Hire a Family Member as Caregiver Through Tennessee Medicaid

The Freedom for Family Caregiving Act Changed the Rules

Until July 1, 2025, many TennCare-contracted home care agencies refused to hire family members — particularly spouses and people living in the same household as the person receiving care. That practice left thousands of Tennessee families providing unpaid, full-time dementia care while a Medicaid-funded agency slot sat unused because the family couldn't access it.

The Freedom for Family Caregiving Act (Public Chapter 182 of 2025) eliminated that barrier. TennCare-contracted provider agencies can no longer refuse to hire a family member — including spouses, parents of minor children, and other co-resident relatives — as a paid personal care assistant or direct support worker solely because of the family relationship.

This matters because roughly 70% of people with dementia in Tennessee receive care primarily from family members, many of whom reduce their work hours or leave jobs entirely to provide that care.

Two Paths to Get Paid as a Family Caregiver

Tennessee offers two distinct mechanisms for family caregivers to receive Medicaid-funded compensation through TennCare CHOICES.

Agency Employment (W-2 Route)

Under this arrangement, the family member applies for a position with one of the TennCare-contracted Personal Support Services Agencies operating in their region. The agency handles payroll, background checks, training requirements, and supervision. The family caregiver becomes a W-2 employee of the agency and provides care according to the plan of care developed by the Managed Care Organization (MCO).

Pay rates and employment terms are set by the agency and region; confirm the current rate directly with the participating agency. The advantage is simplicity — the agency manages all employment paperwork and compliance. The limitation is that you're working within the agency's scheduling system and rate structure.

Consumer Direction

Consumer Direction is the more flexible option. Under this model, the TennCare CHOICES member (or their authorized representative) directly hires, trains, schedules, and supervises their own personal care workers. A fiscal intermediary handles payroll processing, tax withholding, and workers' compensation insurance.

Consumer Direction can have a different rate structure because the worker is hired through the self-directed arrangement rather than the agency's standard employment model. The actual wage and deductions vary by MCO, region, and program; confirm them before enrolling.

To switch to Consumer Direction, the CHOICES member contacts their MCO care coordinator and requests the change. The MCO will verify the member's care plan supports self-direction and connect them with the fiscal intermediary. The family member then completes a background check, tuberculosis screening, and basic orientation before starting paid work.

Eligibility Requirements

The person receiving care must be enrolled in TennCare CHOICES Group 2 (home and community-based services) and have personal care hours approved in their plan of care. Group 1 members in nursing facilities cannot use this option because they're receiving institutional care. Group 3 members may qualify depending on their approved service plan.

The family caregiver must:

• Pass a Tennessee Bureau of Investigation (TBI) background check
• Complete a tuberculosis test
• Attend the required training hours (varies by agency or Consumer Direction program)
• Be at least 18 years old
• Not be the CHOICES member's legal guardian simultaneously serving as their paid caregiver (a separate individual must serve as the authorized representative for Consumer Direction oversight)

Spouses can serve as paid caregivers under the Freedom for Family Caregiving Act. This was the most significant change — prior to 2025, many agencies categorically excluded spouses.

How Many Hours Can You Get Paid For

The number of paid hours depends entirely on the member's approved plan of care, which the MCO develops based on the Pre-Admission Evaluation (PAE) acuity score and assessed needs. Do not rely on a fixed statewide weekly range; the Group 2 cost-neutrality cap of $294.87 per day ($107,627.55 per year) sets the ceiling.

You cannot bill for more hours than the care plan authorizes, and the MCO will conduct periodic reviews to verify the hours are medically necessary. If your parent's care needs increase — which is common as dementia progresses — request a care plan reassessment from the MCO.

The Caring for Caregivers Act Adds a Separate Grant

Independently of the Medicaid payment pathway, the Caring for Caregivers Act of 2026 established a state-funded pilot program (running July 1, 2026 through December 31, 2027) that provides grants of up to $6,000 annually to family caregivers of individuals diagnosed with Alzheimer's disease or related dementias. These grants reimburse uncompensated expenses such as respite care, home modifications, and assistive technology.

This grant is separate from TennCare CHOICES. Ask the administering agency and TennCare how a grant or reimbursement will be treated in your parent's specific eligibility and service-plan calculation before accepting it.

Steps to Set It Up

1. Confirm your parent is enrolled in TennCare CHOICES Group 2 with personal care hours in their plan of care
2. Contact the MCO care coordinator assigned to your parent's case
3. Request either agency employment referral or Consumer Direction enrollment
4. If choosing Consumer Direction, the MCO connects you with the fiscal intermediary
5. Complete the TBI background check and TB screening
6. Complete required training
7. Begin providing — and billing for — approved care hours

The time from request to first paid shift varies by MCO, agency or fiscal intermediary, screening, and training; ask for an estimated start date. If the MCO delays or denies your request based on the family relationship, cite Public Chapter 182 of 2025 (the Freedom for Family Caregiving Act) and request a supervisor review. The law prohibits denial solely because of the family relationship.

For families navigating TennCare CHOICES enrollment, caregiver payment options, and the QIT requirements that often come with it, the Tennessee Dementia & Memory Care Guide walks through every step with state-specific forms and checklists.

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