in 2024, senior applicants for a HCBS Waiver are limited to $2,829 / month in income and $2,000 in assets. For Regular Medicaid / Medicaid State Plan, a senior applicant is usually limited to either $943 / month or $1,255 / month in income and $2,000 in assets. Some states and programs require applicants need a Nursing Home Level of Care, while others require that applicants need assistance with their Activities of Daily Living. These activities include bathing, dressing, eating, toileting, transferring, mobility, and maintaining continence.
How to Apply / Getting Started
Regardless of the Medicaid program through which a family member, spouse, or friend hopes to be compensated for caregiving, the first step to beginning the enrollment process is to ensure the individual meets their state’s eligibility requirements.
Because the financial criteria (income and assets) for Medicaid are restrictive, many candidates will not automatically be eligible for the Medicaid program. This does not mean they cannot become Medicaid-eligible. Many individuals choose to work with a Professional Medicaid Planner to ensure their eligibility. Medicaid Planners, in addition to helping with the paperwork, are familiar with the nuances of eligibility and can help families restructure their finances accordingly.
If a family has determined their loved one automatically meets the financial eligibility criteria, the next step is to contact their state’s Medicaid office to begin the application process.
If a family has determined their loved one does not automatically meet the financial requirements, they may wish to contact a Medicaid Planner.
The Medicaid application process varies based on the state and the specific Medicaid program through which a loved one can receive compensation. The beneficiary’s primary Medicaid contact should be able to direct one to the appropriate program and application process in their state.
See state-specific Medicaid long-term care programs in the state in which one resides. While many of the listed programs allow seniors to self-direct their own care, not all do.