No, you do not have to pay income tax or self-employment tax. If this is paid under the state program it should fall under the IRS Notice 2014-7. This means that the income is not subject to tax and is allowed to be subtracted out using the steps I provided.
Excerpt from the notice: This notice provides that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program, described in this notice, are difficulty of care payments excludable under § 131 of the Internal Revenue Code.
The IRS must want to track these payments since the payer is required to issue the tax documents, but this is not a new tax treatment of these earnings. Use the following ink for more information: Certain Medicaid Waiver Payments May be Excludable from Income
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