Can You Pay Yourself for Taking Care of Elderly Parents?

Willona had COPD and needed a caregiver, but her son couldn't afford to pay full agency rates on top of everything else. He was also partially dependent on her Social Security check to cover rent. We were approaching a wall. Eventually I made a decision I only made once in my ten years running ComForCare — I released my best caregiver, Harriet, from her non-compete agreement so she and Willona could make a private arrangement directly. Harriet moved in. Willona got to stay home. The son kept his roof.

The financial reality of family caregiving is something most families don't plan for. If you are providing significant care to an elderly parent and it is costing you in time, income, or out-of-pocket expenses, there are legitimate ways to be compensated. Here they are.

Medicaid Waiver Programs

In most states, Medicaid's home and community-based services waiver programs allow a qualified elderly person to direct their own care and designate a family member as a paid caregiver. The family member receives payment from Medicaid at or near the state's established rate for home care services. Eligibility, payment rates, and program rules vary significantly by state. Contact your state's Medicaid office or Area Agency on Aging to find out what's available in your state.

Veterans' Benefits

The VA's Program of Comprehensive Assistance for Family Caregivers (PCAFC) provides a monthly stipend to a designated family caregiver for qualifying veterans with significant service-connected disabilities. The Aid and Attendance benefit can help pay for care — including family-provided care in some arrangements. If your parent is a veteran, contact the VA to understand what's available.

Long-Term Care Insurance

Some long-term care insurance policies will pay for family-provided care. This is not universal — many policies require that care be provided by a licensed agency or professional. But it's worth reading the policy carefully or calling the insurer to ask directly. Eunice had a long-term care policy she was afraid to use. Once she started using it, it covered years of care she'd been paying for out of pocket.

A Personal Care Agreement

A personal care agreement (also called a caregiver agreement) is a formal written contract between an elderly person and a family member documenting the care being provided and the compensation being paid from the elderly person's own funds. This arrangement needs to be properly structured — realistic compensation at market rates, documented care hours, and ideally reviewed by an elder law attorney — because it has implications for Medicaid eligibility if the parent ever needs to apply. Done correctly, it is a legitimate way for a parent to compensate a child for real care being provided.

Tax Benefits

If you are claiming an elderly parent as a dependent, you may be eligible for the dependent care tax credit and deductions for certain medical expenses. These are not compensation for caregiving, but they reduce the financial burden. Consult a tax professional who can review your specific situation.

Chip Mitchell spent over 10 years owning and operating a home care company in Northwest Georgia. He currently cares for his father-in-law, PawPaw, who has lived with Parkinson's Disease for 20 years.

About Chip Mitchell

Chip Mitchell is the founder of Growing Gray USA. With over a decade of experience owning a home care company, he has helped hundreds of families navigate the complexities of caring for aging parents.