Key Takeaways
- 49 states and DC allow Medicaid to pay family members for home care under consumer-directed or structured family caregiving programs.
- Hourly rates for family caregivers range from $14–$44 per hour depending on state and care type; structured family caregiving programs typically pay $40–$70 per day after agency pass-through (usually 50–65% of the gross stipend).
- Eligibility requires Medicaid waiver enrollment, which typically mandates nursing-home level of care and income limits; many waivers have waiting lists.
- Paid caregiver income is subject to federal income tax and FICA (self-employment or household employer rules), and counts as earned income for Social Security benefit credits.
- Starting July 2026, states must publish hourly payment rates for home care services on their Medicaid websites, improving transparency.
What Are Paid Family Caregiving Programs?
Many families providing daily care for an aging parent don’t realize a paycheck may be available for that work. Through Medicaid-funded home care programs, adult children, siblings, and other family members can receive wages or stipends for care they are already providing. As of 2025, all 49 responding states and Washington, DC, pay family caregivers under at least some circumstances through Medicaid home care programs. Florida did not respond to the KFF 23rd annual survey (data collected April–July 2025, published January 2026).
These programs are an alternative to institutional care—they allow older adults and people with disabilities to stay home while receiving the support they need. For families weighing in-home care options against facility-based care, understanding how payment works is a practical first step.
Consumer-directed vs. structured family caregiving
Most paid family caregiving operates through one of two models.
Consumer-directed programs (also called self-directed or participant-directed programs) treat the Medicaid enrollee as the employer. The enrollee selects, trains, and can dismiss their caregiver—including a family member. The caregiver receives an hourly wage, just as any other home care worker would. Nearly all states allow Medicaid enrollees to self-direct their home care in at least some circumstances, and among those states, all allow enrollees to select, train, and dismiss their caregivers.
Structured family caregiving (SFC) programs are a distinct model used in about 10 states. Rather than paying an hourly wage, Medicaid pays a daily stipend to a provider agency, which passes 50%–65% of that stipend on to the family caregiver after covering care coordination, nurse oversight, and monthly home visits. The family caregiver is not the enrollee’s employer in this model—the agency is.
How program funding works
Both models are funded through federal Medicaid authorities under the Social Security Act. The most common vehicle is the Section 1915(c) Home and Community-Based Services (HCBS) waiver, which allows states to serve people who would otherwise qualify for nursing home care. States may also use Section 1115 demonstration waivers or Section 1915(j), a state plan option that lets Medicaid enrollees hire and pay family members directly without enrollment caps. Section 1915(k) (Community First Choice) provides states with six additional Federal Medical Assistance Percentage (FMAP) points in exchange for allowing self-direction in state plan attendant services.
Waiver programs can be geographically limited, capped in enrollment, or restricted to specific disability populations—all of which are legal under federal rules. The result is significant variation from one state to the next in who qualifies, how much gets paid, and whether a slot is even available. Nationally, over 5.1 million Medicaid enrollees use home care services annually, and Medicaid funded two-thirds of all home care spending in the United States in 2023.
How Much Do Family Caregivers Get Paid?
Personal Care Agency Rate Range (Medicaid)
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Home Health Agency Rate Range (Medicaid)
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Median All-Payer Home Care Worker Wage (BLS 2024)
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Structured Family Caregiving Net Daily Pay Range
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Source: KFF Medicaid Home Care Survey, 2025; BLS Occupational Outlook
Hourly rates in consumer-directed programs
In consumer-directed programs, family caregivers receive an hourly wage. That wage is not set federally—each state sets its own Medicaid reimbursement rates, and those rates determine what an enrolled caregiver can earn.
According to KFF’s analysis of Medicaid home care payment rates ahead of the 2025 reconciliation law, Medicaid agency payment rates for personal care services range from $14 to $44 per hour across reporting states. Home health agency rates span a much wider band—from $25 to $159 per hour—reflecting differences in required staff credentials and scope of care.
Those are agency-level rates. What a family caregiver actually takes home depends on whether the program routes payment through an agency (which takes an administrative share) or pays the caregiver directly as a household employee. Direct-pay arrangements typically pass through a higher share of the Medicaid rate to the caregiver.
For comparison, the Bureau of Labor Statistics reported a median wage of $17 per hour for home health and personal care aides in 2024—an all-payer figure that includes workers employed by agencies outside of Medicaid. Family caregivers in self-directed Medicaid programs may earn above or below that median depending on state.
A note on data gaps: CMS does not publish a single consolidated table of state-by-state consumer-directed caregiver pay rates. State Medicaid agencies publish rate schedules individually—often in rate bulletins or waiver plan amendments on their own websites. Families should contact their state Medicaid agency or local Area Agency on Aging for the exact rates applicable to their program.
Daily stipends in structured family caregiving
In structured family caregiving programs, the payment structure is different. Medicaid pays the provider agency a daily stipend; the agency passes approximately 50%–65% of that gross amount to the family caregiver after covering care coordination, nursing supervision, and home visits.
The net result for family caregivers, according to KFF’s 2025 survey data, is typically around $40–$70 per day. That range reflects variation in both the gross Medicaid stipend (which differs by state and level of care) and the agency’s administrative percentage.
State-by-state variation
For state-specific care programs, the range of what a family caregiver earns is substantial. A family caregiver in a high-cost state with a robust self-direction program may earn closer to the $44/hour ceiling for personal care services. A family in a lower-rate state with a structured caregiving model may net closer to $40 per day—roughly $5 per hour for an eight-hour care day.
Because state Medicaid rates change with each waiver amendment cycle or budget cycle, any specific dollar figure published here can become outdated. The July 2026 CMS transparency rule—described in the final section of this article—will make state-level rate comparisons more accessible for families going forward.
Eligibility Requirements for Paid Caregiving
Becoming a paid family caregiver through Medicaid is not automatic. Both the care recipient and, in some programs, the caregiver must meet specific criteria before a payment relationship can begin.
Medicaid waiver enrollment
The first requirement is that the person receiving care must be enrolled in Medicaid and qualify for a home and community-based services waiver. That typically means meeting two separate tests: financial eligibility (income and assets below state-set limits) and functional eligibility (a demonstrated need for a nursing-home level of care).
The financial thresholds vary by program and state. Some waivers use the standard Medicaid income limit; others apply a higher institutional income rule, allowing income up to the nursing facility rate. Asset limits similarly differ by state. Families can check current thresholds through their state Medicaid agency or through coordinating care with multiple providers and the Area Agency on Aging in their region.
Functional and financial criteria
Most waivers require that the enrollee need help with activities of daily living (ADLs)—bathing, dressing, eating, toileting, transferring—or instrumental activities of daily living (IADLs) like managing medications or preparing meals. The specific number of ADLs required, and whether IADL limitations count, differs by state and waiver.
For Indiana’s Structured Family Caregiving program, for example, the qualifying resident must be eligible for Indiana’s Aged and Disabled Medicaid waiver and must need nursing-home-level care—a threshold that reflects the program’s origins as an institutional care alternative. Indiana’s program has grown to serve more than 4,000 families since its 2013 pilot launch, though this enrollment figure dates to 2021 and may not reflect current numbers. Families in Indiana should contact the Indiana Family and Social Services Administration (FSSA) Division of Aging for current enrollment and eligibility data.
Waiting lists and enrollment caps
Medicaid HCBS waivers are legally permitted to cap enrollment and maintain waiting lists. Waivers are often only available to a limited number of people, resulting in waiting lists that can stretch months or years—a practical barrier that affects program access nationwide. The most recent nationally comparable waiting list data from KFF dates to FY2018, when over 820,000 people were on HCBS waiting lists; families should request current waiting list information directly from their state Medicaid agency.
The 2025 federal reconciliation law is estimated to reduce federal Medicaid spending by $911 billion—roughly 14%—over the next decade, with broad implications for home care programs. Whether specific state HCBS waiver programs are reduced, restructured, or eliminated in response to those federal funding changes will depend on each state’s budget decisions. Families already enrolled in programs are advised to monitor their state Medicaid agency’s communications.
Restrictions on legally responsible relatives
Federal law permits states to prohibit paying “legally responsible relatives”—defined as spouses and parents of minor children—for caregiving. The policy rationale is that these relatives are already legally obligated to provide support. However, many states have obtained waiver authority to pay legally responsible relatives as well. Whether a spouse or parent can be paid under a specific state’s program depends on that waiver’s terms. Adult children caring for a parent are generally not considered legally responsible relatives under federal definitions and face fewer restrictions on receiving payment.
State retirement planning resources and state Medicaid agency websites are the most reliable sources for current legally responsible relative policies by state.
Structured Family Caregiving Programs: State Landscape
Structured family caregiving (SFC) is a distinct Medicaid model—one that families in participating states may find more accessible than navigating a full self-direction arrangement. In SFC programs, a Medicaid-contracted provider agency serves as the intermediary: the agency is responsible for care coordination, nurse oversight, and compliance, while the family caregiver delivers the day-to-day support.
As of the 2025 KFF survey, structured family caregiving programs operate across 14 state-waiver combinations in 12 states. Nine states offer SFC specifically for older adults and people with disabilities; two states offer it for people with intellectual or developmental disabilities; and additional states operate SFC through standalone state plan options or Alzheimer’s-specific waivers.
States with Structured Family Caregiving (SFC) Programs by Waiver Population (2025)
| States | # of States | Waiver Population |
|---|---|---|
| CT, GA, IN, LA, NC, ND, OH, RI, SD | 9 | Older Adults & People with Disabilities |
| IN, NH | 2 | Intellectual/Developmental Disabilities |
| MO | 1 | Alzheimer's/Related Disorders |
| MA | 1 | Standalone State Plan (Foster Care Adults) |
| NV | 1 | Standalone Waiver (Alzheimer's/Dementias) |
Which states offer structured family caregiving
Connecticut, Georgia, Indiana, Louisiana, North Carolina, North Dakota, Ohio, Rhode Island, and South Dakota all offer SFC programs for older adults and people with physical disabilities through their Section 1915(c) waivers. Indiana and New Hampshire additionally offer SFC through IDD (intellectual and developmental disabilities) waivers. Missouri offers SFC specifically for Alzheimer’s and related disorders. Massachusetts and Nevada operate SFC programs outside traditional waivers—Massachusetts through a standalone state plan option and Nevada through an Alzheimer’s-focused standalone waiver.
Indiana’s program as a model
Indiana launched its Structured Family Caregiving program as a pilot in 2013 and expanded it statewide. The program serves more than 4,000 families (per 2021 AARP reporting; current enrollment figures should be verified with the Indiana FSSA Division of Aging). Eligibility requires enrollment in Indiana’s Aged and Disabled Medicaid waiver and a demonstrated need for nursing-home-level care.
On payment: one AARP profile from 2021 cited a net caregiver stipend of approximately $40 per day for a single profiled caregiver, while Indiana’s largest SFC provider at the time reported paying family caregivers approximately $800–$1,200 per month depending on care level. Both figures are from 2021 and have not been independently verified against current Indiana FSSA rate schedules. Families in Indiana should contact the FSSA Division of Aging directly for current rates.
How SFC programs differ from consumer-directed care
In consumer-directed programs, the Medicaid enrollee is the employer of record. In SFC, the provider agency is. That distinction matters for families weighing their options. SFC programs include built-in care coordination and nurse oversight—services that consumer-directed programs may require families to arrange separately. The trade-off is that the agency’s administrative share (typically 35%–50% of the gross Medicaid stipend) reduces the net payment to the caregiver. For families seeking structure and professional support, SFC may be the more manageable path. For post-acute and long-term care options, the right model depends heavily on the care recipient’s needs and the family’s capacity to manage an employer relationship.
Payment rates in SFC programs reflect both the state’s Medicaid reimbursement rate and the specific agency’s pass-through percentage. Across all reporting SFC states, the net family caregiver stipend typically falls in the $40–$70 per day range—with the gross Medicaid stipend to the agency being higher in each case.
Self-Direction: Paying Family Members in Consumer-Directed Programs
Consumer-directed programs give the Medicaid enrollee—not a provider agency—control over who provides their care, how that person is trained, and what they are paid within state-set rate limits. For families who want a family member to serve as a paid caregiver without an intermediary agency, this is typically the pathway to pursue.
What self-direction means
Nearly all states allow Medicaid enrollees to self-direct their home care in at least some circumstances. In states with self-direction options, the enrollee has employer authority: they can select, train, and dismiss their caregivers—including family members. The extent of that authority varies. Some states give enrollees full budget management; others require that a fiscal intermediary or fiscal/employer agent handle payroll, tax withholding, and compliance on the enrollee’s behalf.
Federal rules under 42 CFR Part 441, Subpart G require that self-directed programs include a written person-centered plan, employer authority for the enrollee, and support from a fiscal/employer agent. Those requirements protect both the enrollee and the caregiver.
Setting and negotiating caregiver pay rates
In many self-direction programs, enrollees have some flexibility in setting the caregiver’s hourly rate—up to a state-defined maximum. According to the KFF 2025 survey, 41 states allow enrollees to set caregiver pay rates directly, within the bounds of the state’s Medicaid rate schedule. Rates that fall below state minimum wage or above the Medicaid program ceiling are not permitted.
The practical range for personal care services, as reported by KFF, runs from $14 to $44 per hour across Medicaid agency payment rates by state. Family caregivers working directly in a self-direction arrangement may receive rates near the higher end of a given state’s band if the enrollee sets the rate at the program maximum.
How family caregivers are hired and paid
Once the care plan is approved and the waiver is in place, the process of hiring a family member follows employment law. The caregiver completes a background check (required by most states), submits timesheets through the fiscal/employer agent, and receives a paycheck—either directly or through direct deposit—on a regular pay schedule. The fiscal agent handles payroll tax withholding and year-end W-2 issuance in most programs.
For coordinating multiple care providers in a self-directed arrangement, the fiscal/employer agent is typically the primary administrative contact. Contact information for these agents is usually provided by the state Medicaid agency when the enrollee’s waiver is approved.
States allowing self-direction in any HCBS program
49 states
States allowing enrollees to set caregiver pay rates
41 states
States allowing flexible budget management
39 states
States paying family caregivers under any HCBS program
50 states
Tax Treatment of Paid Caregiver Income
Paid family caregivers receive ordinary earned income—not tax-exempt gifts or informal payments. Understanding how that income is taxed is important before starting a paid caregiving arrangement. The rules differ depending on how the program structures the employment relationship. Families should consult a tax professional before filing; this section describes the documented federal framework, not individualized tax advice.
Income tax and self-employment tax obligations
In most Medicaid self-direction programs, a family caregiver is classified as a household employee of the Medicaid enrollee. Household employee wages are subject to federal income tax withholding (if the employee requests it or the employer withholds voluntarily) and FICA taxes—Social Security (6.2%) and Medicare (1.45%) split between the employee and employer.
If a caregiver is instead classified as an independent contractor—less common in structured Medicaid programs but possible in some arrangements—the caregiver is responsible for both the employee and employer share of FICA as self-employment tax (15.3% on net earnings), reported via IRS Schedule SE.
The fiscal/employer agent in most self-direction programs handles payroll tax withholding on the enrollee’s behalf, meaning the caregiver receives net wages after FICA deductions, just as with any other W-2 job. Families in states without a fiscal agent intermediary should consult the IRS household employer rules (governed by IRS Schedule H and IRS Publication 15-B) directly.
Household employer rules
When the Medicaid enrollee is the employer of record, the enrollee (or their fiscal agent) must comply with household employer rules. Federal rules require the employer to withhold the employee’s share of FICA, pay the employer’s matching share, and file Schedule H with the household employer’s annual tax return if total household wages paid in the year exceed the applicable threshold. For 2024, the domestic service worker cash wage threshold triggering FICA obligations is $2,700 per year. Most family caregivers working meaningful hours will exceed this threshold.
Year-end reporting takes the form of a W-2 issued to the caregiver and filed with the Social Security Administration. The fiscal/employer agent typically manages this process in formally structured self-direction programs.
Reporting requirements (1099 vs. W-2)
The distinction between a W-2 (employee) and a 1099-NEC (independent contractor) matters for how taxes are reported and paid. In formal self-direction programs with fiscal agents, the caregiver receives a W-2. In some informal arrangements or agency-managed SFC programs, the caregiver may receive a 1099 and bear responsibility for self-employment tax. Families should confirm the classification with their program’s fiscal agent or provider agency before the tax year ends—reclassification after the fact is complicated.
State income tax implications
Whether and how each state taxes Medicaid caregiver income varies. Some states exempt certain Medicaid payments from state income tax; others treat them as ordinary income. No comprehensive public source covers all 50 states’ treatment of Medicaid caregiver wages. Families should consult a tax professional familiar with their state’s rules, or contact their state department of revenue, before making assumptions about state tax liability.
For families managing an aging parent’s finances, understanding the full tax picture before starting a paid arrangement avoids year-end surprises.
How Paid Caregiving Affects Social Security and Other Benefits
Beyond annual tax obligations, family caregivers should understand how paid caregiving income affects their own long-term benefits—particularly Social Security.
Earned income credits and Social Security quarters
Wages from Medicaid-funded caregiving count as earned income for Social Security purposes. This means a family member who leaves the workforce—or reduces hours—to provide care and receive Medicaid caregiver wages continues to accumulate Social Security quarters of coverage. Workers generally need 40 quarters (10 years) of covered earnings to qualify for Social Security retirement benefits. Each dollar of earned income from a caregiving arrangement, reported on a W-2 or Schedule SE, counts toward those quarters.
For family members who stepped away from traditional employment to provide care, this is a meaningful distinction. Informal, unpaid caregiving earns no Social Security credits. Paid caregiving through a Medicaid program does.
Impact on retirement benefits
Social Security retirement benefits are calculated based on a worker’s 35 highest-earning years. Caregiving wages, while often lower than prior employment income, still enter the calculation. For a caregiver whose earnings record has gaps from prior unpaid caregiving years, adding even modest Medicaid caregiving wages to the record can improve the eventual retirement benefit calculation by replacing zero-earnings years.
Families should contact the Social Security Administration (ssa.gov) directly for an estimate of how caregiving wages will affect a specific individual’s projected retirement benefit—especially if the caregiver is within 10–15 years of retirement age.
SSDI and SSI eligibility considerations
For family caregivers who themselves have disabilities and receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), earning Medicaid caregiver wages introduces complexity. SSDI recipients must stay below the Substantial Gainful Activity (SGA) threshold to maintain eligibility. SSI recipients face an earned income exclusion ($65 per month, then 50 cents for every additional dollar earned) that reduces SSI payments as wages rise. Earning caregiver wages does not automatically disqualify an SSDI or SSI recipient, but it may affect benefit amounts or trigger a review. For caregiver support and resources, the SSA’s Ticket to Work program and Benefits Counseling services can help caregivers with disabilities evaluate the impact before starting a paid arrangement.
How to Find and Apply for Paid Caregiving Programs
Contacting your state Medicaid agency
The first step is to contact your state Medicaid agency—specifically the division that administers Long-Term Services and Supports (LTSS) or Home and Community-Based Services (HCBS). Every state’s Medicaid agency maintains a list of approved waivers and can confirm whether a consumer-directed or structured family caregiving option exists for the care recipient’s situation.
An alternative entry point is the local Area Agency on Aging (AAA), which can connect families with state waiver coordinators, help assess eligibility, and often assist with the application process. The Eldercare Locator (eldercare.acl.gov) connects families to their local AAA by zip code.
Navigating waiver enrollment and waiting lists
Waiver enrollment typically begins with a functional assessment—usually conducted by a state Medicaid assessor or contracted agency—to determine whether the care recipient meets the nursing-home level of care requirement. Financial eligibility is determined separately through the standard Medicaid application process.
If the applicable waiver has a waiting list, the care recipient’s name is placed on the list upon determination of eligibility. Wait times vary by state, waiver, and geographic area. Families in states with longer waits sometimes explore whether multiple waivers exist for the same population—some states operate parallel waivers with different waiting periods—or whether the enrollee qualifies for a state plan option (like Section 1915(k)) that does not have enrollment caps.
Upcoming transparency rules (July 2026)
Starting July 2026, a CMS rule requires states to report hourly payment rates for personal care, homemaker, home health aide, and habilitation services and publish that information on state websites. This transparency requirement will make it easier for families to compare rates across programs without filing information requests with individual state agencies. It will also support the kind of state-by-state rate comparisons that are currently difficult because of inconsistent state reporting.
For nursing home and care facility resources and broader program comparisons, the CMS website (cms.gov) maintains a directory of approved state HCBS waivers through the Medicaid and CHIP Program system.
Important: This article provides general information about paid family caregiving programs and Medicaid home care and is not financial, legal, or tax advice. Eligibility rules, benefit amounts, and program details vary by state and change frequently. Before making decisions about Medicaid planning, long-term care insurance, or estate matters, consult a licensed elder law attorney or a financial advisor who specializes in senior care.
Sources cited in this article:
- KFF Medicaid Home Care Support for Family Caregivers in 2025 (23rd Annual Survey) — https://www.kff.org/medicaid/medicaids-home-care-support-for-family-caregivers-in-2025/
- KFF Payment Rates for Medicaid Home Care Ahead of the 2025 Reconciliation Law — https://www.kff.org/medicaid/payment-rates-for-medicaid-home-care-ahead-of-the-2025-reconciliation-law/
- KFF How Do Medicaid Home Care Programs Support Family Caregivers? — https://www.kff.org/medicaid/how-do-medicaid-home-care-programs-support-family-caregivers/
- KFF Medicaid Home Care HCBS in 2025 — https://www.kff.org/medicaid/medicaid-home-care-hcbs-in-2025/
- KFF Key State Policy Choices About Medicaid Home and Community-Based Services — https://www.kff.org/medicaid/key-state-policy-choices-about-medicaid-home-and-community-based-services/
- Bureau of Labor Statistics, Occupational Outlook Handbook: Home Health Aides and Personal Care Aides — https://www.bls.gov/ooh/healthcare/home-health-aides-and-personal-care-aides.htm
- AARP: Indiana Caregiving Program Helps Hoosiers Age in Place — https://states.aarp.org/indiana/indiana-caregiving-program-helps-hoosiers-age-in-place
- Last updated: 2026-09-03
- Article reviewed by: TheCareRatings editorial team