Yes, your son can get paid to take care of you, and the arrangement is legal as long as you set it up properly. The foundation is a written caregiver agreement that spells out the work, the schedule, and the pay rate. Without that document, money moving from you to your son can look like a gift to the IRS or to Medicaid, and that creates problems that are hard to unwind later.
The Written Caregiver Agreement
A written caregiver agreement, sometimes called a personal care agreement, turns informal family help into a documented arrangement. It protects both sides. You have proof that payments were for real services at a fair price. Your son has clear terms for what he’s owed. And if you ever apply for Medicaid, this agreement is what stands between the caregiver payments and a penalty for giving away assets.
At a minimum, the agreement should cover:
- The specific services your son will provide, listed task by task: bathing, meals, transportation, medication reminders, household chores, and so on.
- The schedule, meaning how many hours per day or week and which days.
- The pay rate and how often he’ll be paid.
- The start date and the circumstances under which the arrangement ends.
- Signatures and dates from both of you.
The pay rate needs particular care. Compensation has to reflect what a professional home care aide would charge in your area. Overpaying is the fastest way to make payments look like disguised gifts. The national median for nonmedical in-home care runs roughly $30 to $35 per hour, with rates ranging from the low $20s to over $40 depending on location and complexity of care. Call a few local home care agencies to establish the going rate where you live, then set your son’s pay at or below that figure.
If You Cannot Sign the Agreement Yourself
If dementia or another condition prevents you from understanding and signing a contract, the person holding your power of attorney, or a court-appointed guardian or conservator, can sign on your behalf. There’s a common complication: if your son is both your caregiver and the person holding your power of attorney, he’d essentially be signing a contract with himself, which is a clear conflict of interest. In that situation, bring in a third party. An elder law attorney can review the terms and confirm they’re fair, and some families have another sibling co-sign. Skipping this step is one of the mistakes Medicaid is most likely to flag.
Where the Money Can Come From
Your Own Funds
The simplest source is your own savings, retirement accounts, or regular income. You control the terms, no third party has to approve anything, and the only requirements are the written agreement, a fair rate, and your son reporting the income on his taxes.
Long-Term Care Insurance
Some long-term care insurance policies cover care provided by family members. Cash indemnity policies are the most likely to allow this, because they pay a set daily amount regardless of who provides the care. Other policies require a licensed professional caregiver, which would exclude your son unless he holds those credentials. Read your policy or call your insurer to find out.
Veterans Benefits
If you’re a veteran receiving a VA pension and need help with daily activities like bathing, dressing, or feeding, Aid and Attendance adds a monthly payment on top of your pension. For 2026, the additional monthly amount is up to $2,424 for a single veteran and $1,558 for a surviving spouse.1Veterans Affairs. VA Aid and Attendance Benefits and Housebound Allowance The money goes to you as part of your pension, and you can use it to pay your son.
The VA also runs a Veteran-Directed Care program that gives veterans a budget to hire their own care workers, family members included. You work with a counselor to build a spending plan and hire the people who meet your needs.2Department of Veterans Affairs. Veteran-Directed Care – Geriatrics and Extended Care Separately, the Program of Comprehensive Assistance for Family Caregivers pays a monthly stipend directly to a primary family caregiver of an eligible veteran, though eligibility for that program is more restrictive.3Veterans Affairs. Program of Comprehensive Assistance for Family Caregivers Monthly Stipend Fact Sheet
Medicaid Self-Directed Care
Most states run Medicaid programs that let care recipients hire and manage their own caregivers, family members included. The names differ from state to state (consumer-directed care, participant direction, self-directed services), but the idea is the same: instead of getting care through an agency, you get a budget and choose who provides it.4Medicaid.gov. Self-Directed Services Eligibility, pay rates, and which relatives qualify vary by state, so contact your state Medicaid office to see what’s available where you live.
Taxes on the Money You Pay Your Son
What your son receives is taxable income. The paperwork depends on whether he’s your employee or an independent contractor, and the IRS takes a firm position on this: caregivers who work in someone’s home are usually employees, not contractors, because the care recipient controls what work gets done.5Internal Revenue Service. Family Caregivers and Self-Employment Tax
As a household employer, once you pay a household employee $3,000 or more in cash wages during 2026 you’re required to withhold and pay Social Security and Medicare taxes and issue a Form W-2 at year-end. Federal unemployment tax may also apply if wages cross certain quarterly thresholds.6Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide IRS Publication 926 walks through the mechanics.
In the less common case where your son truly qualifies as an independent contractor, he handles his own taxes on Schedule C and pays self-employment tax if his net earnings exceed $400. Starting in 2026, you’re required to issue a Form 1099-NEC only if you pay him $2,000 or more during the year, up from the previous $600 threshold.7Internal Revenue Service. Form 1099-NEC and Independent Contractors Don’t default to contractor treatment because it’s simpler; the IRS usually sees in-home caregivers as employees.
Medicaid Waiver Payments Can Be Tax-Free
If your son is paid through a state Medicaid waiver program and you live in his home, those payments may be entirely excludable from his gross income. Under IRS Notice 2014-7, Medicaid waiver payments for care provided to someone living in the caregiver’s home are treated as tax-free difficulty-of-care payments.8Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable From Income The residence requirement is strict. You have to live in your son’s home. If he comes to your house to provide care, the exclusion doesn’t apply and the payments are taxable.9Internal Revenue Service. Notice 2014-7
Medicaid’s Look-Back Period
If Medicaid might pay for your long-term care later, every dollar you pay your son will be examined when you apply. Medicaid uses a 60-month look-back period, reviewing financial transactions from the five years before your application. Any transfer for less than fair market value in that window can trigger a penalty period during which you’re ineligible for benefits. Medicaid calculates the length by dividing the uncompensated transfers by the average monthly cost of nursing home care in your state.10Office of the Law Revision Counsel. 42 U.S. Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets The penalty starts when you’re already in a nursing home and would otherwise qualify, which is the worst possible time to lose coverage.
This is why the written agreement matters so much. Payments made under a documented caregiver contract, at a fair market rate, for services actually rendered, are not uncompensated transfers. They’re legitimate expenses. Without the paperwork, identical payments look like gifts.
The flip side is useful. Medicaid has strict asset limits, and paying your son a fair rate for real care is a legitimate way to spend down countable assets while keeping you cared for at home. The agreement, along with records of hours worked and payments made, proves these were real transactions rather than a way to hide money from Medicaid.
Workers’ Compensation and Household Employer Insurance
Once you’re a household employer, you may have obligations beyond taxes. Many states require household employers to carry workers’ compensation insurance for domestic employees, caregivers included. Thresholds vary; some states use hours worked per week or quarter, others use wages paid. Workers’ comp covers medical bills and lost wages if your son is injured while providing care, and it shields you from personal liability for those costs. Check your state’s rules, and don’t assume your homeowner’s policy covers a workplace injury to a household employee. Most don’t.