Can a Family Member Get Paid as a Caregiver in Michigan?

Yes, a family member can get paid as a caregiver in Michigan. The most common route is the state’s Medicaid-funded Home Help Program, which pays individual providers $17.13 per hour as of January 2026. Other options include the MI Choice Waiver for people who need nursing-home-level care at home, two VA programs for veterans, and private pay arrangements backed by a written caregiver agreement. Which one fits depends on the care recipient’s medical needs, their income and assets, and whether they served in the military.

Home Help Program

Home Help is the state’s main program for paying a family caregiver, and it’s the one most families end up using. It’s a Medicaid benefit that covers personal care and household tasks for people who need help with daily activities but want to stay in their own home. The care recipient picks the provider, and the provider can be a family member who is at least 18: an adult child, grandchild, niece, nephew, or similar relative. Spouses cannot be paid Home Help providers.

To be approved, the family caregiver has to pass a criminal background check and enroll in CHAMPS, Michigan’s Community Health Automated Medicaid Processing System.¹ MDHHS reviews the application and issues a provider ID once everything checks out.

Covered work splits into three buckets: activities of daily living (bathing, dressing, eating, toileting, grooming, mobility), instrumental activities (meal prep, light housekeeping, laundry, shopping, help with medication), and complex care tasks like wound care, catheter management, respiratory treatments, and range-of-motion exercises.²

The 2026 individual provider rate of $17.13 per hour reflects Michigan’s $13.73 minimum wage plus a $3.40 direct care worker pass-through.³ Weekly hours are set by assessment: a nurse or social worker evaluates what the care recipient can and can’t do on their own, and MDHHS authorizes hours accordingly. Your actual monthly income tracks those authorized hours, not the number you’d like to work.

MI Choice Waiver

MI Choice is for people with more intensive needs. The care recipient has to require a nursing-facility level of care but want to stay at home or in a community setting instead of entering a nursing home.⁴ Services include personal care, homemaker help, respite, and community living supports.

Under MI Choice’s self-determination option, the participant can hire a caregiver of their choosing for certain services, and that caregiver can be an adult child or other relative. A financial management services agency runs the back end: payroll, tax withholding, background checks. Families don’t have to piece that together themselves.⁵ Spouses and legal guardians, however, can’t be paid for personal care or similar services. Michigan’s federal waiver agreement explicitly excludes legally responsible individuals from payment for that type of care.⁶

Eligibility runs on three tracks. The person must be a Michigan resident, meet Medicaid income and asset limits, and be assessed as needing nursing-facility-level care. For 2026, a single applicant’s countable assets generally can’t exceed about $9,950, and monthly income is capped around $2,982 before deductions. A nurse and social worker conduct an in-person evaluation to confirm medical eligibility and build the care plan.

A new Structured Family Caregiving service is planned under MI Choice for early 2026. It’s built for live-in caregivers and bakes training, coaching, and support into the service itself.⁷ Details are still being finalized.

Habilitation Supports Waiver

If the care recipient has an intellectual or developmental disability and meets an institutional level of care, the Habilitation Supports Waiver can pay a family caregiver who supports them in a community setting.⁸ Caregivers have to be designated as qualified providers and complete the required training. Enrollment runs through local Community Mental Health Service Programs.

VA Programs for Caregivers of Veterans

If you’re caring for a veteran, two federal programs can pay a family caregiver. They work independently of Michigan Medicaid and have their own eligibility rules.

Program of Comprehensive Assistance for Family Caregivers

PCAFC pays a monthly stipend directly to a primary family caregiver. The veteran has to have a VA disability rating of 70% or higher (individual or combined), need at least six months of continuous in-person personal care, and be enrolled in VA health care.⁹ The caregiver must be at least 18 and either a family member or someone who lives full-time with the veteran.

The stipend is tied to federal pay scales. The VA takes the GS-4, Step 1 salary for the locality where the veteran lives and divides by 12. Level 1 caregivers receive 62.5% of that monthly amount; Level 2 caregivers (caring for veterans who cannot sustain themselves in the community) receive the full amount.¹⁰ In Michigan, monthly stipends typically run from roughly $1,900 at Level 1 to over $3,000 at Level 2, depending on locality. Primary caregivers also get access to CHAMPVA health insurance (if not otherwise eligible), mental health counseling, and at least 30 days of respite care each year.

VA Aid and Attendance

Aid and Attendance is an enhanced VA pension for wartime veterans and surviving spouses who need help with daily activities or are housebound. For 2026, a veteran with no dependents can receive up to $29,093 per year (about $2,424 per month); a veteran with one dependent can receive up to $34,488 per year (about $2,874 per month).¹¹ It isn’t labeled a caregiver payment, but the VA allows the money to be used to pay a family member for in-home care. The family member doesn’t need a professional license. A written agreement spelling out the services and payment arrangement helps legitimize the setup.

Private Pay

When government programs aren’t a fit or don’t cover enough hours, families can set up a private pay arrangement. The care recipient or their family pays the caregiver directly for an agreed-upon set of services. Scheduling and scope are entirely up to the parties, since no program rules are controlling what’s covered.

Some long-term care insurance policies pay benefits when a family member provides care, but policy language varies a lot. Older policies often restrict benefits to licensed agencies. Newer policies more commonly allow family caregivers, sometimes conditioned on a physician’s care plan. Read the policy before you count on it.

Whether the money comes from savings or insurance, formalize the arrangement in writing. Without a written agreement, regular payments from a parent to an adult child start to look like gifts to Medicaid and the IRS, and that creates problems later.

Caregiver Agreements and Medicaid Divestment

A written caregiver agreement isn’t just paperwork. If the care recipient may ever need Medicaid to help pay for a nursing home or waiver services, a properly structured agreement is the only thing separating legitimate compensation from a divestment penalty that delays benefits. This is where most families get into trouble.

MDHHS treats any payment for personal care or home care as a transfer for less than fair market value, meaning a gift, unless the agreement meets every one of these conditions:¹²

Written and signed before any services begin. The effective date is either the date the agreement is signed and notarized or the date the signed contract is received by the local MDHHS office. No paying for work already done.
No advance payment. The caregiver can only be paid after services are provided.
At the time services are received, the care recipient cannot be living in a nursing home, adult foster care home, or hospital, or be enrolled in a waiver program like MI Choice or Home Help.
A doctor, someone in the doctor’s office, or a community health worker must provide a written statement that the services are necessary to prevent the person from needing residential or nursing facility care. Companionship alone doesn’t count.
If a power of attorney, guardian, or other legal representative signs on behalf of the care recipient, that representative cannot also be the caregiver or benefit from the contract.
The agreement must spell out the type, frequency, and duration of services and the exact compensation.

Compensation should reflect what a professional would charge for the same work. The 2026 Home Help individual provider rate of $17.13 per hour is a reasonable Michigan benchmark.³ Charging well above that without a reason like complex medical care raises flags. Notarize the agreement; Michigan caps notarial fees at $10 per act.¹³

If MDHHS finds that payments were divestment, the penalty is a waiting period during which the care recipient won’t receive waiver or long-term care benefits. Eligibility isn’t lost permanently, but the delay can force families to cover care costs out of pocket until it clears.

Taxes on Caregiver Pay

Caregiver income is taxable, whether it comes from a Medicaid program or a private arrangement. For private arrangements, the IRS usually treats a family caregiver paid by an individual as a household employee, which makes the care recipient (or whoever controls the payments) a household employer with real tax obligations.

When Employment Taxes Apply

Pay a household caregiver $3,000 or more in cash wages during 2026 and you must withhold and pay Social Security and Medicare taxes totaling 15.3% of wages, split evenly between employer and employee at 7.65% each. If total cash wages to all household employees reach $1,000 or more in any calendar quarter of 2025 or 2026, federal unemployment (FUTA) tax applies on the first $7,000 of each employee’s wages.¹⁴

Family Exemptions

Certain relationships are exempt from employment taxes. You don’t owe Social Security or Medicare tax on wages paid to your spouse, your child under 21, or your parent (with limited exceptions). You also don’t owe these taxes on wages to any employee under 18, unless caregiving is their primary occupation.¹⁵ Compensation still gets reported on a W-2 even when these exemptions apply.

Medicaid Waiver Tax Exclusion

Caregivers paid through Medicaid waiver programs like Home Help or MI Choice may be able to exclude that income from federal taxes entirely. IRS Notice 2014-7 treats qualifying Medicaid waiver payments as difficulty-of-care payments excludable under Section 131 of the Internal Revenue Code, whether or not the caregiver is related to the care recipient.¹⁶ The main requirement is that the caregiver and the care recipient live in the same home. A tax professional can confirm whether your specific setup qualifies.

Workers’ Compensation

Michigan has a carve-out that limits workers’ comp exposure for family caregiving. A family member living in the care recipient’s home isn’t considered an employee for workers’ comp purposes at all. For non-resident caregivers, a private household employer has no workers’ comp obligation unless the caregiver works 35 or more hours per week for at least 13 weeks during the preceding 52 weeks.¹⁷ Part-time family caregiving under that threshold doesn’t require workers’ comp insurance. For Medicaid-paid caregivers, the financial management services agency generally handles insurance and compliance.

Where to Start

The right starting point depends on the care recipient. For most families, the quickest route is Home Help. Contact your local MDHHS office and ask for an assessment. A caseworker evaluates what daily tasks the person needs help with and authorizes a weekly hours figure. The family caregiver then enrolls as a provider through CHAMPS and can begin getting paid.

For people with more intensive medical needs who might otherwise end up in a nursing home, ask about MI Choice. The entry point is your local Area Agency on Aging or MDHHS. The assessment is more involved and covers both medical and financial eligibility for nursing-facility-level care under Medicaid.⁴

Veterans should contact a VA Caregiver Support Coordinator at their nearest VA medical center or apply online at VA.gov. The veteran and the prospective caregiver apply together and go through a joint assessment.⁹

For any private pay arrangement, draft a written caregiver agreement before the first day of paid care. Spell out the services, schedule, hourly rate, and payment terms. Notarize it, and if Medicaid is even a possibility down the road, make sure every MDHHS requirement is met. Skipping that step is the most common and most expensive mistake families make.

1
State of Michigan. New Home Help Individual Provider Enrollment Instructions
2
State of Michigan Department of Health and Human Services. Available Services
3
State of Michigan. Numbered Letter L-25-75, Home Help Rate Increase
4
State of Michigan: Department of Health and Human Services. MI Choice Waiver Program
5
Michigan Department of Health and Human Services. MI Choice Waiver Participant Handbook – DCH-1433
6
State of Michigan. MI Choice Waiver 1915(c) Amendment
7
State of Michigan. Introduction to Structured Family Caregiving
8
Department of Health and Human Services. Habilitation Supports Waiver
9
Veterans Affairs. The Program of Comprehensive Assistance for Family Caregivers
10
Veterans Affairs. PCAFC Eligibility Criteria Factsheet
11
Veterans Affairs. Current Pension Rates For Veterans
12
Michigan Department of Health and Human Services. MA Divestment – BEM 405
13
State of Michigan. Notary Services
14
Internal Revenue Service. Publication 926 (2026), Household Employer’s Tax Guide
15
Internal Revenue Service. Family Caregivers and Self-Employment Tax
16
Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable From Income
17
Michigan Legislature. MCL – Section 418.118 – Domestic Servants