Programs That Pay Family Members for Elder Care: A Comprehensive Guide

More than 53 million Americans are family caregivers, with over 34 million of those caring for adults aged 50 and above.1 If you’re among them, you likely see your caregiving as an act of love. However, the value you provide is immense, extending far beyond emotional support. Family caregiving saves healthcare systems and insurance providers billions annually by reducing hospitalizations and emergency room visits for older adults. You also contribute to pharmaceutical company profits by ensuring medication adherence and free up crucial hospital resources for others in need.

AARP estimates that family caregivers collectively provide over $600 billion worth of care each year, based on professional home care hourly rates.2 Despite this significant contribution, few family caregivers receive financial compensation for their dedication.

Instead, approximately 40% of family caregivers reduce their work hours or leave their jobs entirely to manage caregiving responsibilities.3 This results in lost income, retirement savings contributions (401(k)), and reduced Social Security contributions. Without financial assistance, many caregivers deplete their savings and even incur debt to cover average annual out-of-pocket caregiving costs of around $7,200.4

This situation is unsustainable for both caregivers and public health systems. Fortunately, various organizations are working to address this issue. In the meantime, it’s crucial for family caregivers to understand the existing compensation opportunities available to them.

Medicaid Programs for Family Caregiver Payment

Understanding Medicaid

Medicaid is a government-funded program designed to help eligible Americans with healthcare costs. Each state manages its own Medicaid program with specific rules, eligibility criteria, and benefits, while adhering to federal Medicaid guidelines. Importantly, many state Medicaid programs offer pathways for paying family members to provide care for eligible individuals.

Medicaid Eligibility Requirements

Medicaid eligibility for seniors (65+) and individuals with disabilities hinges on strict income limitations. In 2024, state income limits for Medicaid Home and Community Based Services or Medicaid Waivers range from $914 to $2,742 per month. Furthermore, assets like savings and investments often need to be significantly spent down on healthcare expenses before Medicaid long-term care coverage becomes accessible.

Medicaid Payment Options for Family Caregivers

• Medicaid Personal Care Services (PCS): PCS is a Medicaid benefit covering assistance with activities of daily living (ADLs), such as bathing, dressing, eating, and using the toilet. A physician’s order, a documented care plan, and nurse supervision are typically required for PCS. Many state Medicaid programs allow family members to be paid caregivers under PCS.

• Medicaid Home and Community-Based Services (HCBS) 1915(c) Waivers: HCBS Waivers enable states to fund long-term care services in home and community settings instead of institutional nursing homes. These waivers can cover services for older adults needing nursing home-level care but who can remain at home with appropriate support. Services can encompass personal care, adult day health, respite care, and other supports to prevent institutionalization. Numerous states with HCBS Waivers permit payment to family members for providing personal care. The State Waivers List on Medicaid.gov provides state-specific information.

How Medicaid Family Caregiver Payments Work

Most states feature “consumer-directed” or “self-directed” care options within their Medicaid programs. These options facilitate hiring family caregivers to deliver Personal Care Services. Program names vary by state but often include Consumer-Directed Personal Assistance Services, Cash & Counseling, and Self-Directed Services.

Family caregivers must usually meet state-mandated training and/or certification criteria, often including background checks. Pay rates for family caregivers are generally aligned with prevailing rates for home care aides in the specific state, potentially ranging from $13-$18 per hour or higher.5

Steps to Become a Paid Family Caregiver Through Medicaid

While the exact process differs by state, common steps include:

1. Medicaid Eligibility Check: Determine if your family member qualifies for Medicaid and if the state Medicaid program allows payment to family caregivers. Contact the relevant state Medicaid program for this information.
2. Medicaid Enrollment: If both answers are affirmative, collaborate with the state Medicaid office to enroll your family member in Medicaid. This process may take several weeks to months.
3. Self-Directed Care Application: Work with the state Medicaid office to complete the required paperwork for the self-directed care benefit, including obtaining a physician’s order for Personal Care Services for your family member.
4. Training and Certification: Fulfill any necessary training and certification requirements as specified by the state.

VA Programs for Family Caregiver Compensation

Understanding the Department of Veterans Affairs (VA)

The VA is a federal agency dedicated to providing benefits and services to veterans and their families. Its offerings include education, rehabilitation, disability compensation, home loans, pensions, burial services, and comprehensive healthcare through VA medical centers and clinics.

The VA currently offers four programs that can compensate family members caring for older or disabled veterans or their surviving spouses:

• Aid and Attendance Pension Benefit (A&A)
• Housebound Pension Benefit
• Program of Comprehensive Assistance for Family Caregivers (PCAFC)
• Veteran Directed Care (VDC)

VA Payment Options for Family Caregivers

Aid and Attendance Pension Benefit (A&A)

• Eligibility: Veterans or surviving spouses eligible for a basic VA pension or survivor pension may qualify for A&A if they need assistance with ADLs (bathing, dressing, grooming, meal preparation, medication management) and/or have Alzheimer’s disease.
• How it Works: A&A provides a monthly cash allowance to the eligible veteran or surviving spouse. These funds can be used at their discretion, including paying for in-home care from family members (excluding spouses).

Housebound Pension Benefit

• Eligibility: Veterans or surviving spouses eligible for a basic VA pension or survivor pension may qualify if they are permanently disabled and unable to leave their home.
• How it Works: The Housebound Pension Benefit provides a cash benefit that can be used to hire a friend or relative (excluding a spouse) for in-home care.

Program of Comprehensive Assistance for Family Caregivers (PCAFC)

• Eligibility: Veterans who experienced critical injuries or serious illnesses in the line of duty and are enrolled in VA healthcare may qualify for PCAFC if they have a VA disability rating of at least 70% (individual or combined) and require personal care for at least six months due to inability to perform one ADL and/or require supervision.
• How it Works: PCAFC provides monthly cash benefits to family caregivers, along with access to education, training, counseling, and up to 30 days of respite care annually.

Veteran Directed Care (VDC)

• Eligibility: Veterans enrolled in the VA medical benefits package who require skilled services and ADL assistance may be eligible for VDC.
• How it Works: VDC provides a monthly budget (not direct cash payment) to the veteran to manage their care needs, including medical equipment or caregiver services. Caregivers can be adult children, grandchildren, spouses, or other relatives. A designated service manages the budget and pays family caregivers or equipment suppliers. This program is currently available in 43 states, Washington DC, and Puerto Rico, with expansion underway in the remaining states (Delaware, Georgia, Kansas, Minnesota, Nebraska, North Dakota, and Rhode Island). Contact your local Area Agency on Aging (AAA) for local program availability.

Steps to Become a Paid Family Caregiver Through the VA

Navigating the VA system can be complex and time-consuming. Organizations like the Elizabeth Dole Foundation and the American Legion (202-263-5759) offer support to military caregivers seeking VA benefits.

Paid Family Leave for Caregiving

Understanding Paid Family Leave

Paid family leave laws build upon the federal Family Medical and Leave Act (FMLA). While FMLA provides unpaid, job-protected leave with continued health insurance, state-level paid family leave offers partial or full income replacement when employees need to take time off work to care for a family member with a serious health condition. Currently, 11 states (California, Colorado, Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington) and Washington, DC have enacted paid family leave. Delaware, Maine, Maryland, and Minnesota are set to implement programs in 2025 and 2026.

Some employers also offer their own paid family leave policies. Regardless of your state’s paid leave status, check with your HR department about employer-provided paid family leave benefits.

Paid Family Leave Eligibility

Each state with paid family leave defines its own eligibility criteria, wage replacement levels, leave duration, and definition of “family member.” Online resources provide detailed information on state-specific family leave laws.

How Paid Family Leave Works

Paid family leave mechanisms vary by state.

In some states, eligibility is automatic for employees of participating employers. “Participating employers” often include all public employers and private employers with 50+ employees who meet FMLA requirements: employee tenure of at least one year and 1,250+ hours worked in the 12 months preceding leave.

Other states offer voluntary state-run paid leave insurance programs. This model often extends paid family leave access to individuals working for smaller employers or who are self-employed, as they can opt to purchase coverage.

Steps to Access Paid Family Leave for Family Caregiving

Once you’ve confirmed your paid family leave eligibility, follow the specific application process for your state and/or employer. Typical steps include:

1. Employer Notification: Inform your employer of your need for family leave.
2. Healthcare Provider Certification: Request your loved one’s healthcare provider to provide written certification of their health condition and need for care.
3. Employer Forms: Your employer will provide necessary forms for you to complete and return.
4. State Application (if applicable): Your state may have an online portal for paid family leave applications and document submission.
5. Timely Notification: If possible, provide 30-day advance notice to your employer. If not, notify them as soon as possible.

Long-Term Care Insurance (LTCI) for Family Caregiver Payment

Understanding Long-Term Care Insurance

Long-term care insurance (LTCI) is private insurance that can cover costs associated with nursing homes, assisted living, home healthcare, skilled nursing, personal care, homemaker services, adult day care, hospice care, and respite care for individuals needing ADL assistance. LTCI offers greater flexibility and choice compared to government programs like Medicaid, which have strict financial limitations.

LTCI Eligibility for Family Caregiver Payment

Unfortunately, only around 3% of adults over 50 have LTCI.6 This is partly due to lack of awareness and the cost of premiums, which can range from a few thousand to $10,000 annually depending on age, health, and coverage choices. If your family member has LTCI, it presents a potential payment avenue.

However, some LTCI policies only cover facility-based care (nursing homes, assisted living) and not in-home care. Among policies covering in-home care, only some will pay family members (“informal caregivers”).

If your loved one’s LTCI policy covers informal caregivers, you may be eligible for payment. The policy will likely require the care recipient to meet benefit eligibility criteria, such as needing assistance with a specific number of ADLs or having cognitive impairment.

How LTCI Payments Work

LTCI payments can be structured in two primary ways:

1. Cash Payments: Policies allowing cash payments for informal care will directly send the monthly benefit amount to the policyholder, who can then use these funds to pay the family caregiver.
2. Reimbursement: Policies using reimbursement require submission of invoices or care documentation. The insurance company then reimburses the policyholder for covered costs.

Steps to Get Paid as a Family Caregiver Through LTCI

1. Policy Eligibility Verification: Confirm that your family member’s LTCI policy provides benefits and covers “informal caregivers.” Initiate a claim with the insurance company.
2. Assessment/Care Plan: The insurance company may request an assessment or care plan detailing your family member’s care needs.
3. Elimination Period: Understand that there is typically an “elimination period” (similar to a deductible) before benefits begin, during which you will not be paid.
4. Payment Claiming: After the elimination period, you can begin submitting claims for payments from the LTCI provider.
5. Resource for LTCI Payment: Explore this NCOA partner resource for further guidance on LTCI and family caregiver payment.

Personal Care Agreements for Family Caregiver Compensation

Understanding Personal Care Agreements

A personal care agreement is a legally binding contract created within a family. It designates one or more family members as caregivers and specifies the payment amount for their services. This document is particularly important if the care recipient may eventually need Medicaid, as it provides proof of asset spend-down on healthcare. Without proper documentation, payments made to family caregivers might be considered gifts and could negatively impact Medicaid eligibility.

Personal Care Agreement Eligibility

Any family can establish a personal care agreement if they have the financial means and desire to compensate a family caregiver.

How Personal Care Agreements Work

A personal care agreement outlines the duties and responsibilities of the family caregiver(s) and the agreed-upon compensation, typically based on local professional caregiver rates. Once in place, the care recipient can pay the caregiver according to the agreement’s payment schedule.

Steps to Create a Personal Care Agreement for Family Caregiving

1. Family Discussion: Discuss the personal care agreement option with family members.
2. Rate Research: Research local in-home caregiver rates to determine a reasonable hourly rate.
3. Legal Consultation: If the family agrees, consult with an elder law attorney to draft the agreement.
4. Record Keeping: Maintain detailed records of care hours, expenses, and payments received.

Compensation Gaps and Future Solutions

The payment options discussed primarily benefit specific groups:

• Family caregivers of low-income seniors eligible for government assistance.
• Family caregivers whose loved ones can afford LTCI or out-of-pocket payments.
• Family caregivers of certain veterans.
• Family caregivers in states with paid family leave who can balance employment and caregiving (limited to 12 weeks of paid leave per year).

Unfortunately, many family caregivers do not fit into these categories. However, there is hope for broader solutions. Innovative companies like RubyWell are actively working to address the caregiving crisis. Continued advocacy and collaboration with state and federal governments are crucial to implement policies that make compensation solutions accessible to all family caregivers in need.

FAQ

How much do family members get paid for caregiving?

Family caregiver compensation varies based on the payer (program or individual), location, and local caregiver rates. Payment should align with prevailing rates for paid caregivers in your area.

To determine local rates:

1. Contact local home care agencies and inquire about their average hourly rates for professional in-home caregivers.
2. Review resources like this article, which lists average hourly and monthly in-home caregiver salaries by state.

Are there tax benefits for paid family caregivers?

Yes, several tax benefits may be available to family caregivers:

• Credit for Other Dependents: Potentially reduces taxes by up to $500 for eligible caregivers.
• Medical Expense Deduction: Allows deduction of unreimbursed medical expenses exceeding 7.5% of adjusted gross income, including home healthcare, adult day care, and home modifications.
• Head of Household Filing Status: Some caregivers meeting specific criteria, such as paying over half of household expenses, may qualify for Head of Household status.
• Child and Dependent Care Credit: Reimburses up to $3,000 for care expenses paid while working, even if the care recipient is not a dependent but resides with you and cannot self-care.

For detailed information on these tax credits, refer to Money Saving Tips for Family Caregivers.

Are there training requirements for paid family caregivers?

Training requirements depend on the payer, program, and state. Personal care agreements and paid family leave typically do not mandate training. However, government-funded programs and LTCI policies often require state-specific training, registration, or certification for compensation eligibility.

Regardless of formal requirements, training can enhance caregiver confidence and care quality. Inquire with the care recipient’s healthcare provider about family caregiver training opportunities. A new Medicare rule in 2024 enables Medicare to reimburse eligible providers for offering training and education to family caregivers of their patients.

Sources

1. National Alliance for Caregiving and AARP. Caregiving in the U.S. Found on the internet at:Found on the internet at https://www.caregiver.org/resource/caregiver-statistics-demographics/

2. AARP. Valuing the Invaluable 2023 Update: Strengthening Supports for Family Caregivers. Found on the internet at: https://www.aarp.org/pri/topics/ltss/family-caregiving/valuing-the-invaluable-2015-update/

3. Family Caregiver Alliance. Caregiver Statistics: Work and Caregiving. Found on the internet at https://www.caregiver.org/resource/caregiver-statistics-work-and-caregiving/

4. AARP. Family Caregivers Spend More Than $7,200 a Year on Out-of-Pocket Costs. Found on the internet at https://www.aarp.org/caregiving/financial-legal/info-2021/high-out-of-pocket-costs.html

5. Care.com. Here’s the average monthly in-home caregiver salary in every state. Found on the internet at: https://www.care.com/c/average-in-home-caregiver-salary-by-state/

6. JRC Insurance Group. Long-Term Care Statistics 2022. Found on the internet at: https://www.jrcinsurancegroup.com/long-term-care-statistics/