Yes, getting paid to be a caregiver for a family member is possible, and there are four main ways it happens: a state Medicaid self-directed care program, a Department of Veterans Affairs caregiver program, a long-term care insurance policy that allows family providers, or a direct private-pay arrangement with the relative you care for. Which route is open to you depends on your family member’s health coverage, disability or veteran status, and finances.
Medicaid Self-Directed Care
Medicaid is the most widely available funding source. Nearly every state runs at least one consumer-directed program that lets a person on Medicaid choose their own caregiver, including a relative, and pay them with Medicaid funds.1Social Security Administration. Compilation of the Social Security Laws – Section 1915 These programs are authorized under Section 1915(c) or Section 1915(i) of the Social Security Act, which lets states offer home and community-based services in place of nursing home care.2Medicaid.gov. Home and Community-Based Services 1915(c)
The person receiving care directs the arrangement. They pick the caregiver, set the schedule, and oversee the work. A fiscal management entity assigned by the state handles paychecks, tax withholding, and reporting, so the care recipient does not have to run payroll.1Social Security Administration. Compilation of the Social Security Laws – Section 1915 Compensation comes from an individualized budget built during care planning.
Most states let adult children, siblings, and other relatives be paid caregivers. About 44 states also allow legally responsible relatives such as spouses or the parent of a minor child, though those relationships face more restrictions and are excluded in some states entirely. Rules vary, so check with your state Medicaid office to confirm which relationships qualify.3USAGov. Get Paid as a Caregiver for a Family Member Pay rates generally run from about $10 to $27 per hour depending on the state and the level of care.
Electronic Visit Verification
As a paid Medicaid caregiver, you will log your hours through an electronic visit verification (EVV) system. Federal law requires every state to use EVV for Medicaid-funded personal care services. The system records when you clock in and out, the services you provide, and your location. The requirement comes from the 21st Century Cures Act and applies to the same Medicaid waiver authorities that fund family caregiving.4Medicaid.gov. Electronic Visit Verification Your state’s fiscal management entity typically supplies the app or device. Accurate logs matter: false timekeeping can trigger a fraud investigation, suspended payments, and program termination.5eCFR. 42 CFR Part 455 Subpart A – Medicaid Agency Fraud Detection and Investigation Program
Medicare Does Not Pay Family Caregivers
Families often mix up Medicare and Medicaid, so this is worth stating plainly. Medicare does not pay family members to provide personal care. Its home health benefit covers skilled nursing and therapy delivered by a Medicare-certified agency, and it specifically excludes custodial care like help with bathing, dressing, and toileting when that is the only care needed.6Centers for Medicare & Medicaid Services (CMS). Medicare and Home Health Care When Medicare does cover home health, the services must come from a certified agency rather than a relative. If your family member has Medicare but not Medicaid, look to the VA, long-term care insurance, or a private arrangement.
VA Caregiver Programs
If the person you care for is a veteran, two VA programs may pay you or add money to their pension that they can pass on to you.
Program of Comprehensive Assistance for Family Caregivers
The Program of Comprehensive Assistance for Family Caregivers (PCAFC) pays a monthly stipend to family members caring for eligible veterans with serious service-connected injuries. The program originally covered only post-9/11 veterans but now includes veterans from all service eras.7Office of the Law Revision Counsel. 38 USC 1720G – Assistance and Support Services for Caregivers The veteran must:
- Have a serious injury caused or worsened during active service, which can include traumatic brain injury or psychological trauma.
- Have a VA disability rating of 70 percent or higher, individual or combined.8eCFR. 38 CFR Part 71 – Caregivers Benefits and Certain Medical Benefits Offered to Family Members of Veterans
- Need personal care services for at least six continuous months because of an inability to perform daily activities or a need for supervision from neurological or cognitive impairment.
- Be enrolled in VA health care.
One primary family caregiver and up to two secondary caregivers can be designated per veteran. Only the primary caregiver receives the stipend, and that person may also qualify for CHAMPVA health coverage (if they have no other insurance), mental health counseling, and respite care. Secondary caregivers get training and some support benefits but no stipend.7Office of the Law Revision Counsel. 38 USC 1720G – Assistance and Support Services for Caregivers CHAMPVA enrollment for a qualifying primary caregiver is automatic through the PCAFC application, with no separate filing required.9Veterans Affairs. CHAMPVA Benefits
The stipend is calculated from the federal General Schedule GS-4, Step 1 rate for the locality where the veteran lives. The 2026 base rate is $31,103 per year.10OPM.gov. Salary Table 2026-GS That annual figure is divided by 12 and multiplied by a factor reflecting the veteran’s care needs:
- Level One is 62.5 percent, for veterans who need help with daily activities. At the 2026 base rate, that is roughly $1,620 per month before locality adjustment.
- Level Two is 100 percent, for veterans unable to sustain themselves in the community without a caregiver. At the 2026 base rate, that is roughly $2,592 per month before locality adjustment.11VA Caregiver Support Program. Program of Comprehensive Assistance for Family Caregivers Monthly Stipend Fact Sheet
Locality pay raises those figures in higher-cost areas. Apply online through the VA caregiver portal or by submitting VA Form 10-10CG.12Veterans Affairs. Apply for the Program of Comprehensive Assistance for Family Caregivers
Aid and Attendance
Veterans who do not qualify for the PCAFC may qualify for the Aid and Attendance benefit, an added monthly payment on top of a VA pension. It is available to wartime veterans (or their surviving spouses) who need help with daily activities, are bedridden, have limited eyesight, or live in a nursing home.13Veterans Affairs. VA Aid and Attendance Benefits and Housebound Allowance Unlike the PCAFC, Aid and Attendance does not require a service-connected injury; it turns on the veteran’s overall care needs and financial eligibility for a pension. The veteran can generally use the extra pension money to pay a family member, though the VA does not run this as a formal caregiver employment program the way it does the PCAFC.
Long-Term Care Insurance and Private Pay
If your family member has a long-term care insurance policy, it may cover payments to a family caregiver. Some policies allow it; others require care from a licensed agency or non-family provider. Ask the insurer for written confirmation that a relative qualifies as an approved provider under the policy.3USAGov. Get Paid as a Caregiver for a Family Member
Families paying out of pocket have the most flexibility. You can hire the family caregiver directly through a private agreement or route the arrangement through a home health agency. Going through an agency makes the caregiver a W-2 employee of the agency, which handles payroll, tax withholding, and workers’ compensation, then assigns them to care for their own relative. That arrangement adds liability protection: if the caregiver is injured on the job, the agency’s insurance covers it.
If the family pays the caregiver directly, the person paying becomes a household employer with the tax obligations described below.
Taxes on Caregiver Pay
How your caregiver income is taxed depends on how you are paid and whether you live with the person you care for.
The Difficulty-of-Care Exclusion for Medicaid Waiver Payments
If you receive Medicaid waiver payments and live in the same home as the person you care for, those payments may be fully excluded from your federal taxable income. Under IRS Notice 2014-7, qualifying Medicaid waiver payments are treated as difficulty-of-care payments that do not count as gross income.14Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable From Income The shared-home requirement is the pivot. Moving into your relative’s home and making it your primary residence qualifies. Providing care in a separate home where the recipient does not live does not.
The difference can be substantial. A caregiver earning $25,000 a year through a Medicaid waiver who lives with the care recipient could owe zero federal income tax on that pay. Vacation pay and similar amounts not directly for providing care stay taxable even when you share a home.14Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable From Income
Household Employer Obligations
When a family pays a caregiver directly, outside a Medicaid program or agency, the person paying is generally a household employer. For 2026, if you pay a household employee $3,000 or more in cash wages during the year, you must withhold and pay Social Security tax (6.2 percent from the employee, 6.2 percent from the employer) and Medicare tax (1.45 percent each). Below $3,000, none of the wages are subject to those taxes.15Internal Revenue Service. Household Employer’s Tax Guide
You are not required to withhold federal income tax from a household employee’s wages, but you can if the employee asks you to by submitting a Form W-4. You also owe federal unemployment (FUTA) tax if you pay household employees a combined $1,000 or more in any calendar quarter. FUTA applies to the first $7,000 of each employee’s wages at a net rate of 0.6 percent after the standard credit, and it is paid entirely by the employer.15Internal Revenue Service. Household Employer’s Tax Guide These taxes are reported on Schedule H, filed with the employer’s personal income tax return.
Effect on SSI and Other Benefits
If you get Supplemental Security Income (SSI), being paid as a caregiver can reduce your monthly payment. SSI counts earned income and generally reduces your benefit by $1 for every $2 you earn above the first $65 per month, plus any unused portion of the $20 general income exclusion. The maximum federal SSI payment for an individual in 2026 is $994 per month.16Social Security Administration. What’s New in 2026 – The Red Book Enough caregiver earnings can reduce or eliminate SSI entirely.
There is an exception worth checking. If your Medicaid waiver payments qualify for the difficulty-of-care exclusion under IRS Notice 2014-7, the Social Security Administration may also exclude them when calculating SSI. The rules have shifted, so confirm with your local Social Security office before assuming caregiver income will not affect your benefit.
Caregiver income can also change your eligibility for other means-tested programs, including Medicaid for your own coverage, the Supplemental Nutrition Assistance Program, and housing assistance. Each has its own thresholds and exclusions. Factor in how the wages will be counted before you take a paid position.
Paperwork You Should Expect
Whichever route you use, a paid caregiving arrangement needs documentation.
A personal care agreement is a written contract between the caregiver and the care recipient or their representative. It should list the tasks you will perform (meal preparation, bathing help, medication reminders, mobility assistance), the hours per week, the pay rate, and how often you will be paid. This matters especially if the care recipient later applies for Medicaid, because the agency will review financial transactions to confirm payments to family were for real services rather than gifts intended to reduce assets.
You will also need medical documentation showing the care recipient needs help, typically a physician’s statement, diagnoses, and a functional assessment covering activities of daily living such as bathing, dressing, eating, toileting, and moving around the home.17Medicaid.gov. Functional Assessments and Quality Improvement For Medicaid, a nurse or social worker usually performs the assessment. For the PCAFC, the VA runs its own clinical evaluation. Financial records for the care recipient verify eligibility for public programs, and the caregiver provides identification, a Social Security number, and proof of legal residency for payroll.
Most programs run a background check that includes criminal history and abuse registry searches. After you apply and complete the assessment, expect several weeks to a few months for approval, depending on the program’s volume. Once approved, payments come through the Medicaid fiscal intermediary or directly from the VA. Keep organized copies of everything you submit; delays usually come from missing paperwork rather than eligibility problems.