Do I Need Workers' Comp for a Family Caregiver I Pay?

Whether you need workers' comp for a family caregiver you pay turns on who the employer is and your state: California has an hours-and-pay test; Wisconsin makes it optional for families. If you've just started paying your brother to look after Mom, or hired an aide a neighbor recommended, the worry is a fair one: if the caregiver falls on the stairs, who pays, and am I on the hook? California, Oregon and Wisconsin, the three states whose rules we've checked against each state's own law and agency guidance, give three different answers, and a Medicaid self-direction program can change the answer again. Handing payroll to a fiscal agent doesn't hand off all of your liability, either.1,2,3

In This Guide

• Who Is the Caregiver's Employer?
• Workers' Comp for a Family Caregiver: Three States, Three Rules
• If the Caregiver Gets Hurt and You Have No Workers' Comp
• Self-Direction: What the Fiscal Agent Carries and What You Keep
• Unemployment Tax and the Family-Member Exclusions
• Wages You Could Owe Under Federal Law
• Health Coverage for the Caregiver
• What to Do This Week
• Frequently Asked Questions

Who Is the Caregiver's Employer?

You may not think of yourself as an employer. You're paying someone you love, or someone you trust, to help a parent stay home. But nearly every answer in this article hangs on one question, so it's worth settling first.

You hire the caregiver directly. IRS Publication 926 says a worker hired to do household work is your household employee if you can control not only what work is done but how it's done. Household-employee status doesn't depend on whether the work is full time or part time, or on whether you found the worker through an agency or from a list an agency gave you.4

An agency sends the caregiver. If an agency provides the worker and controls what work is done and how, the worker is not your employee, according to the same IRS publication.4 In Oregon, for example, workers employed by private home health care agencies that serve clients at home are subject workers, and those agencies must carry workers' compensation for them.5

A Medicaid program pays the caregiver and you self-direct. In Medicaid self-direction, a financial management services (FMS) entity, also called a fiscal/employer agent or fiscal intermediary, typically handles the back end: collecting timesheets, running payroll, and withholding, filing and paying employment-related taxes and insurance. The FMS doesn't provide the care. Under the federal rule for the self-directed personal assistance option (the Section 1915(j) state plan option), a state can set up the FMS as a payroll agent under Section 3504 of the Internal Revenue Code.6 How that works, and what it leaves with you, is in the self-direction section below and in our guide to consumer-directed services.

A county can also be the employer. In Wisconsin, where a county social service agency directs, pays and provides benefits to a home care provider, the county is the employer for worker's compensation purposes.2

Workers' Comp for a Family Caregiver: Three States, Three Rules

Workers' compensation for someone working in a private home is decided by state law, and the three states below show how far apart the answers can be. We've verified these three against each state's statute and its workers' compensation or safety agency. If you live elsewhere, don't assume your state matches any of them.

California: both the hours and the pay must be met

Under California Labor Code section 3351, a person employed by a household for personal duties that aren't part of the owner's business is an "employee" for workers' compensation. California Labor Code section 3352 excludes a household employee from workers' comp if, in the 90 days before the injury, the employment was for less than 52 hours or for wages of not more than $100. Because either shortfall excludes the worker, California workers' comp coverage for a household caregiver needs both: 52 or more hours and more than $100 in wages in the 90 days before the injury. California's Division of Occupational Safety and Health (Cal/OSHA) guidance for domestic workers adds that employers need to have workers' compensation insurance.1 If your aide works a few hours a week for you, count the hours and pay across the last 90 days, not just this week.

California Labor Code section 3352 also excludes from workers' comp a caregiver who is employed by their own parent, spouse or child. So an adult daughter whose mother pays her privately to provide care falls outside California's workers' comp definition of employee.1 If an adult daughter paid privately by her mother is hurt on the job, California workers' comp isn't the safety net for her, and that's worth talking through as a family before it happens. The parent, spouse or child exclusion comes from the California statute; the sources we verified don't apply it to California's In-Home Supportive Services program, so if your relative is paid through In-Home Supportive Services (IHSS), ask the county how that program handles workers' comp. Our California guide to getting paid as a family caregiver covers IHSS itself.

Oregon: private hires are nonsubject, program workers are covered

Oregon's Workers' Compensation Division says home health care workers employed directly by a client in a private home are nonsubject workers, so the client isn't required to provide workers' compensation coverage, unless the home is also used for business purposes. Oregon's rule flips when the care is state-funded or comes through the Oregon Home Care Commission: the commission elects coverage on behalf of the clients who employ those workers, and home care workers and personal support workers represented by SEIU Local 503 are covered for on-the-job injuries.5 For an Oregon family, that means the same aide doing the same work can be covered by workers' comp through the commission or not required to be covered at all, depending on who is paying. See our Oregon paid family caregiver guide for those programs.

Wisconsin: optional for families, built in for self-directed programs

Wisconsin's Department of Workforce Development says that where the client (the person receiving care) is the employer of a home care provider, worker's compensation insurance is optional, because arranging a family member's home care isn't the client's trade or occupation. For someone receiving long-term care on a self-directed basis through programs listed in Wis. Stat. 102.07(20), including Family Care and Family Care Partnership on a self-directed basis, a worker without other coverage is treated as the employee of the fiscal agent for worker's compensation only and is covered under the fiscal agent's policy, unless the client buys an individual policy.2 Our Wisconsin paid family caregiver guide explains the state's programs.

If the Caregiver Gets Hurt and You Have No Workers' Comp

This is the moment families dread, and it's worth facing before it happens. "Optional" doesn't mean "no risk." Wisconsin's workforce agency states plainly that employers who are not subject to the Act and don't carry worker's compensation insurance may be sued in a civil action for damages by an employee injured at work.2 Skipping a policy you weren't required to buy can still leave your family facing a lawsuit.

Federal workplace-safety rules are a separate question. Under 29 CFR 1975.6, it's the Occupational Safety and Health Administration's policy that individuals who privately employ people in their own homes for ordinary domestic household tasks are not subject to the requirements of the OSH Act for that employment. In a 2001 letter, OSHA said it believes the household domestic-employment exemption from the OSH Act includes domestic household tasks performed for an elderly member of the household who employed the worker.7 OSHA's household exemption is a federal safety-rule policy for the household employer, and it doesn't settle workers' comp, which the Wisconsin rule above shows is a state-law question with its own consequences.

If you're counting on a homeowners or other liability policy, ask your insurer, in writing, whether it covers an injury to someone you employ in your home. We haven't found a state regulator's rule on that question that we can cite.

Self-Direction: What the Fiscal Agent Carries and What You Keep

Self-direction can feel like a relief: someone else handles the paychecks and the tax forms. That help is real. But it isn't the same as someone else carrying your obligations. If your FMS acts as your IRS-authorized Section 3504 agent, the IRS holds you, as the employer, liable along with it for the federal employment taxes it handles.3

When the IRS authorizes an agent under Section 3504 to perform an employer's employment tax acts (the employer requests this on Form 2678), every provision of law that applies to the employer for those acts, penalties included, applies to the agent. An employer that authorizes a Section 3504 agent remains subject to those same employment-tax provisions, penalties included. The IRS describes this as joint and several liability: both the agent and the employer are liable for the employment taxes and penalties tied to the obligations the agent took on, and IRS examiners are told to advise the employer that it remains liable along with the agent.3

Federal unemployment tax has a special rule for program participants. A Section 3504 agent already authorized for Federal Insurance Contributions Act (FICA) tax and income tax withholding can also be authorized for federal unemployment (FUTA) tax on home care services when the employer is a "home care service recipient": someone receiving home care while enrolled in a government-funded home care program, and for the rest of the calendar year after leaving it. A Section 3504 agent's FUTA authorization for home care services is permissive, not automatic, and the employer remains subject to all the same FUTA provisions, penalties included.3

In practice, keep copies of what your FMS files on your behalf, and ask it two direct questions: which federal and state tax filings it makes for you, and whether your worker is covered by workers' comp through the FMS or the program. In Wisconsin's listed self-directed programs, the worker is covered by workers' comp under the fiscal agent's policy unless you buy your own policy.2

Unemployment Tax and the Family-Member Exclusions

When a parent who pays an adult child dies or moves to a nursing home, the caregiving job can end overnight. If you're counting on unemployment to fall back on, the federal rules are narrower than you might expect.

Publication 926 tells a household employer not to count wages paid to their spouse, their child under age 21, or their parent as FUTA wages.4 The FUTA exclusion for a household employer's child stops at age 21, so it doesn't reach an adult son or daughter paid by a parent. For wages that do count, a household employer who pays total cash wages of $1,000 or more to household employees in any calendar quarter of 2025 or 2026 owes FUTA tax, and state unemployment tax may also be owed.4 Our guide to hiring in-home help walks through the rest of the household-employer tax rules.

Whether a paid adult child can actually collect state unemployment benefits when the job ends is a question of your state's unemployment insurance law, which we haven't verified for any state. Ask your state's unemployment agency before you count on it.

Wages You Could Owe Under Federal Law

Liability isn't only about injuries. Federal wage law decides which hours a paid caregiver must be paid for, and a few of those rules are in flux right now.

A relative paid through a public program. In certain Medicaid-funded and other publicly funded home care programs that let the person receiving care choose a family or household member as the paid provider, the U.S. Department of Labor will usually not treat a relative with a pre-existing close, personal relationship as employed beyond the program's written plan of care, so in those programs that relative usually doesn't have to be paid for care given outside the plan-of-care hours. The Department of Labor's plan-of-care limit holds only if the plan of care is reasonable, meaning it would have included the same paid hours if the provider weren't family; a program may not cut paid hours because the provider is a relative. A worker with no prior family or household tie who moves in to be a live-in employee must be paid under ordinary Fair Labor Standards Act (FLSA) rules for all services.8

Companionship and live-in exemptions, and their 2025 status. Under the 2013 rule now in the regulations, third-party employers such as home care agencies may not claim the FLSA live-in overtime exemption, even when the household is a joint employer. The household itself may still claim the FLSA live-in overtime exemption, and DOL states that if the household may properly claim the exemption, it won't be liable for overtime regardless of any involvement of a third party.9 The companionship exemption under the same rule covers care only when it's provided along with fellowship and protection and doesn't exceed 20 percent of the total hours worked per person per workweek, and third-party employers may not claim it either.9

In plain terms: if your family is the employer of a live-in aide and properly claims the live-in exemption, DOL says you aren't the one liable for that aide's overtime, even if an agency is also involved.9 What an agency owes its own aides is the part in flux. DOL's 2013 rules barring third-party employers from the companionship and live-in exemptions are both under reconsideration. On July 2, 2025, DOL published a proposed rule, not yet final, to rescind its 2013 home care rule under the FLSA. In Field Assistance Bulletin 2025-4 (July 25, 2025), its Wage and Hour Division told investigators not to take enforcement action against third-party employers, including home care agencies, that claim the companionship or live-in exemption, and not to consider limits on the time home care workers spend providing care, until any final rule takes effect. Field Assistance Bulletin 2025-4 says it doesn't alter any statutory or regulatory requirements, so the 2013 home care rule remains the regulation.9

Health Coverage for the Caregiver

If you're giving up a job, and the health insurance that came with it, to do this work, that loss deserves a plan of its own.

If you leave a job and lose job-based coverage. Losing job-based health insurance, even after quitting, opens a Special Enrollment Period on the Health Insurance Marketplace. HealthCare.gov says to apply within 60 days of losing the job-based coverage; under the federal rule you can also pick a plan up to 60 days before that coverage ends. Marketplace coverage can start the first day of the month after the job-based coverage ends. Dropping coverage voluntarily, or letting COBRA lapse for non-payment before it expires, doesn't count as a loss of coverage. COBRA itself lets you pay to stay on the job-based plan for a limited time, usually 18 months, usually at the full premium plus a small administrative fee.10

If you're a VA family caregiver. A Primary Family Caregiver in VA's Program of Comprehensive Assistance for Family Caregivers (PCAFC) gets CHAMPVA through the program only with no other health coverage, and VA counts Medicare and Medicaid as other coverage. So an older veteran's spouse who has Medicare doesn't get CHAMPVA through PCAFC, though the regulation attaches no such condition to the monthly stipend.11 Our PCAFC stipend guide covers eligibility and amounts.

If you're an Oregon home care worker. Oregon law lets the Home Care Commission arrange health insurance, including group coverage, for home care workers and personal support workers hired through its registry.5

What to Do This Week

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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.