Is paying a caregiver “under the table” a problem?

Is paying a caregiver “under the table” a problem?

Short answer: Yes. Cash payments without records can be treated as gifts for the look-back, and there can be tax and employment law problems.

Figures change periodically. Double-check current amounts before relying on them.

Paying a caregiver in cash without records causes several risks:

  • Medicaid look-back. If the person later applies for Long-Term Care Medicaid, unexplained cash withdrawals or payments to family can be treated as gifts, causing a penalty. Without an agreement and records, it is hard to prove the payments were for care.
  • Taxes. A caregiver working in the person’s home may be a household employee, which can require the employer (the person receiving care) to withhold and pay Social Security, Medicare and possibly unemployment taxes. The caregiver must report the income.
  • Disputes. Without a written agreement, family members may disagree later about what was owed.

A better approach:

  • a written caregiver agreement describing duties, hours and pay;
  • payment by check or bank transfer;
  • a daily care log;
  • handling payroll taxes, or using a payroll service.

Getting help

Every situation is different, and small facts can change the answer. If this question affects a real decision, especially with a spouse at home, a home, gifts or a trust, a Certified Medicaid Planner can apply your state’s rules to your situation. As a rough guide, published fees for help with an application range from about $500 to $6,000, and hourly help from about $150 to $600.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.

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