Caring for a parent or relative is rewarding—and expensive. The good news: in 2025 more programs than ever can legitimately pay family caregivers. The not-so-good news: eligibility, dollar amounts, and rules vary by state, program, and the older adult’s situation. This guide breaks down every major pathway—state and federal programs, veterans’ benefits, paid family leave, disease-specific grants, and even tax considerations—so you know where to start, what to expect, and how to apply.

Quick truth: Traditional Medicare does not pay family members as caregivers. Most direct pay to relatives flows through Medicaid (state/federal), VA programs, certain state paid family leave systems, and a patchwork of nonprofits/grants—plus occasional coverage via long-term care insurance policies. 

1) Medicaid: the primary route to ongoing pay for family caregivers

Why it matters: In every state, at least one Medicaid option now allows some form of payment to family caregivers—most often through self-directed or consumer-directed home- and community-based services (HCBS). In these models, the older adult (or their representative) can hire, train, and pay a family member. Pay rates, hours, and which relatives qualify are set by each state. 

How self-direction works: Medicaid gives the participant a care plan and budget for tasks like bathing, dressing, meal prep, and transportation. The family caregiver becomes the worker of record (often W-2 through a fiscal agent), submits time, and is paid an hourly wage determined by the program. States use various authorities: 1915(c) waivers, 1915(j) personal assistance, state plan personal care, and sometimes 1115 demos. 

Who qualifies (big picture): The older adult must qualify for Medicaid and meet a functional “nursing home level of care” (or similar) to receive HCBS. Financial limits differ by state and pathway. As a 2025 reference point, many states use ~$2,901/month income and ~$2,000 asset limits for long-term care Medicaid/HCBS for a single adult (exceptions exist; spousal rules can protect a well spouse). Some states use medically-needy “spend-down” routes. Always check the state’s exact thresholds. 

State examples (to make it concrete):

California – IHSS: The In-Home Supportive Services program pays family caregivers (including, in many cases, spouses). Hourly rates are county-negotiated; a current reference point is around $18–$21/hour depending on county and backup programs. Providers submit timesheets to the state and receive W-2s. 

New York – CDPAP: The Consumer Directed Personal Assistance Program lets Medicaid enrollees hire family and friends as personal assistants, but historically not spouses/legal guardians (confirm current rules locally as the program is undergoing administrative changes). Wages are set via managed care/fiscal intermediaries; the state has been centralizing payroll through a single vendor, with litigation and transition updates ongoing. 

Washington – TSOA / MAC: WA’s Tailored Supports for Older Adults (TSOA) and Medicaid Alternative Care (MAC) support unpaid family caregivers with monthly stipends or services (TSOA has higher income thresholds than standard Medicaid). Typical TSOA assistance has ranged in the hundreds per month and is structured as caregiver support; exact amounts depend on assessment and current community rates. 

Limits and wait lists: Some HCBS waivers have waiting lists; nationally, hundreds of thousands have waited for services in recent years, and CMS is pushing for more transparency by 2027. Plan ahead and apply early. 

How to apply: Start with your state Medicaid office/aging agency or your county social services. If you know the specific program name (e.g., IHSS, CDPAP), apply there. Your local Area Agency on Aging can point you to the correct intake door. 

2) Veterans: stipends and flexible budgets that can pay family

If your loved one is a Veteran, there are two powerful paths that can pay family caregivers directly or indirectly.

A) Program of Comprehensive Assistance for Family Caregivers (PCAFC)

For eligible Veterans with serious service-connected conditions who need personal care, PCAFC can provide the Primary Family Caregiver a monthly tax-free stipend, health insurance via CHAMPVA (if uninsured), mental health services, and travel benefits when accompanying the Veteran. Stipends are pegged to the federal GS-4 Step 1 pay in the Veteran’s locality and paid at either 62.5% or 100% depending on need level. That translates to roughly ~$1,700–$2,800+ per month in many regions (actual amounts vary by locality). 

Eligibility & application: The Veteran and caregiver must meet clinical and administrative criteria; apply through VA’s Caregiver Support Program. A local VA team assesses needs and assigns the stipend level. 

B) Veteran-Directed Care (VDC / VD-HCBS)

VDC gives eligible Veterans a flexible monthly budget to self-direct services—often used to hire family as paid caregivers through a fiscal intermediary. Budgets vary by assessment and local policy. Apply via the VA health system or through your Area Agency on Aging that operates a VDC program. 

Related: VA Pension with Aid & Attendance

If the Veteran (or surviving spouse) qualifies for VA Pension, the Aid & Attendance add-on increases the monthly pension when help with daily activities is needed. While this is not a wage for the caregiver, the extra, tax-free cash can help pay a family caregiver. 2025 MAPRs vary by marital/dependency status (e.g., ~$33,548/year threshold used in VA’s own example for a married Veteran with A&A). Apply through VA Pension channels. 

3) State Paid Family Leave: short-term wage replacement while you care

A growing list of states/DC run Paid Family Leave (PFL) programs that replace a portion of your wages for several weeks while you care for a seriously ill family member. This is temporary income, not a long-term caregiving wage, but it can bridge time away from work. Coverage, duration, and replacement rates vary; many programs pay 50–80% of wages up to a weekly cap (California’s cap is currently in the $1,600/week range). Check your state’s program for caregiver eligibility, covered relationships, and how to claim. 

4) Nonprofits, vouchers, and disease-specific grants

If Medicaid/VA/PFL aren’t a fit or you need a stopgap, look at respite vouchers and disease-specific help:

• Lifespan Respite and state respite voucher programs: Many states provide caregiver vouchers that you can use to pay for short-term respite (you choose the provider, which can sometimes be a trusted family/friend). Find your state’s options via ARCH’s locator and voucher hub. 
• Disease-specific nonprofits: Organizations like the Multiple Sclerosis Foundation offer Homecare Assistance Grants (and emergency aid) that can fund short-term home care or respite. Other disease nonprofits and local foundations sometimes offer similar micro-grants. 
• National Family Caregiver Support Program (NFCSP): Federal dollars flow to states and local Area Agencies on Aging for caregiver training, counseling, equipment, and respite—not usually wages, but supports that reduce out-of-pocket costs. Contact your AAA to access. 

5) Long-term care insurance (LTCi) and Medicare Advantage: sometimes, but read the fine print

Some long-term care insurance policies will reimburse family caregivers if the policy permits it and the family member meets the insurer’s criteria (training, agency affiliation, or licensed status may be required). Always obtain written confirmation of benefits before you start. 

Medicare Advantage plans (Part C) may offer supplemental in-home support benefits in limited cases. This is not a reliable route to pay a relative, but plan extras can cover short-term help, home modifications, or respite. Ask the plan directly about any in-home support services and whether family caregivers can be paid. 

6) How much can a family caregiver actually get paid?

It depends on the program and the care plan. A few current benchmarks:

• Medicaid self-directed HCBS (state programs): Hourly wages generally mirror local home-care aide pay and negotiated rates. In California’s IHSS, for example, county rates around $18–$21+/hour are common this year (Los Angeles County publicly cites $18.50; state backup programs pay slightly more). Hours are authorized based on assessed need. 
• New York CDPAP: Hourly rates vary by county/plan/fiscal intermediary and are under active transition; confirm current rates and whether spouses are eligible in your county. 
• VA PCAFC stipend: Based on GS-4 Step 1 locality at either 62.5% or 100% of that rate. Example figures published for several cities show roughly $1,700–$2,800+ per month to primary caregivers, depending on locale and tier. 
• Washington TSOA (caregiver support): Assistance is monthly, not hourly wage, and may average in the mid-hundreds per month depending on assessment and available budget. 

7) Who can be paid (spouses, adult children, friends)?

Rules vary. In most Medicaid self-directed programs, adult children and other relatives can be hired. Spousal eligibility varies a lot—allowed in some states/programs (e.g., many CA IHSS cases), barred in others (e.g., longstanding NY CDPAP restriction for spouses/legal guardians—verify current status amid administrative changes). Many programs exclude legal guardians. Confirm with your state. 

VA PCAFC requires the caregiver be at least 18 and meet relationship/residency criteria (family or non-family). VDC is flexible and often allows family. 

8) Taxes and your paycheck: what to know

Most Medicaid/VA caregiver payments are taxable wages unless you qualify for a narrow exclusion. The big exception is IRS Notice 2014-7 (“difficulty of care”): certain Medicaid waiver payments are excludable from federal income tax when the caregiver and the care recipient live together and the payments meet specific waiver criteria. Many states implement this through a W-2 that shows informational amounts and instructions not to include the income in federal taxable wages, and some (like California) also clarify state tax handling and EITC treatment. These rules are nuanced—talk to a tax pro. 

• California IHSS example: Live-in IHSS/WPCS providers who self-certify may exclude wages from federal and state income tax, and California allows excluding it while still counting it as earned income for the CalEITC. You may still receive an informational W-2. 
• Not everything is excluded: Respite pay, training stipends, and some other payments don’t qualify for the exclusion. The IRS FAQ and state guidance outline scenarios. 

9) Step-by-step: how to turn your caregiving into paid work

1. Confirm the likely pathway.
   • If the older adult has limited income/assets and needs daily help, your best bet is Medicaid HCBS (self-directed). If a Veteran, add PCAFC and VDC to the top of the list. If you need short-term income to take time off, check state Paid Family Leave. For stopgaps, look at respite vouchers and disease grants. 
2. Contact the right door.
   • Area Agency on Aging (AAA) / Eldercare Locator (800-677-1116) to identify your state’s Medicaid HCBS intake, caregiver vouchers, and local help. 
   • State Medicaid office for HCBS/self-direction applications and eligibility screening; check waiver names and criteria. 
   • VA Caregiver Support Program (PCAFC) and VA health system (VDC) if applicable. 
3. Document need.
   • Gather medical records, medication lists, and a log of daily activities needing help (bathing, dressing, toileting, mobility, meals, transportation). Strong documentation supports hours and budget authorization. (See CMS/MACPAC self-direction guidance for how person-centered plans drive budgets.) 
4. Complete caregiver onboarding.
   • Expect background checks, I-9/W-4, enrollment with a fiscal intermediary, caregiver training, and electronic timekeeping. Programs will set the authorized hours per week and hourly wage or monthly budget. 
5. Plan for gaps.
   • If a waiver has a wait list, apply for TSOA/MAC-style supports (if in WA), NFCSP respite, and respite vouchers to bridge time. If you’re employed, consider Paid Family Leave while long-term benefits are set up. 

10) Eligibility snapshots (2025)

• Medicaid long-term care/HCBS (typical states): Single adult income often around $2,901/month and assets ~$2,000; numerous exceptions and spousal protections exist. Some states use medically-needy spend-down to qualify people over the limits. 
• Washington TSOA (caregiver support): 2025 individual income limit ~$3,868/month with program-specific rules. 
• VA PCAFC stipend: Formula based on GS-4 Step 1 and tiered at 62.5% or 100%; actual monthly dollars depend on your locality. 
• State Paid Family Leave: Most pay 50–80% of wages up to a cap for 6–12+ weeks depending on the state; check your state for caregiver coverage and definitions of “family member.” 

11) Common questions

Can I, as a spouse, be paid?

Sometimes. California IHSS often allows spouses; New York CDPAP has historically excluded spouses/legal guardians. Always verify your state’s rules; spousal pay is one of the most variable policies in the country. 

What if my loved one isn’t poor enough for Medicaid?

Check TSOA-type caregiver supports (where available), Paid Family Leave, NFCSP services, disease-specific grants, and whether their LTC insurance will pay a family caregiver. Some states also offer tax credits for family caregivers (varies widely and changes often). 

Is this income taxable?

Usually yes—unless you qualify under IRS Notice 2014-7 (live-in Medicaid waiver care). California provides additional guidance for IHSS. When in doubt, show your W-2s and care arrangement to a tax pro familiar with Notice 2014-7. 

How long does it take to set up?

Timelines vary. Programs with wait lists can take months; VA PCAFC and VDC require clinical/administrative reviews. Apply early, and use respite vouchers and Paid Family Leave to bridge gaps. 

12) Where to start (with links)

1. Find your local AAA / Eldercare Locator (national hotline & website): They’ll route you to Medicaid HCBS intake, caregiver supports, and local respite funds. Phone 1-800-677-1116. 
2. Medicaid self-direction basics (what it is and how it works): CMS overview and MACPAC explainer. 
3. State programs & examples:
   • California IHSS (rates, provider rules). 
   • New York CDPAP (program rules and transition news). 
   • Washington TSOA/MAC (caregiver supports). 
4. Veterans: PCAFC (stipends, eligibility) and Veteran-Directed Care (self-directed budgets). 
5. Paid Family Leave: Up-to-date state-by-state status and typical wage replacement. 
6. Respite vouchers & caregiver grants: ARCH National Respite Network; MS Foundation Homecare Assistance Grants as an example of disease-specific help. 
7. Taxes: IRS Notice 2014-7 FAQ for Medicaid waiver payments; California IHSS tax guidance. 

13) Practical tips to maximize your chance of approval

Document need like a pro. Keep a daily log for two weeks noting every assist (times and tasks). It strengthens level-of-care assessments and authorized hours/budgets. (Person-centered planning drives these budgets in self-direction.) 

Ask about “spend-down” and spousal protections. If income is a hair over the limit, medically-needy pathways can still qualify someone by offsetting income with medical costs; spousal impoverishment rules protect a well spouse’s income/assets in many Medicaid pathways. 

If you’re employed, stack benefits. Use Paid Family Leave while you finish Medicaid or VA onboarding so household cash flow doesn’t crater. 

Don’t overlook “supports” that save money even if they don’t pay wages. NFCSP services, respite vouchers, equipment grants, and transportation can materially reduce your costs and stress. 

Re-assess annually (or when needs change). Hours and stipend tiers can increase with documented decline. VA PCAFC, Medicaid HCBS, and TSOA all respond to updated assessments. 

14) Bottom line

If you’re caring for an older adult, there are pathways to get paid:

• Medicaid self-directed HCBS is the most common route to ongoing hourly pay for family caregivers; eligibility and wages vary by state. 
• Veterans’ programs (especially PCAFC and VDC) can provide monthly stipends or budgets that compensate family caregivers. 
• State Paid Family Leave offers short-term wage replacement to care for a seriously ill family member. 
• Nonprofits and respite vouchers can fund breaks or short-term home care, and LTC insurance may reimburse family caregivers if the policy allows it. 
• Taxes matter: Learn whether IRS Notice 2014-7’s live-in waiver exclusion applies to your situation. 

Start with your Area Agency on Aging via the Eldercare Locator (800-677-1116) to identify the right local door. From there, get your documentation in order and apply to the programs that fit your loved one’s situation. The maze is real, but the dollars—and the relief—are out there.