How to Get Paid as a Family Caregiver in Tennessee (2026)

For most of the last decade, Tennessee was one of the hardest states in the country to be paid as a family caregiver. That changed in 2025. The Freedom for Family Caregiving Act, signed by Governor Bill Lee on April 30, 2025 and fully in effect since July 1, 2025, created the first legal pathway in Tennessee for a spouse or parent to be hired as a paid caregiver through a TennCare-contracted home care agency.

The change isn't a single check from the state. It's a permission slip that opens up an existing system. Layered on top of TennCare CHOICES Consumer Direction, the ECF CHOICES Family Caregiver Stipend, VA programs, and the new dementia-specific Caring for Caregivers Act grant signed into law in 2026, Tennessee families now have seven distinct ways to be compensated for caregiving.

This guide lays out every legitimate pathway in Tennessee for 2026, who can actually be hired under each (spouses, adult children, friends, parents of minor children), what the pay looks like, and how to choose the right program for your family's situation.

The Short Version

If you're an adult child, sibling, niece, nephew, friend, or neighbor of a Medicaid-eligible adult in Tennessee, TennCare CHOICES Consumer Direction is the most direct path to being paid. Your loved one applies for CHOICES through their MCO, gets enrolled in the Consumer Direction option, and hires you as their personal care attendant through CDTN. Pay rates are member-set within the budget, typically around $16 to $19 per hour in 2026, up to the TennCare-approved maximum for each service.2

If you're a spouse, don't build a plan on Consumer Direction. TennCare's public page says only that limitations exist, without listing them, and the CMS-approved terms behind Tennessee's consumer direction exclude spouses. The pathway that is unambiguously yours is the Freedom for Family Caregiving Act route: a TennCare-contracted home care agency can hire you to deliver your spouse's authorized care hours as a W-2 employee. The catch: not every agency has updated its hiring policies, so you have to find a willing one.2,1

If you're caring for a child or adult with an intellectual or developmental disability, ECF CHOICES has a Family Caregiver Stipend (Group 4 only), up to $500 per month when the ECF member is a child under 18 and up to $1,000 per month when the member is 18 or older. The stipend isn't a standalone application: a member cannot enroll in Group 4 for the stipend alone, other ECF supports have to be received first. ECF also offers Consumer Direction for personal assistance and respite.2

If your loved one is a wartime veteran, VA programs (Aid & Attendance, Veteran-Directed Care, PCAFC) often pay more than Medicaid-side programs and can stack with them.

If you have enough private assets, a written caregiver agreement with fair-market wages can pay you while reducing your loved one's estate for eventual Medicaid planning. Tennessee's 60-month look-back makes the contract format critical.

The details matter. Below is the full map.

The Recent Change: What Public Chapter 182 of 2025 Actually Did

Tennessee's caregiver-pay landscape has a clear before-and-after at April 30, 2025.

Before that date, a spouse or parent who wanted to be paid had no protected route: Consumer Direction carried limitations on who a member could hire, and nothing stopped TennCare or the Department of Disability and Aging from blocking a provider agency that wanted to hire a relative.1 That left families with two unhappy choices: either find an outside caregiver to deliver care a spouse was already providing for free, or move the member into a nursing facility. The American Association of Retired Persons (AARP) repeatedly ranked Tennessee near the bottom of its scorecard on family caregiver support.

The Freedom for Family Caregiving Act, Public Chapter 182 of 2025, passed the Senate 31-0 and the House 94-0, and was signed by Governor Bill Lee on April 30, 2025. It became fully operational on July 1, 2025.1

The act amends Tennessee Code Annotated, Titles 52 and 71, and prohibits both TennCare and the new Department of Disability and Aging (DDA) from blocking provider agencies from hiring a relative as a Direct Support Worker, personal care attendant, home health aide, private-duty nurse, or other paid caregiver based on:

• The family relationship between the worker and the recipient
• The worker and recipient sharing a home
• The age of the recipient
• The worker being the recipient's parent or spouse
• Which TennCare program (CHOICES, ECF CHOICES, Katie Beckett, etc.) the recipient is enrolled in
• The worker being concurrently employed as a paid caregiver by an unrelated party

What the law does not do. Three things are easy to misread:

1. It does not change Consumer Direction. TennCare's guidance for provider agencies is explicit that "[p]rovider agencies do not employ consumer-directed workers" and points members interested in consumer direction back to their MCO Coordinator. Whatever limitations Consumer Direction places on who a member may hire, PC 182 did not lift them; the new pathway opens only the agency-employed route.2
2. It does not require any specific agency to hire any specific family member. It removes the state-level ban; an individual home care agency still sets its own internal hiring policies. Many agencies were quick to update; others have not. Families will need to call agencies in their area to find a willing one.
3. It does not cover court-appointed conservators or legal guardians unless the court order itself explicitly permits employment.

Programs the new pathway touches: CHOICES, ECF CHOICES, Katie Beckett (Parts A and B), the three §1915(c) DD waivers (Self-Determination, Statewide, Comprehensive Aggregate Cap), Private Duty Nursing, Home Health Nursing, and Home Health Aide services delivered through TennCare.

The strategic effect for Tennessee families: a previously-impossible category of paid caregivers, spouses, parents of minor children with disabilities, and certain co-resident relatives, now has a legal route. The route runs through agencies, not through the member's own checkbook, but it exists.

The Seven Tennessee Paid Family Caregiver Pathways

1. TennCare CHOICES: Consumer Direction (CD)

Who pays: TennCare. CHOICES is a managed long-term services and supports program run through TennCare's managed care organizations, and a member applies for or asks about CHOICES through their own health plan: BlueCare 888-747-8955, UnitedHealthcare Community Plan 800-690-1606, or Wellpoint 833-731-2153. (TennCare Select appears in all three of TennCare's regional health-plan tables alongside those three.)2

Who can be paid: An adult child, sibling, friend, neighbor, or other acquaintance can be hired and paid. A spouse cannot, and neither can whoever serves as the member's designated representative. TennCare's own CHOICES page says only that "there may be some limitations" and does not list them, but the CMS-approved terms do. The TennCare III Special Terms and Conditions provide that the consumer direction option "will be organized and administered in accordance with best practices principles recognized by CMS as reflected in Attachment F," and Attachment F lets members hire people close to them "including family members but excluding spouses," while barring a member's designated representative from being the member's paid worker. That governs CHOICES consumer direction, not only Katie Beckett and Medicaid Diversion. Confirm before you hire: for any relationship other than a spouse or the member's representative, ask your MCO Coordinator rather than assuming either way.2

2026 pay rate: Set by the member within an authorized budget, up to a TennCare-approved maximum. Typical 2026 personal care attendant rates fall in roughly the $16 to $19 per hour range; the approved maximum for a Personal Care Visit is about $19.16 per hour and Respite tops out near $18.93 per hour. The exact ceilings are governed by the current CDTN CHOICES Services and Rates schedule; verify with Consumer Direct Care Network Tennessee before locking in a wage. CDTN routes its member line by health plan: UnitedHealthcare 1-888-444-3109, Wellpoint 1-888-398-0664, BlueCare Tennessee 1-888-450-3240.2

What it covers: Personal care assistance with ADLs (bathing, dressing, toileting, transferring, eating) and selected IADLs (meal prep, medication reminders, light housekeeping, shopping); in-home respite; companion care.

Eligibility, recipient (2026):6

• Age 65+ OR adult age 21+ with a physical disability
• Income up to $2,982/month (300% of the federal SSI Federal Benefit Rate). An applicant over the limit is given the opportunity to establish a Qualified Income Trust (QIT) to redirect the excess, Tennessee's functional equivalent of what other states call a Miller Trust, after which income eligibility is tested again6
• Countable resources up to $2,000 for the applicant. If you are the spouse and you're staying in the community, that $2,000 is not your limit. TennCare's resource-assessment policy sets the community spouse's Community Spouse Resource Maintenance Allowance at the greatest of three amounts: one-half the couple's total countable resources, bounded for a January 2026 snapshot at not less than $32,532 and not more than $162,660; a court-ordered amount; or an amount an appeals officer sets in a hardship situation. So $162,660 caps the one-half calculation, not the allowance itself, and a spouse with a court order or a hardship determination is not held to it6
• Home equity above $752,000 makes an institutional individual ineligible for LTSS (CHOICES) payments, but that limit does not disqualify an applicant while any one of three relatives lawfully resides in the home: the spouse, a child under age 21, or a child who is blind or disabled according to 42 USC 1382c. Even where the limit does apply it is rebuttable rather than settled: TennCare's manual provides that the home equity limit "can be waived if an undue hardship is requested, and a determination is made that undue hardship exists"6
• The home itself is excluded in determining resource eligibility as long as it is the principal place of residence for the applicant, spouse, or dependent relatives, and, if the individual resides in a long-term care facility, intent to return to the home is established. Both conditions apply, not either one, so an applicant already living in a long-term care facility needs the residence test met and an established intent to return6
• Functional: nursing-facility level of care (Group 1 or 2) or At Risk (Group 3)

Eligibility, caregiver: Age 18+, pass background and registry checks, complete TennCare-required training including CPR/first aid and Electronic Visit Verification (EVV), and have a valid Service Agreement on file with CDTN.

Waitlist: The rule's definition of "Enrollment Target" names the groups a cap applies to (CHOICES Group 2 or Group 3, any ECF CHOICES group, and the Katie Beckett groups), and Group 1, nursing facility care, is not among them. Group 2, home and community based services in lieu of a nursing facility, has a mandatory target of 12,500 people at any one time, measured inclusive of the reserved slots below. A waiting list is what is left after the exceptions, not the first thing that happens to you. Once the target is reached, the rule still admits several groups of applicants:7

• Moving home from a nursing facility. A member already in Group 1 who meets the Group 2 requirements "can enroll in CHOICES Group 2 even though the Enrollment Target has been met," and is served outside the target until a slot frees up.
• CEA enrollment. Where an SSI-eligible member meets every other Group 2 criterion, the MCO may, at its sole discretion, offer HCBS as a Cost-Effective Alternative (CEA), and on satisfactory documentation the Bureau of TennCare "will enroll the person into CHOICES Group 2, regardless of the Enrollment Target."
• The 300 reserved slots. TennCare reserves 300 slots inside the Group 2 target, available only once the target is otherwise reached, and only to applicants being discharged from a nursing facility and applicants being discharged from an acute care setting who are at imminent risk of nursing facility placement absent HCBS.
• Anyone already enrolled above the cap. Persons enrolled in excess of the target "must receive the first available slots," so the queue has a defined order rather than an open-ended one.7

Only an applicant who otherwise qualifies for Group 2 but meets neither those exceptions nor the reserve-capacity criteria is placed on the Group 2 waiting list, and a denial for lack of capacity carries written notice and the right to request a fair hearing. Group 3, At Risk of institutionalization, also requires capacity within its own target, which is limited to the funding appropriated for the program; TennCare reports an enrollment target of 1,750 for non-SSI recipients as of October 1, 2022 and publishes current target numbers at tn.gov/tenncare.7

How the caregiver gets paid: CDTN serves as the Fiscal Employer Agent, payroll, tax withholding, EVV, biweekly direct deposit. The member is the W-2 employer of record.2

Best for: An adult relative or close family friend caring for a CHOICES-eligible adult who needs help with ADLs and has been authorized for personal care attendant hours.

2. CHOICES Agency-Employed Pathway (the New PC 182 Route)

Who pays: TennCare, through a TennCare-contracted home care agency or home health agency.

Who can be paid: Anyone the agency is willing to hire, including, for the first time, spouses, parents of minor children, and other co-resident relatives. Since July 1, 2025 the state can no longer stand in the way of that hire. Note the limit: the act binds TennCare and DDA, not the agency, and no agency is required to hire any particular family member.1

2026 pay rate: Whatever the agency pays its W-2 caregivers. Tennessee agency wages vary by region and credential level, with skilled or CNA-level work paying meaningfully more than non-medical personal care.

What it covers: The member's authorized CHOICES personal care, home health aide, or skilled nursing hours, delivered by the family member as a W-2 agency employee.

Eligibility, recipient: Same as CHOICES Consumer Direction (financial and functional criteria are program-wide, not pathway-specific).

Eligibility, caregiver: 18+, pass the agency's background check, meet the agency's hiring qualifications, complete the agency's training. PC 182 removed the state-level barrier that used to stop an agency from hiring you because you're the spouse or parent or live with the recipient, but the agency is under no obligation to hire you and still sets the bar for skill, schedule, and credential requirements.

Waitlist: Same as CHOICES generally: Group 2 has the enrollment target, along with the same at-target exceptions and reserved slots.

How the caregiver gets paid: Standard agency employment. W-2 wages, agency handles taxes, scheduling, and supervision. The agency bills TennCare for the hours; the family member receives the agency's wage rate.

Best for: Spouses caring for a CHOICES-eligible spouse; parents caring for an adult child with an I/DD diagnosis; any family member a provider agency would previously not have considered hiring.

Important caveat: Not every agency has updated its hiring policies. The Tennessee Disability Coalition has been compiling lists of agencies that are actively hiring family caregivers under the new law; the TennCare provider-agency information page is the official starting point.

3. ECF CHOICES: Consumer Direction and the Family Caregiver Stipend

Who pays: TennCare, with DDA in the oversight role.

Population: Tennesseans of any age with an intellectual or developmental disability (I/DD) who meet ECF financial and functional criteria. Five enrollment groups: Group 4 (Essential Family Supports), Group 5 (Essential Supports for Employment & Independent Living), Group 6 (Comprehensive Supports for Employment & Community Living), Group 7 (children with severe behavior support needs), and Group 8 (adults with severe behavior support needs).

Family Caregiver Stipend (Group 4 only): Up to $500 per month when the ECF member is a child under 18, and up to $1,000 per month when the member is an adult age 18+. The stipend is a flat sum paid by the assigned MCO, not an hourly wage, intended to compensate the family caregiver for lost wage-earning opportunity and for care provided above what is typical for the recipient's age; the actual amount is set based on the individual's needs. It does not require enrolling as a Consumer-Directed Worker. Two limits families miss: a member cannot enroll in Group 4 for the stipend alone (other ECF supports must be received first, and employment and community-integration goals must be addressed before the stipend is considered), and the stipend may not duplicate paid Consumer Direction hours or paid agency services for the same time period.2

Consumer Direction (all ECF groups): Same FEA (CDTN), and the same unstated limitations on who the member may hire. Ask the MCO Coordinator which relationships your group allows before you count on Consumer Direction; if the answer is no, the Family Caregiver Stipend and the agency-employed route are the alternatives.2

Agency-employed pathway under PC 182: Same as CHOICES, parents of minor children, adult children, and other relatives can now be hired by a Direct Support Provider agency to deliver authorized ECF services.

Eligibility, recipient: I/DD diagnosis recognized by DDA; meets ECF financial criteria (CHOICES income/asset limits) or qualifies under Katie Beckett-style parental income disregards for children.

Eligibility, caregiver: Same general profile, 18+, background check, training, valid Service Agreement.

Waitlist: ECF has historically operated reservation-list dynamics rather than a hard cap; Group 5 emergent slots fill periodically.

Best for: Families of a child or adult with I/DD who want either a flat monthly stipend (Group 4) or paid hourly support delivered by a non-spouse, non-co-resident family worker.

4. TennCare Katie Beckett

Who pays: TennCare, with TennCare Select managing Part A coverage and DDA coordinating Part B.

Population: Tennessee children under age 18 with significant disabilities or complex medical needs whose family income or assets would otherwise disqualify them. Tennessee operates Katie Beckett under its Section 1115 demonstration (NOT a separate §1915(c) waiver) and TCA §71-5-164.2

Three components:

• Part A, full TennCare Medicaid coverage plus up to $15,000 per year in HCBS wraparound (in-home respite, supportive home care, home and vehicle modifications, family caregiver education up to $500/year, equipment and supplies). Capped at 300 enrolled children statewide; a child who is medically eligible but has no open slot stays on a separate Part A waiting list, and children are enrolled into an available slot in numerical order by their Level of Care prioritization score.2
• Part B, for children who do not qualify for institutional care but are at risk of it. No Medicaid enrollment; up to $10,000 per year in flexible services (premium assistance, a health-care savings-type account, consumer-directed respite and supportive home care, or community-based provider services). Part B carries its own enrollment target, so ask DDA where the list stands.2
• Part C, bridge coverage for children losing Medicaid eligibility while waiting for a Part A slot.

Can parents be paid as caregivers? Not through Consumer Direction. Under Tenn. Comp. R. & Regs. 1200-13-01-.32, a parent or legal guardian may hire family members as Workers but not a spouse; "a family member shall not be reimbursed for a service that he would have otherwise provided without pay"; and a parent or guardian may not employ any person who resides with the enrolled child to deliver Supportive Home Care or hourly Respite.2 Part A's $500/year family caregiver education benefit reimburses training, not caregiver wages.2

The PC 182 pathway: A parent or other household member can now be hired by a licensed TennCare provider agency to deliver the child's authorized HCBS hours, and a parent of a minor child (by birth or adoption) is eligible without court approval. Two hard limits travel with it: a court-appointed conservator or guardian still cannot be employed as the family caregiver unless the order explicitly permits it, and compensation for care beyond what the child's person-centered plan authorizes is prohibited. The plan, not the parent's actual hours at home, sets what is payable.2 This is still the meaningful change for Katie Beckett families: a parent delivering nursing-level care can now be a paid agency employee for the hours the plan covers.

Best for: Families of medically complex children where a parent has been delivering full-time skilled nursing or aide-level care without pay.

5. Tennessee Caring for Caregivers Act (Enacted 2026)

Status: The Tennessee Caring for Caregivers Act (Public Chapter 940 of 2026; HB 1443 / SB 1777) was signed into law by Governor Bill Lee on May 18, 2026, after passing the House 92-3 and the Senate 30-0. It creates a new three-year pilot grant program administered by the Department of Disability and Aging (DDA); DDA is standing up the application process, so confirm that applications are open before relying on it.8

What it does: Establishes a three-year DDA pilot grant program for family caregivers of Tennesseans with Alzheimer's disease or related dementias who are cared for in a private residence.

Grant amount: Up to $6,000 per year to reimburse documented expenses including home modifications (grab bars, ramps, safety upgrades), durable medical equipment, and respite care.8

Eligibility: The care recipient must have an Alzheimer's or related dementia diagnosis and be cared for in a private residence. Priority is given to lower-income households.

Funding: Year-one appropriation of $600,000, divided across East, Middle, and West Tennessee.8

What it is not: A tax credit (despite the shared name with Oklahoma's Caring for Caregivers tax credit) and not an hourly caregiver wage. It's a reimbursement grant, caregivers must front qualifying expenses and submit documentation.

Best for: Family caregivers of dementia patients with documented home-modification, equipment, or respite expenses to reimburse.

6. VA Programs (PCAFC, Veteran-Directed Care, Aid & Attendance)

Federal VA programs apply in Tennessee with state-specific delivery details.

6a. VA Program of Comprehensive Assistance for Family Caregivers (PCAFC)

Who can be paid: A designated "Primary Family Caregiver", spouse, son, daughter, parent, stepfamily, or extended family member, of an eligible veteran. Up to two Secondary Family Caregivers can also be designated.

2026 stipend: The base is the OPM GS-4 Step 1 annual rate for the veteran's locality, divided by 12 to get a monthly figure, then multiplied by a factor set in 38 CFR 71.40(c)(4). It is not an hourly wage. Which factor applies turns on whether the household is in the current program or is a legacy participant or legacy applicant, and there are four possible values, not two:4

• Current program (veteran meeting 38 CFR 71.20(a)): 0.625 of that monthly figure, or the full 1.00 where VA determines the veteran is "unable to self-sustain in the community."
• Legacy participant or legacy applicant (veteran meeting 71.20(b) or (c)): the factor comes from the sum of the veteran's 2019 clinical ratings, and no self-sustain determination is required on this route. A sum of 21 or higher pays 1.00. A sum of 13 to 20 pays 0.625. A sum of 1 to 12 pays 0.25.4
• A veteran who qualifies both ways (meeting 71.20(a) and 71.20(b) or (c)) is paid whichever of the two amounts is higher.4
• Legacy floor: a legacy participant under 71.20(b) receives not less than what their caregiver was eligible to receive the day before October 1, 2020, as long as the veteran still resides at the address PCAFC had on record that day. The legacy rules run for eight years beginning October 1, 2020, so they lapse October 1, 2028.4

If your family has been told the only route to the full stipend is a self-sustain determination, that is true only inside the current program. A legacy household with a 2019 rating sum of 21 or higher reaches 1.00 on the rating schedule alone, which is 1.6 times the 0.625 amount, so it is worth asking your Caregiver Support Coordinator in writing which schedule your household is being paid under. In Tennessee, locality is what moves the dollar amount: the Nashville–Davidson–Murfreesboro–Columbia MSA, the Memphis MSA, the Knoxville MSA, and the Rest of US locality (most of East Tennessee) each carry a different GS-4 Step 1 rate. Confirm your specific stipend with your VA Caregiver Support Coordinator before relying on a number.3,4

Veteran eligibility: Service-connected disability rating of 70% or higher (single or combined); needs in-person personal care services for at least 6 continuous months; enrolled in VA health care. Both pre-9/11 and post-9/11 eras qualify under the expanded program.3

Other PCAFC benefits: CHAMPVA health insurance for the Primary Family Caregiver if uninsured; at least 30 days/year of respite; mental health counseling; legal and financial planning; travel reimbursement.

How the caregiver gets paid: Direct deposit from the VA after PCAFC application approval. The stipend is federal tax-free.

Best for: Families of eligible veterans who are willing to commit to full-time caregiving and who meet the post-2022 expanded eligibility.

6b. VA Veteran-Directed Care (VDC): Tennessee Status

Who can be paid: Any caregiver the veteran hires, which VA says might include their own family member or neighbor. VA's page doesn't address a spouse either way, so ask the veteran's VA facility before counting on that.9

2026 pay rate: The veteran receives a flexible budget managed by the veteran or their representative, and hires and supervises their own workers within it; a financial management services (FMS) provider handles the employer paperwork.9

Tennessee availability: Veteran-Directed Care is a VA Geriatrics and Extended Care (Home and Community Based Services) benefit delivered in partnership with the Aging and Disability Network, in Tennessee the state's nine Area Agencies on Aging and Disability. It is not offered at every VA facility, and a veteran qualifies only if they are eligible for community care and meet the clinical criteria for the service. Tennessee veterans are served by three VA health care systems: the VA Tennessee Valley Healthcare System (Nashville and Alvin C. York/Murfreesboro campuses), the VA Mountain Home Healthcare System (Johnson City), and the VA Memphis Healthcare System. Ask your VA Caregiver Support Coordinator or social worker whether VDC is available at your facility and request a referral.3,9

Veteran eligibility: Enrolled in VA health care; needs help with ADLs; VDC must be available at the veteran's VAMC.

How the caregiver gets paid: Through a Financial Management Services agency contracted with the VA.

Best for: Tennessee veterans with ADL needs who want the widest say in who they hire. Confirm first that VDC is offered at the veteran's own VA facility.

6c. VA Aid & Attendance Pension

Who is paid: The veteran or surviving spouse directly. Family caregivers are typically paid out of the pension under a private arrangement.

2026 A&A maximums (Maximum Annual Pension Rate, or MAPR, effective Dec 1, 2025 – Nov 30, 2026) are ceilings, not flat payments: VA pays only the difference between countable income and the MAPR. A veteran with no dependents and A&A has an MAPR up to $29,093/year; a veteran with one dependent up to $34,488/year; two veterans married to each other who both qualify for A&A up to $46,143/year. Each additional dependent adds $2,984/year. A surviving spouse is on a different, lower schedule: Survivors Pension with A&A and no dependents tops out at $18,697/year, not the veteran figure. Divided by 12, the $29,093/year single-veteran MAPR works out to roughly $2,424 a month. Confirm current rates on the VA pension rate page before applying.10

Net worth limit (2026): $163,699, the same figure for veterans and surviving spouses. The calculation counts the claimant's and any dependents' assets and income for VA purposes; assets exclude the primary residence, the car, and basic home items. VA also applies a 36-month look-back under 38 CFR 3.276 to assets transferred for less than fair market value, with a penalty period that may not exceed 5 years, so a caregiver-payment plan needs to survive VA's transfer rules as well as TennCare's.10

Eligibility: A wartime veteran or their surviving spouse, and the service test depends on when service began: someone who started active duty before September 8, 1980 needs at least 90 days of active duty with at least 1 day during a wartime period, while an enlisted person who started after September 7, 1980 generally needs at least 24 months or the full period they were called to active duty, still with at least 1 day during wartime. The veteran must also have no dishonorable discharge and be 65 or older, have a permanent and total disability, be a nursing-home patient for long-term care due to a disability, or get SSDI or SSI. The A&A functional criteria themselves are at 38 CFR 3.352(a): needing regular help with dressing, bathing, feeding, or toileting, needing protection from daily hazards, being bedridden, being in a nursing home because of a disability, or having 5/200 or less eyesight in both eyes. (Housebound is a separate, lower pension tier, not an A&A criterion.)11

How it works for caregivers: The pension goes to the veteran. Family caregivers are paid from it under a written caregiver agreement. The Tennessee Department of Veterans Services and county Veterans Service Officers can help file at no cost, avoid for-profit pension consultants who charge a percentage.

Best for: Wartime veterans (or surviving spouses) with countable income and assets under the limits who need help with ADLs.

7. Private Caregiver Agreements (Personal Services Contracts)

Who can be paid: Any non-spouse caregiver under a written contract, including adult children, parents, siblings, friends, neighbors, and professional caregivers. (Spouses are the exception, for the reason explained below.)

2026 pay rate: A reasonable and customary fair-market rate for the geographic area and service type, typically what a local home care agency or private-hire aide would charge for the same work. Document the rate against 2–3 local agency quotes so it holds up as legitimate compensation rather than a gift.5

What it is: A written, arms-length contract between the care recipient (or their legal representative) and the family caregiver, executed before services begin. Required elements:5

• Date services begin
• Specific services to be performed (personal care, transportation, meal prep, etc.)
• Hours per week and schedule
• Reasonable and customary hourly rate, documented against 2–3 local agency quotes
• Payment terms (frequency, method)
• Caregiver keeps daily logs of duties and hours
• Caregiver reports income on their tax return

Why it matters for Medicaid planning: Tennessee enforces a 60-month Medicaid look-back. Without a written contract, payments from an aging parent to an adult child for caregiving are presumed to be uncompensated transfers (gifts) and trigger a penalty period. For applications dated on or after January 1, 2026 the Tennessee transfer-penalty divisor is $295.87 per day ($8,846.10 per month), so each $295.87 of unprotected transfer creates roughly one day of Medicaid ineligibility. The penalty clock does not start on the day of the transfer: it begins on the later of the first day of the month the assets were transferred, or the date the applicant is otherwise eligible for Institutional Medicaid or CHOICES and would be receiving long-term care but for the transfer. A properly structured personal services contract converts the payment into a legitimate exchange of value, preserving the estate and avoiding penalties.5

Why this doesn't apply to spouses: A personal services contract buys nothing for a married couple, because federal Medicaid law already exempts transfers between spouses from the transfer penalty. Under 42 U.S.C. §1396p(c)(2) (Social Security Act §1917(c)(2)), any asset may be transferred without penalty to the individual's spouse, or to another person for the spouse's sole benefit. Money moved between spouses is not a penalized gift to begin with, so there is nothing for a caregiver contract to fix.12

Best for: Families with enough assets to private-pay a caregiver who want to preserve the estate for future Medicaid planning. Always work with a Tennessee elder-law attorney to draft the contract, TennCare scrutinizes informal arrangements.

Comparison Table

How to Choose a Tennessee Paid Family Caregiver Program

Start with the care recipient's situation:

1. Veteran or surviving spouse? Check the VA pathways first. PCAFC stipends in higher-cost Tennessee localities can compete with or exceed what CHOICES Consumer Direction pays hourly, and Aid & Attendance can stack with a Medicaid pathway. Connect with your county Veterans Service Officer through TDVS before applying, it's free help.
2. Already on TennCare or likely to qualify? If the caregiver will be a non-spouse family member, start with CHOICES Consumer Direction (the fastest, most flexible route). If the caregiver is a spouse or the parent of a minor, you need the new agency-employed pathway under PC 182, start at the TennCare provider-agency information page and call contracted agencies in your area that hire family.
3. Caring for a child or adult with I/DD? ECF CHOICES Group 4 has the only flat monthly stipend in this guide ($500/month when the member is under 18, $1,000/month when the member is 18 or older). You can't apply for the stipend by itself, so start by getting the member enrolled in ECF supports through TennCare ECF.
4. Caring for a dementia patient with documented expenses? The Caring for Caregivers Act became law in May 2026; once DDA stands up the application process, its $6,000/year pilot grant reimburses home modifications, equipment, and respite for caregivers of someone with dementia in a private residence.
5. Private-pay with substantial assets? Talk to a Tennessee elder-law attorney about a personal services contract, both to generate caregiver income now and to protect the estate from the 60-month look-back when Medicaid eventually becomes necessary.
6. None of the above? Contact your local Area Agency on Aging and Disability through the statewide line at 1-866-836-6678. Tennessee's nine AAADs deliver National Family Caregiver Support Program information, access assistance, counseling and training, respite care, and limited supplemental services, plus the state-funded OPTIONS for Community Living program. That's real support, but it is not hourly caregiver pay.13

Tax Considerations

All Tennessee paid-caregiver programs generate reportable income, with one important federal exclusion.

• CHOICES Consumer Direction pays W-2 wages through CDTN as the Fiscal Employer Agent.
• CHOICES Agency-Employed pathway (PC 182) pays W-2 wages from the home care agency.
• ECF CHOICES Consumer Direction also pays W-2 wages through CDTN.
• ECF Family Caregiver Stipend, tax treatment is administered by the assigned MCO; consult the MCO and a tax preparer for the current year's classification.
• VA PCAFC stipend is federal tax-free income; not reported on a W-2.
• VA Veteran-Directed Care pays W-2 wages through the FMS agency.
• VA Aid & Attendance pension is paid to the veteran (tax-free for the veteran); when used to pay a family caregiver, the caregiver receives ordinary taxable income.
• Personal caregiver agreements pay W-2 wages if the caregiver is treated as an employee, or 1099 income if truly independent (be careful, misclassification is the #1 audit risk in this area).

IRS Notice 2014-7: Qualified Medicaid HCBS payments made to an individual care provider for the personal care of a recipient who lives in the provider's home are treated as excludable difficulty-of-care payments under IRC §131 and may be left out of the provider's gross income. Three bounds decide whether it reaches you: the recipient has to live in your home (if you live in a separate residence, the payments are not excludable), the exclusion does not extend to respite care, and it does not cover amounts paid directly out of the care recipient's own funds. Talk to a tax preparer familiar with the rule before filing.14 Separately, when the CDTN worker is the member's child, parent, or spouse, the IRS requires the FICA/FUTA difficulty-of-care exemption.2

Tennessee state income tax: Tennessee has no state income tax on wages, so the federal classification is the entire tax story for Tennessee residents.

Common Misconceptions

"If my mother has Medicare, I can get paid through Medicare." Medicare does not pay family caregivers. Medicare only pays for short-term skilled home health through certified agencies. Family caregiver pay in Tennessee comes through TennCare, the VA, or private arrangements.

"PC 182 means TennCare will hire me directly." No. The law removes a state-level barrier; the agency is still your employer, and it still has to be willing.

"I can pay myself out of my parent's Social Security check." Not without a written contract. An informal transfer of a parent's Social Security to a family member without a personal services contract is treated as a gift under TennCare's 60-month look-back, and triggers a penalty calculated at roughly $295.87 per day of disqualification for every $295.87 transferred.5

"I need a CNA license to be paid as a family caregiver in Tennessee." Not for CHOICES Consumer Direction, the PC 182 agency pathway (in most cases), or VDC. Caregivers typically need to be 18+, pass a background check, and complete program-specific training. A CNA license expands what skilled tasks you can perform but is not a baseline requirement.

"If I start getting paid, my family loses TennCare." Paying a family caregiver out of TennCare-authorized hours does not jeopardize the recipient's TennCare. The hours come out of the recipient's authorized service plan, not their personal income or assets.

Related Terms

• Consumer Directed Services (CDS): The national term for self-directed programs like TennCare CHOICES Consumer Direction. Tennessee's version operates under §1115 demonstration authority (functionally equivalent to §1915(j) Cash & Counseling).
• HCBS waiver: The federal authority for community-based long-term services. Note: TennCare CHOICES is operated under §1115 demonstration authority, not a §1915(c) waiver, a TennCare-specific structural choice.
• Activities of Daily Living (ADLs): The functional basis for personal care attendant authorization across all CHOICES pathways.
• Nursing Facility Level of Care (NFLOC): The clinical threshold for CHOICES Group 1 and Group 2.
• Miller Trust / Qualified Income Trust (QIT): Tennessee uses the QIT terminology for the income-redirection trust used by CHOICES applicants over the 300% SSI income limit.6
• Medicaid spend-down: Tennessee does not use the spend-down model the way some states do; the QIT is the primary income-correction mechanism.

Learn More

Find personalized help navigating Tennessee paid family caregiver programs at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.