Mortgage Killer Accelerator

Strategy 38 of 107

Paid family caregiving at home through a Medicaid program

Depends on people or program rulesFrom new cash flow, not your paycheck

What it is

If a parent or relative who qualifies for Medicaid home care lives with you, ask the state whether its self-directed program lets them hire a family member as the caregiver.

Steps

  1. If a parent or relative who qualifies for Medicaid home care lives with you, ask the state whether its self-directed program lets them hire a family member as the caregiver.
  2. Payments under a qualified Medicaid waiver for care of someone living in your home may be excludable from income (IRS Notice 2014-7).
  3. Send what remains after the household's added costs to principal.

Repeat: Monthly, for as long as care is needed and approved.

Measure: Monthly caregiver pay after added household costs.

Try it in the calculator Enter its amount in "Monthly non-income amount to principal". Add a payoff goal of 5 years to see what is still needed.

Risks

  • Caregiving is hard work, and the pay can end when the care plan changes.
  • Programs and pay rates differ by state; some do not pay spouses or legal guardians.
  • Confirm the tax treatment with a CPA.

Who it fits

Married couples, Single, Average household, No high school diploma, No college degree, Grandmas and grandpas (62 and over)

Needs

Caring for a relative who lives in the home

How predictable

Depends on people or program rules (tenants, family, IRS records, lenders)

A worked example (hypothetical, not guaranteed)

Picture a hypothetical household (married couples). They owe $300,000 at 6.5% with 30 years left. The required payment is $1,896 a month, and that payment, which comes from income, never changes in this example.

They follow the steps: if a parent or relative who qualifies for Medicaid home care lives with you, ask the state whether its self-directed program lets them hire a family member as the caregiver.

Suppose it brings $600 a month on principal from this strategy, not from the paycheck. The loan would be paid off in 16 years 3 months instead of 30 years, saving about $196,219 in interest. To finish in five years, they would still need about $3,374 a month more from other strategies. That is why the five-year sequences stack several at once.

The amount above is chosen only to show the arithmetic. It is not an estimate of what this strategy will produce for anyone. Put real numbers from the fact finder into the calculator.

Sequences that use it

  • Income from the home stack: Work the home already supports: child care, paid care for a relative who lives with you, and one big event week a year.

Sources and more information

Where to get help

Related strategies

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