How Can You Pay a Caregiver Through Medicaid? Rules, Waivers, and What to Expect

Many states let you pay a caregiver through a model called self-directed care. You may also hear it called consumer-directed care. Both names mean about the same thing. You get to choose who provides your care, and in most programs that person can be a friend or family member.

With self-directed care, you are in charge. You pick your caregiver, set the schedule, and decide how your care works day to day. Medicaid gives the money to pay that caregiver. The amount is based on a budget for your care. 

To see how this compares to hiring through an agency, read our blog on self-directed vs. agency home care.

You will hear the word waiver a lot in home care. A Medicaid waiver is special permission a state gets from the federal government. It lets the state use Medicaid money in more flexible ways.

Learn more about Medicaid waivers in our blog, “What are Medicaid Waivers?“

Normally, Medicaid pays for care in places like hospitals or nursing homes. A waiver lets the state set aside some of those normal rules. This way, it can pay for care in your own home instead. Many waivers also let you hire and pay your own caregiver.

Each state creates its own waivers. A state may have several, each with its own name and its own rules. One common type is a Home and Community Based Services waiver, which helps people get care at home instead of in a facility.

This is why your friend or family member in another state may have a very different experience than you. They may be in a different waiver, with different rules about who they can hire and how much care they can get.

Medicare is a federal program, so its rules are the same in every state. Medicaid is different. With the words being so similar, it’s easy to get them confused. Each state runs its own Medicaid program, using both state and federal money.

Because each state runs its own program, the details change from place to place. These things often vary by state:

• The name of the self-directed program
• Which waivers are offered
• Who counts as eligible
• Who you are allowed to hire, including whether a spouse or parent can be paid
• How many care hours you can get
• How much a caregiver is paid

So it is smart not to assume. A rule you read about online may be true in one state but not in yours. Always check the details for your own state and program.

Two people need to qualify in this process: the person getting care and the person giving it.

The person receiving care usually must:

• Qualify for Medicaid in their state
• Qualify for a specific waiver or self-directed program
• Have a care assessment that shows they need daily help

A care assessment is a review done by a case manager or nurse. They look at what daily help the person needs, like bathing, dressing, meals, or moving around. This helps set how many care hours Medicaid will pay for.

The caregiver usually must:

• Pass a background check
• Complete any required training
• Be legally allowed to work in the United States

Most programs let you hire a friend or family member. Some limit whether a spouse, or a parent of a child under 18, can be paid. These rules vary by state, so confirm what applies where you live. But it’s one of the main benefits of this type of program that you get to choose. 

This is one of the most common questions families ask. 

Some states let you pay a spouse, or a parent of a child under 18. Others do not allow it. Some allow it only in certain programs or in situations where no other option is available. There is no single rule that covers the whole country.

If this is your situation, ask your case manager early. They can tell you what your state allows before you make plans. That way, there are no surprises later.

When you hire your own caregiver, you become their employer. Being an employer comes with tasks like payroll and taxes. That is a lot to take on, especially while caring for someone. This is where a special helper comes in.

Most self-directed programs use a Financial Management Services provider. This is often shortened to FMS. It may also be called a fiscal intermediary. An FMS provider handles the money and paperwork side of paying your caregiver.

An FMS provider does not choose your caregiver or run your care. You stay in charge of that. Instead, the FMS provider takes care of tasks like these:

• Paying your caregiver from your Medicaid budget
• Withholding and filing taxes
• Handling enrollment paperwork
• Running background checks
• Sending you reports so you know how many hours you have used

You can learn more in our guide to what a financial management services provider does.

Every state is a little different, but the process usually follows these steps.

1. Check eligibility. First, make sure the person receiving care qualifies for Medicaid and for a self-directed program or waiver in their state. A case manager can help you find out.
2. Get a care assessment. A case manager or nurse reviews the person’s needs. This sets a care plan with a certain number of approved care hours each week.
3. Enroll in the program. Sign up for your state’s self-directed program. The person receiving care is usually set up as the employer of the caregiver.
4. Set up your caregiver. Your caregiver completes paperwork, a background check, and any required training. They cannot be paid until this part is done.
5. Track the time worked. Your caregiver logs their hours. Most programs require Electronic Visit Verification, or EVV. EVV is a simple app or phone system that confirms when and where care was given.
6. Get the caregiver paid. The FMS provider reviews the hours, handles taxes, and pays your caregiver from your approved budget.

You will usually approve your caregiver’s time before they are paid. Payment cannot start until all the setup steps are finished. This protects both you and your caregiver.

Want to understand what goes into determining the cost of home care? Read our blog, “Affordable Home Care Providers: What You Need to Know.”

Pay rates are not the same everywhere. Each state and program sets its own rates. Your care budget also plays a part.

The good news is that the pay does not come out of your own pocket. It comes from the Medicaid budget set for your care. Your caregiver is paid for the hours they work, up to the hours your plan allows.

Some programs pay more for certain kinds of care. Others use one set rate. Your case manager or FMS provider can tell you the rate for your program. They can also tell you how many hours you have to work with.

Caregivers are usually paid on a set schedule, such as every two weeks. The exact schedule depends on your program.

Here is how a normal pay cycle works. First, your caregiver logs their hours, often through the EVV application being used, such as PPL’s Time4Care™. Next, you approve those hours. Then the FMS provider checks the hours, takes out taxes, and sends the payment.

One rule matters most here. Hours must be approved before payment can go out. So it helps to review and approve time quickly. This keeps your caregiver paid without delays.

Paying a caregiver through Medicaid can feel like a lot at first. But you do not have to figure it out alone. A short questionnaire can help you see if self-directed care could work for you or someone you love. Click the button below to find out if it is a good fit.

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Public Partnerships (PPL) is a financial management services provider focused entirely on self-directed care. PPL supports roughly 50 self-direction programs across the country, has helped facilitate more than 700,000 participant and caregiver relationships, and has processed over $10 billion in goods and services payments. In New York, PPL serves as the statewide fiscal intermediary (FI) for the CDPAP program.

PPL is not a home care agency and does not assign caregivers or provide direct care. Instead, PPL handles the administrative side of self-direction, including payroll, taxes, enrollment paperwork, and compliance, so that participants can direct their own care with confidence. To see which programs PPL supports in your state, visit the state programs page below.

Explore Programs by State