CostsUpdated July 4, 202611 min readReviewed by the CareMatch care team
If you're already providing care unpaid, there's a decent chance you can be paid for it. Not always a lot — but often enough to matter, especially if you've had to cut back on work. Here are the four real paths in 2026.
53M
US family caregivers
$470B
Annual value of unpaid family caregiving
$7,200
Average annual out-of-pocket cost per family
Path 1 — Medicaid self-directed care
Every US state now has some version of a Medicaid program where the person receiving care chooses (and directs) their own caregiver — including many family members. The specific name varies:
- California: In-Home Supportive Services (IHSS)
- New York: Consumer Directed Personal Assistance Program (CDPAP)
- Texas: Consumer Directed Services (CDS)
- Florida: Long-Term Care program with self-direction option
- Georgia: Structured Family Caregiving (SFC)
Who qualifies: the older adult must be Medicaid-eligible (income and asset limits vary by state) and assessed as needing long-term care. In most states, adult children can be the paid caregiver. Spouses qualify in about half of states.
What it pays: typically $12–$25/hr, with weekly hours capped by the assessed level of need.
How to apply: contact the state Medicaid office or an Area Agency on Aging (call 1-800-677-1116). The process takes 60–120 days.
Path 2 — VA benefits
If your parent is a wartime veteran or a surviving spouse, two programs pay family caregivers:
- Aid & Attendance — up to about $2,300/mo for a single veteran, $2,700/mo for a married veteran (2026), paid to the veteran, who can then pay a family member for care.
- Veteran-Directed Care — a monthly budget the veteran uses to hire and pay caregivers, including family. Available in most VA regions.
- Program of Comprehensive Assistance for Family Caregivers (PCAFC) — for post-9/11 veterans and, since 2020 expansion, eligible earlier eras. Pays a monthly stipend directly to the family caregiver.
Path 3 — Long-term care insurance
Many long-term care insurance policies cover in-home care, and some allow family members to be paid. Two things to check in the policy:
- Does it cover "informal" or "non-licensed" caregivers?
- Does it require the caregiver to work through a licensed agency?
Policies vary widely. Some will pay a family member directly; some require you to be employed by an agency (a workaround is having the family member work through a marketplace or agency that handles payroll).
Path 4 — Family caregiver agreement (private pay)
When care is paid from the older adult's own funds, a written agreement is essential. It should specify:
- Hourly rate (market-based — usually $18–$30/hr in most regions)
- Hours per week
- Specific duties (bathing, meds, meals, transport, etc.)
- Payment schedule
- Effective date and termination terms
Why it matters: without a formal agreement, payments look like gifts. If Medicaid is needed later, the 5-year lookback will treat those payments as disqualifying transfers unless there's a written contract, market-rate documentation, and paid taxes. Draft with an elder-law attorney — one hour of legal fees now saves months of Medicaid delays later.
The tax side
- Payments from Medicaid or the VA are usually reported as W-2 or 1099 wages — the family caregiver files them as income.
- Some Medicaid caregiver payments to a family member living with the care recipient are exempt from federal income tax under IRS Notice 2014-7. Check with a tax preparer.
- Private-pay caregiver income is fully taxable — Social Security and Medicare tax may apply as household-employer.
If you'd rather step back from hands-on care and use these funds for a professional caregiver, the same Medicaid, VA, and LTC insurance programs typically pay for that too.
FAQ
Frequently asked questions
No. Traditional Medicare does not pay family caregivers — it only pays for short-term skilled care after a hospital stay, delivered by a licensed home-health agency. Some Medicare Advantage plans have limited in-home support benefits, but they don't pay family. For family pay, look to Medicaid, the VA, or long-term care insurance.
Every state now has a Medicaid program that lets an eligible older adult choose their own caregiver — including many family members — and Medicaid pays that person a wage. Names vary by state (Consumer Directed Personal Assistance, Cash & Counseling, Structured Family Caregiving, In-Home Supportive Services, etc.). Spouses can be paid in some states; adult children can be paid in most.
Typically $12–$25/hr depending on the state, capped by weekly hour limits based on the assessed level of need. It's rarely a replacement for a full-time salary, but for someone already providing 20+ hours of unpaid care, it can meaningfully offset lost income.
A written contract between an older adult and a family member being paid for care, using the older adult's own funds. Important for two reasons: it makes the payments legitimate (not gifts), and it protects Medicaid eligibility down the road — without the agreement, payments can look like disqualifying transfers when Medicaid does its 5-year lookback. Always draft one with an elder-law attorney.
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