Consumer-Directed Care

Consumer-directed care, also called self-directed or participant-directed care, lets a person on Medicaid choose, hire, train, schedule and supervise their own caregivers, instead of relying on a home care agency to do it. In many states, the person can hire a family member or friend. Some programs also give the person a budget to spend on services and goods that meet their needs. This guide explains how consumer direction works, the federal options behind it, and the responsibilities involved.

Figures change periodically. Double-check current amounts before relying on them.

The short version

Consumer direction gives the person control over who provides their care, when and how.
It is offered through HCBS waivers, state plan options such as section 1915(j) and Community First Choice (1915(k)), and managed care plans.
There are two main kinds of authority: employer authority (hiring and managing workers) and budget authority (deciding how to spend a set budget).
A fiscal intermediary (financial management service) usually handles payroll, taxes and paperwork.
A representative, such as a family member, can direct care for someone who cannot do it alone.
Many states allow family members to be paid caregivers; rules on paying spouses and legal guardians vary.

Why consumer direction exists

Traditional agency care works well for many people, but it can mean a rotating cast of aides, fixed schedules and little say in who comes into the home. Consumer direction grew out of the independent living movement and federal “Cash and Counseling” demonstrations in the late 1990s and 2000s. Research from those demonstrations found higher satisfaction and fewer unmet needs among participants. Today every state offers some form of self-direction.

Federal options

1915(c) waivers. States can offer self-direction for some or all waiver services.
1915(j) self-directed personal assistance services. A state plan option that lets people self-direct personal care and, in some cases, use part of their budget for items that increase independence.
1915(k) Community First Choice. A state plan option for attendant services that must include a self-directed option.
1915(i) state plan HCBS and 1115 demonstrations can include self-direction.
Managed care. Plans in managed long-term services and supports programs often must offer self-direction.

Employer authority

With employer authority, the person (or representative) acts as the employer, or co-employer with an agency, of their caregivers. They:

recruit and interview workers;
hire workers they choose, often including relatives or friends;
train workers in how they want care done;
set schedules within the approved hours;
supervise and evaluate workers;
dismiss workers if needed;
approve timesheets.

Budget authority

With budget authority, the person receives an individual budget based on their assessed needs. Within the rules, they decide how to spend it, for example:

setting caregiver wages within a range;
buying services from different providers;
in some programs, buying goods or services that substitute for human help, such as a microwave, a laundry service or assistive technology.

The fiscal intermediary

Most programs use a financial management service (FMS), sometimes called a fiscal employer agent. The FMS:

processes timesheets and pays caregivers;
withholds and files payroll taxes;
handles workers’ compensation where required;
performs background checks if required;
tracks spending against the budget.

This takes most of the paperwork burden off the person and family.

Support brokers and case managers

Many programs provide a support broker or consultant who helps the person plan, find workers, understand rules and solve problems. The waiver case manager or managed care coordinator also stays involved.

Representatives

If the person cannot direct their own care, because of dementia or another condition, a representative can take on the employer role. The representative is often a family member and usually cannot also be a paid caregiver in the same program. State rules vary.

Hiring family members

Many states allow consumer-directed programs to pay adult children, grandchildren, siblings, nieces, nephews and friends. Rules on spouses, parents of minor children and legal guardians are stricter. Federal rules for 1915(c) waivers allow states to pay legally responsible individuals, such as spouses, for extraordinary care in certain circumstances, if the state chooses to. See Getting paid as a family caregiver.

Responsibilities and risks

Finding backup. If a worker is sick or quits, the person needs a backup plan. Programs usually require one.
Supervision. Managing workers takes time and skill.
Fraud prevention. Timesheets must reflect actual hours worked. Programs use electronic visit verification (EVV), required by federal law for Medicaid personal care and home health services, to confirm visits.
Worker training. Some programs require basic training or certification.
Wages. Programs set wage ranges. Pay for family caregivers is usually modest.

Who it fits

Consumer direction tends to work well for people who:

want control over who provides their care;
have a family member or friend who can be a paid caregiver;
live in areas where agency workers are hard to find;
have needs that vary or require flexible scheduling;
have a representative willing to manage the paperwork, if they cannot.

It may be less suitable for people without anyone to help manage it, or who prefer that an agency handle everything.

How to get started

Qualify for the Medicaid program (waiver, state plan or managed care) that offers self-direction.
Complete the needs assessment, which sets approved hours or a budget.
Choose self-direction and attend an orientation.
Enroll with the fiscal intermediary.
Hire workers, complete their enrollment and background checks.
Start services and submit timesheets through the EVV system.

A simple example

Grace, 74, uses a wheelchair after a spinal injury and qualifies for her state’s waiver. She chooses self-direction. Her assessment approves 30 hours a week of personal care. She hires her niece for weekday mornings and a neighbor for evenings, and trains both in her routines. The fiscal intermediary pays them every two weeks and handles taxes. When her niece goes on vacation, a backup worker from a list provided by the program fills in.

Getting help

The waiver case manager or managed care plan can explain the state’s self-direction options. A Certified Medicaid Planner can help the person qualify for Medicaid so self-direction is available.

Frequently asked questions

Does self-direction give me cash? In most programs, no. The fiscal intermediary pays workers and approved purchases. A few programs offer more flexible budgets.

Can I switch back to agency care? Yes, usually at any time.

Are paid family caregivers employees? Yes, usually of the person (with the fiscal intermediary as agent) or of an agency, depending on the model. They receive wages and pay taxes.

Do I need to be able to manage it myself? No. A representative can manage it for you.

Key terms

Employer authority: the right to hire, train, schedule, supervise and dismiss caregivers.
Budget authority: the right to decide how to spend an individual budget within program rules.
Fiscal intermediary (financial management service): an organization that handles payroll, taxes and paperwork.
Representative: a person who directs care for someone who cannot do so alone.
Electronic visit verification (EVV): a federally required system for recording home care visits.

Building a backup plan

Every self-directed plan needs a backup for when the main caregiver cannot work. Options include a second trained worker, a family member who can step in unpaid, a home care agency on call, or a short respite stay. Write the plan down, share it with everyone involved, and keep contact numbers handy.

Common mistakes

Submitting timesheets for hours not worked, which is fraud even when the care was “really needed.”
Not training workers in safe transfers and infection prevention.
Having no backup plan.
Letting the same person act as both paid caregiver and representative where the state forbids it.

A second example: a representative directs care

Ida, 88, has dementia and cannot manage employer tasks. Her son Paul serves as her representative in her state’s self-directed program. Paul hires two caregivers, a cousin who lives nearby and a former home care aide recommended by a neighbor, and splits the approved hours between them. He approves timesheets in the fiscal intermediary’s online system, holds a short meeting with both caregivers each month, and keeps a written care routine in Ida’s kitchen. When one caregiver moves away, Paul hires a replacement from a registry the program provides. Because Paul is the representative, the state’s rules do not allow him to be paid as a caregiver in the same program.

Training and support for self-directing families

Many programs offer orientation sessions, handbooks and online training on topics such as interviewing workers, setting expectations, completing timesheets and handling disputes. Taking this training before hiring makes the first months smoother. Some states also run registries of workers interested in self-directed jobs, which help families who do not have a relative or friend available.

Ask whether the program offers a peer mentor who has self-directed before.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.