I live with my mother but I can't work out of the home for fear that she will fall due to being off-balanced, legally blind and having Dementia. I looked at some newspaper ads for caregivers and most charge atleast $2400.00 a month for living in. Also, private companies like Home Instead are outrageously high. So I don't feel guilty that I am not contributing much because basically I am contributing my life, my time, and sacrificing working to try to save for my retirement. I am 64 years old and receive a small widow's pension. I rarely go out with friends, stay in the home to ensure her safety and monitor all medications, dress, bathe, drs. appts, cook, grocery shopping, pay her bills, talk to her creditors, do her taxes, and the list goes on. Even a live in wouldn't be able to do her personal finances. So, truly I think it is a win win situation for both of us as she has me (her daughter here) not a stranger and can ask me to buy her things that she needs. I don't feel guilty at all because caregiving is a lonely depressing job when it is done day in and day out.
I agree with Glad that treating this in a business-like manner and seeing an Elder Law specialist to set up a contract is the best way to do.
No states have laws against paying people for services. But how states looks at such expenditures in terms of Medicaid applications may vary. Perhaps your mother will never need to apply for Medicaid, but it is best to assume she might and get things set up appropriately.
At first this sounded so ideal and possibly enviable. I assumed you were functioning well and probably drawing your own social security and on your own medicare until I read your thread from 10 hours ago.
What do you do when you are so depressed taking care of a parent that it causes your health to deteriorate?
https://www.agingcare.com/questions/so-depressed-taking-care-of-a-parent-178509.htm
Please read the suggestions there and follow them. Your situation is continuing to go down hill and will only get worse.
If your Mother can pay you a salary, it would be in everyone's best interest if your Mother paid a full-time Caregiver to come into the house, thus giving you time to work at a full-time job, get company sponsored health insurance, company sponsored contributions to your 401(k), paid vacation days, paid sick days, etc.
By the way, I hope your son and his girlfriend are paying rent to your Mother for living under roof with her [per last year postings]. I hope your Mother isn't paying for their groceries and items that are needed by their toddler.
You really need to step back and take a long hard look at this situation, maybe contact someone at the Senior Services of Southeastern Virginia www.ssseva.org to give you tips on what to do or where to move.