Read this:

https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income

For instance, A6: "The exclusion only applies to payments for care in the individual care provider’s home where the care recipient lives under the recipient’s plan of care."

An entity that is registered for the services and providing the plan of care, would have employees that need to qualify. If all of his employees live with the people they are caring for, then read Q11 and Q12, including: "Your status as an employee or independent contractor and the identification of your employer (if you are an employee) depend on whether the agency or the care recipient has the right to direct and control how you perform your services. Tax Topic 762, available at /taxtopics/tc762.html, provides information and additional resources on how to determine whether you are an employee and, if so, who your employer is."

And:

"Q16. I am an agency that employs individuals who provide care to disabled individuals under a state Medicaid Home and Community-Based Services waiver program. Some of the payments I make are excludable from the employee’s gross income under Notice 2014-7. Am I required to withhold federal income tax on the payments that are excludable under Notice 2014-7?"