After entering/verifying your W2 with zero in box 1 and amounts in boxes 3-6, select the "Nontaxable Medicaid waiver payments that qualify as difficulty of care payments" option. When asked to "Enter the total amount of difficulty of care payments" enter all your payments. It should be the amount in box 5 on your W2.
This procedure will not put the difficulty of care in line 1a but will put it on line 1d to count as part of your earned income to allow any applicable credits that require earned income. This also adds a corresponding negative amount on Schedule 1, line 8s which flows to line 8 on your form 1040. This makes the payments nontaxable.
You should be able to e-file with these entries.
You can see all of these entries on the forms using forms mode in desktop versions or following the steps below for online versions of TurboTax.
1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "View Tax Summary"
4. Select "Preview My 1040" in the left hand menu
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