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Paying Family Caregivers through Medicaid Structured Family Caregiving

Updated: May 29

Family members play a vital role in our healthcare system as caregivers for older adults and folks with disabilities in our community. Being cared for by family doesn’t just enhance the quality of life for folks by enabling them to stay active in the community where they are surrounded by loved ones. It also saves the state dollars because it delays or prevents the need for nursing home care or care in a facility. Yet this work is unpaid and often comes at a heavy financial, physical, and emotional cost to family caregivers.  

Many family caregivers must maintain a full-time job in addition to providing care for their loved one. There is simply not enough time in the day to meet both work and caregiving obligations and meet basic personal needs. A common thing that family caregivers report to TJC, as we work alongside them on a case for their loved one, is how little sleep they are running on.  

In a 2021 study, 78% of caregivers surveyed reported regular out-of-pocket costs related to caregiving. On average, family caregivers spent a quarter of their annual income on caregiving expenses. This impacted the caregiver's ability to meet their own healthcare costs and saving for retirement. More than half of employed family caregivers reported needing to take time off, reduce their hours, take on an additional job, or another work-related strain. 

Our state's Medicaid program, TennCare, provides health insurance to some low-income individuals and also covers long term services and supports for individuals who have disabilities or are aging and need hands-on help. While TennCare covers 60% of all Tennessee nursing home residents, and also covers in-home professional caregivers, it largely overlooks family caregivers who provide essential services to its TennCare members. The reliance on family caregivers is only increasing as the demand for care rises with the aging population, and the shortage of healthcare workers continues to strain the healthcare system.  

However, there is an inclination by law and policymakers not to pay family caregivers “for care they would provide for free.” This is a tough concept for families to grapple with because - as so many family caregivers explain - they would never look away if their loved one needed help. However, family caregivers’ ability to provide care while also keeping the household financially afloat is hindered by the policy choice not to pay for their labor. This thinking also minimizes the true economic value of their work. AARP estimated that in 2021 the value of family caregivers’ unpaid caregiving work was approximately $600 billion

Indeed, states are beginning to recognize how critical the family caregiver is to our healthcare system and for the wellbeing of vulnerable members of our community. To make this care sustainable, states are wisely investing in family caregivers through their Medicaid programs and providing direct paths to pay caregivers for their work. Unfortunately, Tennessee has a way to go. According to AARP’s 2023 State Scorecard Report, we are ranked last in all 50 states and D.C. in supporting family caregivers. 

In Tennessee, TennCare provides indirect compensation to family caregivers. This is done through the “Consumer Direction” option. However, this option is very difficult to access and execute. Under Consumer Direction, legal guardians or the individual seeking services are essentially the boss in their professional care. TennCare contracts with a financial intermediary to handle the paycheck disbursement, but the legal guardian or the individual seeking services handles all the other aspects including hiring, training, and managing staff. Navigating this has been extremely difficult for families in Tennessee and other states that have implemented this option. If a loved one needs more support than the one family member can provide, the burden is on the family to find additional professional caregivers, which is extremely difficult due to the caregiver shortage. The hoops families must go through to execute the Consumer Direction model can also be very trying. This includes interactions with the financial intermediary. In one recent story, a Tennessee family had difficulty hiring care for their son with cerebral palsy because the intermediary’s portal kept crashing and having other technical issues. 

Also, TennCare has several rules that prevent the most practical or even the only family member from being paid through Consumer Direction. TennCare rules do not allow immediate family members or those that live with the person supported to be paid through Consumer Direction. This is discriminatory towards families of color as Black, Asian, and Hispanic individuals are most likely to live in multigenerational households than White. Black family caregivers are also more likely to find themselves to be the sole person in the life of the person supported available or existing to provide care to their loved one. Additionally, this ignores the fact that many individuals with disabilities are unable to live independently and may reside with their only family members. 

Tennessee must make changes to support family caregivers and make their role more sustainable. Paying family caregivers is one tool that many states are adopting to support their role. To make this tool effective, creativity and thought on how to implement this tool is needed. This involves clear expectations of what type of care can be compensated and for how much. Also, while financial relief is top of mind for many of these families, family caregivers also want training programs and support networks to give them confidence and ensure they have the necessary skills and resources to care for the person supported.  

An investment in family caregivers means a reduction in costs and burden on our healthcare facilities and healthcare workers. It means more financially secure Tennesseans. It means safer Tennesseans and more vibrant, diverse communities. 

To learn more or join us in pushing for this policy change, visit Tennessee Disability Coalition/Tennessee Justice Center's Paid Family Caregiving Resource hub here. 


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