A Recent IRS Tax Announcement Provices a New Opportunity for Aging at Home

Many older adults hope to age in place, remaining safely in their own homes for as long as possible. At the same time, programs designed to support people living at home through Medicaid are becoming increasingly difficult to access. Financial eligibility rules are tighter, and income limits often exclude people from qualifying. 

As a result, individuals and families need to plan earlier, think creatively, and explore options outside traditional Medicaid home care programs.

A recent announcement from the Internal Revenue Service has brought renewed attention to one such option, live-in caregivers.

What Did the IRS Announce?

The IRS clarified that, in certain situations, the value of room and board provided to a live-in caregiver may not be treated as taxable income to the caregiver when the arrangement is structured properly. This generally applies when the caregiver lives in the home for the homeowner's convenience and provides household or personal care services as part of that arrangement.

This can make live-in care significantly more affordable than traditional hourly home care.

This is not a blanket rule and the details matter. Tax treatment depends on how the caregiver relationship is structured, what services are provided, and whether room and board are part of the compensation. Professional guidance is important before relying on this strategy.

Why This Matters More Than Ever

Medicaid programs that support home-based care are becoming more restrictive. Asset and income rules are getting harder to meet.  Some planning options that once helped people remain at home are now limited.

For many older adults who want to stay at home and cannot qualify for Medicaid, private-pay solutions are increasingly necessary.

A properly structured live-in caregiver arrangement can provide daily support, oversight, and companionship at a cost that may be more manageable than assisted living or full-time hourly care.

Live-In Care as a Practical Aging-in-Place Strategy

Live-in care can work well for individuals who need consistent help but do not require round-the-clock skilled nursing care. A live-in caregiver may assist with meals, daily routines, mobility, medication reminders, transportation, and general household support, while also providing companionship.

When planned carefully, this approach can support independence, preserve dignity, and allow an older adult to remain at home longer. 

What If You Do Not Have Family to Rely On?

Many people, especially solo agers, worry that aging in place is unrealistic because they do not have nearby family to help. Fortunately, new platforms and creative housing models are expanding the possibilities.

Services such as Nesterly,com help match older homeowners with students or young adults who are seeking affordable housing in exchange for help around the home. Other platforms, including Care.com, can be used to find caregivers who may be open to live-in or hybrid arrangements.

In areas like Greater Boston, this approach can be particularly effective. Graduate students, medical and nursing students, and other young adults often value stable housing and may be willing to provide part-time support at a reasonable cost. When structured correctly, these arrangements can be mutually beneficial.

Planning Comes First

While this IRS clarification creates opportunity, it also creates risk if handled incorrectly. Tax rules, employment laws, and Medicaid eligibility requirements do not always align.

Before entering into a live-in caregiver arrangement, it is important to consider how payments are structured, whether room and board are included, employment classification issues, and how the arrangement may affect future Medicaid eligibility. Written agreements and advance legal planning are essential.

The Bottom Line

As the cost of care continues to rise and Medicaid rules become more restrictive, aging in place requires more planning and creativity than ever before. Live-in caregiver arrangements, when thoughtfully structured, can provide an affordable, flexible alternative that enables people to remain at home longer.

For those who value independence and want to avoid crisis-driven decisions, early planning makes all the difference.

At Senior Solutions LLC Attorneys at Law, we help individuals and families plan for long-term care and, whenever possible, keep clients out of nursing homes.  When nursing home care becomes the only option, we guide clients on how to protect their assets.   

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Senior Solutions, Attorneys at Law, is an Estate Planning and Elder Law firm serving the Greater Boston, Massachusetts area since 2001. We are ready to help you with Medicaid Planning, Estate Planning, Probate, Guardianship & Conservatorships, Special Needs Trusts, and Fiduciary Services. We are here to help. Please call our office at 617-489-5900 or schedule a brief consultation by clicking the button above.