Can I Get Paid to Take Care of My Mother: Medicaid, VA, and Taxes

Yes, you can get paid to take care of your mother, and there are four realistic routes: Medicaid self-directed care, VA caregiver programs if she’s a veteran, a long-term care insurance policy that permits family caregivers, or a written agreement in which she pays you from her own savings. Which one fits depends on her income and assets, her veteran status, and whether she holds an insurance policy with the right language.

Getting Paid Through Medicaid

Medicaid pays for home-based care through Home and Community-Based Services waivers authorized under Section 1915(c) of the Social Security Act.¹ Under a consumer-directed or self-directed model, your mother chooses her own workers and can hire you instead of going through an agency. Most states allow adult children to be paid providers. Some states restrict spouses or parents of minor children from filling the role, so check the rules where she lives.

She has to clear two hurdles. The first is functional: she must need the level of help that would otherwise qualify her for a nursing facility, meaning hands-on assistance with daily tasks like bathing, eating, or dressing.¹ The second is financial: in most states, income is capped at 300 percent of the Supplemental Security Income benefit, which is $2,982 per month in 2026, and countable assets are typically limited to $2,000.² A few states have raised or eliminated the asset cap. The state Medicaid office can give you exact thresholds.

Once she’s approved, a support coordinator helps her build a spending plan that lists her services, her chosen workers, and hourly rates pegged to local market pay for home health aides. Your wages come out of that budget. Many states require you to pass a background check and complete short training before payments start.

Getting Paid Through the VA

If your mother is a veteran, two VA programs can pay you.

Program of Comprehensive Assistance for Family Caregivers

PCAFC pays a monthly stipend to one designated primary caregiver.³ To qualify, the veteran must have a VA disability rating of 70 percent or higher, individual or combined, and need at least six continuous months of in-person personal care.⁴ That care need can come from an inability to perform daily activities, a need for supervision because of neurological impairment, or a need for regular instruction without which daily functioning would be seriously impaired.

The stipend is built from the federal General Schedule pay rate at Grade 4, Step 1, adjusted for the veteran’s locality and divided by 12. Level One caregivers receive 62.5 percent of that monthly rate. Level Two caregivers, those caring for a veteran unable to sustain in the community, receive 100 percent.⁴ The dollar figure varies by region because locality pay does. Primary caregivers may also get CHAMPVA health coverage if they aren’t already insured, mental health counseling, and respite care.

You apply using VA Form 10-10CG, a joint application signed by both the veteran and you.³

Veteran-Directed Care

Veteran-Directed Care is the alternative if your mother needs help but doesn’t meet PCAFC’s 70 percent rating threshold. It gives veterans of any age a flexible VA-funded budget to manage their own home services, and, with counselor support, they can hire family members at local market rates.⁵ Ask her local VA medical center for a referral.

Long-Term Care Insurance

If your mother has a private long-term care insurance policy, it may pay for care you provide, but everything depends on the contract. Some policies pay only licensed home health agencies or certified nursing assistants, which rules out most family members. Others cover informal caregivers if a formal plan of care is in place, and some bar payments to a caregiver who lives in the same household.

Before you count on the policy, get written confirmation of benefits from the insurer. Ask specifically whether the policy pays unlicensed family caregivers, what documentation is required, and whether an elimination period applies before benefits begin.

Getting Paid Directly by Your Mother

If she doesn’t qualify for Medicaid or a VA program and has no usable insurance, she can pay you from her own money through a Personal Care Agreement, sometimes called a caregiver contract. This is a written contract between her as employer and you as caregiver that spells out the arrangement in advance. Sign it before care starts. Without a signed agreement predating the work, payments can be treated as gifts rather than compensation.

Setting a Fair Rate

Pay in the agreement should reflect what a professional home health or personal care aide would earn locally. The Bureau of Labor Statistics puts the national median wage for home health and personal care aides at $16.78 per hour as of May 2024, with the lowest 10 percent under $12.31 and the highest 10 percent over $21.25.⁶ Regional rates vary a lot, so check what local agencies charge and keep a note explaining how you arrived at yours.

Why the Rate Matters for Future Medicaid

Fair pricing protects your mother’s Medicaid eligibility down the road. Federal law sets a 60-month look-back period before a Medicaid application, and any transfer made for less than fair market value during that window triggers a penalty period of ineligibility.⁷ If you’re paid well above going rates, Medicaid can treat the excess as a gift and delay her coverage. The penalty is calculated by dividing the uncompensated transfer amount by the average monthly cost of nursing facility care in her state.

A tightly written agreement with market wages, specific duties, and contemporaneous time and payment records shows the money was compensation, not asset shelter. If Medicaid is a realistic possibility within the next five years, have an elder law attorney review the contract.

What the Agreement Should Include

A start date that predates any paid work.
Specific services: bathing help, meal preparation, medication reminders, transportation, and anything else you’ll actually do.
Schedule: days, expected weekly hours, on-call duties.
Pay rate, pay frequency, and payment method.
Duration and how either side can end the arrangement.
Signatures from both parties, dated. Notarization adds legitimacy.

Taxes on Caregiver Pay

Caregiver wages are income, and how they’re taxed depends on where the money comes from.

When Your Mother Pays You Directly

Under a Personal Care Agreement, your mother becomes a household employer. The IRS treats a caregiver as a household employee, not an independent contractor, when the person receiving care controls what work is done and how.⁸ So she should issue you a W-2 at year end, not a 1099.

If she pays you $3,000 or more in cash wages during 2026, she must withhold Social Security and Medicare taxes at 7.65 percent from your wages and pay a matching 7.65 percent as the employer’s share. Below $3,000, neither of you owes those taxes on the wages. Separately, if she pays $1,000 or more in any calendar quarter, she owes federal unemployment tax on your wages.⁹ She reports household employment taxes on Schedule H with her Form 1040, which by itself can create a filing requirement she wouldn’t otherwise have. You report the wages as income on your own return.

Medicaid Waiver Payments If You Live Together

If you’re paid through a Medicaid self-directed program and you live in the same home as your mother, some or all of those payments may be excludable from your gross income under the difficulty-of-care exclusion. The rule sits in Section 131 of the Internal Revenue Code and originally covered foster care providers, but IRS guidance extended it to certain Medicaid waiver payments made to caregivers who live with the person they care for.¹⁰ When it applies, the payments aren’t taxable income, and they don’t inflate your adjusted gross income for other benefit calculations. Whether your state’s specific program qualifies is worth asking a tax professional about.

Effect on Your Own Benefits

Caregiver wages count as earned income for most federal benefit tests. If you receive SNAP, added income can push your household over the gross income limit. If you buy health insurance through the Marketplace, wages raise your modified adjusted gross income, which changes your premium tax credit either up or down depending on where you start.¹¹ Run the numbers before you agree to a rate.

If You’re Denied

A denial isn’t the end of the road. For PCAFC, four review paths are available:¹²

A supplemental claim, if you have new evidence.
A higher-level review by a senior reviewer, filed within one year of the decision, no new evidence allowed.
A board appeal to a Veterans Law Judge, filed within one year, with a choice of direct review, evidence submission, or hearing.
A clinical appeal to the chief of staff at your mother’s VA facility, which does allow new medical evidence.

For Medicaid denials, every state must offer a fair hearing. The denial notice will explain the reason and how to request a hearing, and you’ll generally have 30 to 90 days to file. At the hearing you can bring more medical or financial documentation. If the reason was financial ineligibility, look closely at whether all assets were counted correctly, since items like a primary residence and one vehicle are generally exempt.

1
Medicaid.gov. Home and Community-Based Services 1915(c)
2
Social Security Administration. SSI Federal Payment Amounts for 2026
3
Veterans Affairs. Program of Comprehensive Assistance for Family Caregivers
4
Veterans Affairs. Program of Comprehensive Assistance for Family Caregivers Monthly Stipend Fact Sheet
5
U.S. Department of Veterans Affairs. Veteran-Directed Care – Geriatrics and Extended Care
6
U.S. Bureau of Labor Statistics. Home Health and Personal Care Aides – Occupational Outlook
7
Office of the Law Revision Counsel. 42 U.S. Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
8
Internal Revenue Service. Topic No. 756, Employment Taxes for Household Employees
9
Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
10
Office of the Law Revision Counsel. 26 USC 131 – Certain Foster Care Payments
11
Internal Revenue Service. Questions and Answers on the Premium Tax Credit
12
Veterans Affairs. Family Caregiver Program Decision Reviews and Appeals