Paid family caregiver programs face rising demand and funding fights

Paid family caregiver programs are getting a harder look as 63 million Americans provide care for relatives, according to research from the National Alliance for Caregiving and AARP, often while taking a financial hit themselves.

George Kueppers, senior research manager at the National Alliance for Caregiving, said caregivers report draining savings, borrowing money, paying bills late and even moving to smaller homes to cover care costs. The group found that one-third have stopped saving money, while one-quarter have spent down short-term savings.

AARP has estimated that replacing unpaid family caregivers with paid workers would cost $1 trillion. Elder-law attorney Harry Margolis wrote for MarketWatch that the country lacks both the money and the workforce to swap out family care on that scale, leaving families to carry much of the load as healthcare and living costs rise.

Can you get paid to care for a family member?

In many cases, yes, but the answer depends on the program, the state and the family relationship. Margolis reported that most state Medicaid programs and the Veterans Administration now allow some relatives to be paid for help with daily needs such as bathing, dressing, eating, meal preparation and medication management.

Most of those payments are hourly, similar to pay for outside aides. Thirteen states also have programs that provide family caregivers with a smaller daily stipend of $40 to $50, rather than tying compensation to hours worked, according to Margolis.

Antoinette Gingerelli, director of policy and advocacy at the National Alliance for Caregiving, said 11.2 million Americans receive some form of pay for family caregiving through Medicaid or the VA Aid and Attendance Program of Comprehensive Assistance for Family Caregivers.

The rules can be tight. Margolis reported that some Medicaid programs allow relatives to be hired but bar spouses, conservators or guardians from being paid, on the theory that those people may be responsible for watching over the care arrangement.

What are self-directed care programs?

Self-directed care programs let the person receiving care, or a representative, hire and manage caregivers rather than relying only on an agency. The idea is that families may be better placed to choose aides who fit the person’s needs and routine.

Josh Koch, a Pennsylvania resident with an autoimmune disease, told Margolis that self-direction gives people more flexibility over tasks such as medication management than they might have under agency-based care rules. Mary Morris, co-founder of the Self-Direction Center, cautioned that every state’s version is different.

Those programs are also under pressure. Margolis reported that states may face cuts after a trillion-dollar reduction in federal Medicaid funding under the 2025 GOP tax law known as the One Big Beautiful Bill Act.

The Justice Department sued New York and its contracted fiscal intermediary in June over the state’s self-directed care program, alleging the contractor was chosen through a sham bidding process and improperly diverted millions of dollars in Medicaid funds. No response from New York or the contractor was cited by Margolis.

Bill Hammond, a senior fellow at the Empire Center for Public Policy in Albany, N.Y., told the U.S. Congress Joint Economic Committee that New York’s program grew from $1 billion in 2016 to more than $11 billion in 2024. Hammond said the program serves many disabled New Yorkers but also agreed with the Justice Department that it has been affected by waste, abuse and fraud.

Why family caregivers face long-term financial risk

Caregiving can reduce income today and retirement security later. Margolis wrote that relatives who cut hours or leave work may lose chances to save, build Social Security credits or keep employer health insurance.

The Medicaid work requirements passed in the 2025 tax law include an exception for caregivers of disabled people, and proposed regulations interpret that exception broadly, according to Margolis. Advocates remain worried that caregivers may lose coverage if they cannot complete eligibility recertification every six months.

One proposal would give Social Security work credits to unpaid family caregivers, though Margolis noted it is unclear how that would affect a system already projected to run out of reserves in 2032.

This story draws on original reporting from MarketWatch.