Monique is grateful she has a room in her home for her aging mother, Theresa, but caring for her is becoming more challenging by the day. Monique can’t work as much because she’s spending so much time with Theresa, which is making it harder to pay the bills.

Most seniors who live at home, like Theresa, depend on family and friends for care as they age. And most of the family and friends who provide that help, like Monique, don’t get paid. However, if Theresa is qualified for Medicaid and applies to the right program, the state could pay Monique to provide the care she was already giving to her mother, which should help with those bills. If she needed to, Theresa could even pay for that care in advance to help her qualify for Medicaid, and help Monique’s financial situation as soon as possible.

We, at Eldercare Resource Planning, can help you understand the availability of Medicaid’s paid caregiver programs and if the caregiver and care recipient can qualify. Connect with one of our Certified Medicaid Planners.

How Medicaid Pays a Family Member to Provide Care

There are several ways Medicaid can compensate a family member for providing care to a Medicaid recipient. Using Consumer Directed Care is the most common method, but Medicaid can also pay a family member as an adult foster care provider if they are qualified. It’s also possible to transfer ownership of a home to an adult child who has been providing care without violating Medicaid rules.

Consumer Directed Care

Medicaid coverage includes some type of Consumer Directed Care option in all 50 states and the District of Columbia. Consumer Directed Care gives the Medicaid recipient some control and decision-making power when it comes to their long-term care. In many states, Medicaid recipients are allowed to hire, and pay, family members or friends as caregivers through Consumer Directed Care.

Adult children are the typical caregivers in these situations, but almost any relative or friend can be paid as a caregiver through Consumer Directed Care. Some states even allow spouses to be hired and paid as caregivers via Medicaid, but not all. Consumer Directed Care is also known as Self-Directed Care, Participant Direction, Consumer Directed Services and, previously, as Cash and Counseling.

Depending on the state and the program, relatives and friend may need to go through a background check, training or a certification process, or perhaps all three, to qualify as Consumer Directed Care caregivers. Their pay rate will depend on the Medicaid recipient’s care needs and the average pay rate for home care aides in the area.

The Medicaid program that offers Consumer Directed Care can change depending on the state. Some states offer Consumer Directed Care through their Aged, Blind and Disabled (ABD) Medicaid, which is also called state plan or regular Medicaid for seniors, but shouldn’t be confused with the state plan or regular Medicaid that is available to financially limited people of all ages. If Consumer Directed Care is offered under the ABD Medicaid umbrella, it might be through a sub-program such as the Community First Choice Option or the Self-Directed Personal Assistance Services (PAS) State Plan Option.

Other states may offer Consumer Directed Care through a Home and Community Based Services (HCBS) Waiver. The names of these Waivers vary by state, and they tend to offer a variety of other long-term care services and supports in addition to any possible Consumer Directed Care option. Almost all HCBS Waivers require beneficiaries to need a Nursing Facility Level of Care (NFLOC), which means they need the kind of constant care and supervision usually associated with a nursing home. This is different than ABD Medicaid, which only requires beneficiaries to show a need for a long-term benefit to be eligible for that benefit.

Adult Foster Care

In a few states, family members can get paid for providing care through an adult foster care program. The Medicaid recipient would have to move into the home of the family member or friend caregiver if they weren’t living there already, or the family member or friend caregiver would have to move in with the Medicaid recipient. In either case, Medicaid would pay the family member for the long-term care they’re providing, which might include housekeeping, meal prep, transportation, supervision and personal care assistance with the Activities of Daily Living. However, it’s important to note that Medicaid will not cover room and board expenses such as mortgage payments, rent, utility bills and food expenses.

Child Caregiver Exemption

The Child Caregiver Exemption allows a Medicaid recipient to transfer their home to a qualified adult child without violating Medicaid rules. In most other cases, a Medicaid recipient could not transfer their home without violating the rules and losing their Medicaid coverage, and they couldn’t even pass the home along after their death because the state would likely try to collect reimbursement for their Medicaid long-term care expenses (a process known as estate recovery) via the sale of the home. To qualify, an adult child must have lived in the home for two years and provided care that prevented their parent from living in a nursing home or some other Medicaid-funded institution.

Using the Child Caregiver Exemption is very different than directly paying a family member as a caregiver, but receiving a home is fairly significant compensation for providing care. Before attempting to use this Exemption on your own, we recommend you contact one of our planning professionals.

How Paying a Family Member Can Help You Qualify for Medicaid

Medicaid is meant for people with limited financial resources, so in order to qualify you have to meet two financial requirements – an asset limit and an income limit. The income limit is not directly relevant to this article, but the asset limit is.

In most states in 2024, the asset limit is $2,000. To make sure applicants don’t simply give away their assets, Medicaid uses the Look-Back Period. In most states, the Look-Back Period is five years, which means state officials will look back into an applicant’s financial history for the five years prior to their application date to make sure they have not given away any assets or sold them at less than fair market value. However, if you have assets that total more than $2,000 in value, there are methods you can use to reduce those assets and qualify for Medicaid. Paying a family member caregiver in advance is one of those methods.

To do this, the Medicaid recipient and family member would need to use a Personal Care Agreement. This is a written contract that details the care to be provided and how much the caregiver will be paid. There is no standard Personal Care Agreement used across all 50 states, but there may be a standard form in your state. To know what kind of details a Personal Care Agreement must include in your state, contact our team of professionals at Eldercare Resource Planning. Using an incorrect Personal Care Agreement could lead to your Medicaid application being denied and a penalty period of ineligibility.

Documenting Care from a Family Member

Not only is it crucial for the Personal Care Agreement to include the correct information and be correctly formatted, the care provided by the family member to the Medicaid recipient must also be carefully documented. They should maintain a log of the hours they were acting as a caregiver, what type of care they were providing and where they were providing it. This information might be needed during the Medicaid recipient’s annual renewal that confirms eligibility.

How a Medicaid Planner Can Help Family Member Caregivers Get Paid

Any time you’re overseeing financial transactions, you should understand all the rules and ramifications of the transactions, and that’s especially true when it comes to paying family members as caregivers via Medicaid. Doing this incorrectly could lead to a loss of Medicaid coverage. The best way to avoid that is by consulting with our team of professionals at Eldercare Resource Planning.

Our planners know which programs in which states offer Consumer Directed Care. They can tell you who can be a paid family caregiver in your state, what they need to do to qualify and how much they can get paid. They can let you know if becoming an adult foster care provider (or recipient) is right for you, or if you’re in position to utilize the Child Caretaker Exemption.

We can tell you the asset limit in your state, if you’re above or below it, and if it makes sense for you to pay in advance for care to meet that limit. If it does make sense for you to take that route, we’ll make sure your Personal Care Agreement meets all of your state’s specifications. And we can help you set up a journal to accurately record all the care being provided.

If you’re one of the many people providing care to a senior family member without being paid, get in touch with us. We can help you get the compensation you deserve.