Will paying a caregiver cash be a problem later on?

Somehow you need to document the services provided, the number of hours being paid for. Receipts will not cut it if it is over the yearly allowance permitted by the IRS for no reporting of income, $1,600.00 a year, I think. Taxes, social security, disability all need to be deducted with the employer paying the employer portion. Or employed as a 1099 contractor which will have significant impact on caregiver pay. And depending on the care arrangement the caregiver may not be legally considered a contractor, a whole new can of worms. You need to consult with an elder law attorney and get the appropriate process in place so it is not questioned as a gift by Medicaid. Accountants do not know Medicaid rules.

Depending on the amount (over $400.00 in one year) it can become a big problem for you both. Talk to a CPA or an attorney to make sure you have the right paperwork in place.

It could be, especially if there is no Caregiver Agreement signed and on file. It could be looked at as a gift.