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If Medicaid is true to form, you and she will have to jump through a LOT of hoops for what will probably be a minuscule amount of compensation. Plus you will most likely have to file taxes on whatever she pays you. If she can pay you out of her own funds, a Caregiver Agreement needs to be drawn up, preferably by an attorney.

Are you certain you want to take this on? “Senility”, or as it is now called, “dementia”, is a progressive disease. There is no cure and it only gets worse. Will you be her caregiver 24/7? Does she have other care options? Family? Do they approve of this arrangement? I’d suggest you do some research on this site about caring for a person with dementia if you are not familiar with what this type of care involves.
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First the older friend needs to apply and be accepted by Medicaid [which is different from Medicare]. Then one would need to see if that State offers any programs where a friend can be paid to be a caregiver. This can vary from State to State regarding the hourly pay and the number of hours worked.

The reason some States limit the amount of pay/hours is that it is more cost effective for the patient to go into a nursing home. There does comes a time where it can take a village to care for one elderly person.
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