Based on the IRS FAQs Medicare Waiver Payments about Independent Contractors receiving Form 1099-NEC (formerly 1099-MISC), as discussed in questions 19 and 20, it seems you could be considered an independent contractor. In this case if you add the income on Schedule C and then subtract it out as a miscellaneous expense, the EITC does not come into play on your tax return so it would not be a consideration.
Lastly, Form SS-8, used by the IRS, helps determine the difference between independent contractor and employee. Since this is a state funded program, it would seem they would be following the IRS guidelines to report the income to the caregivers based on facts and circumstances in each case.
All that being said, you can report the amount on Schedule C and this would eliminate Form 8919 and employee portion of FICA taxes.
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