A Guide to Medicaid Cash and Counseling Programs

Cash and counseling is one of several terms used to describe self-directed Medicaid programs. Under these programs, beneficiaries have the authority to decide how to spend their assigned Medicaid budget for long-term care and support. This may include hiring friends and family members as caregivers. In this article, you'll learn the basics of cash and counseling programs, such as who you can hire as a caregiver and what services they may provide.   

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What Are Cash and Counseling Programs?

Medicaid’s cash and counseling programs are self-directed programs that promote personal choice and independence by giving beneficiaries the authority to decide how Medicaid funds budgeted for their long-term care are spent. The beneficiary is authorized to decide what services are provided, how they’re delivered and who provides them. Essentially, this turns the care recipient into the employer, and their responsibilities may include recruiting, hiring, training and supervising service providers.

Cash and counseling options may be available through a state’s Medicaid program or through Medicaid’s home and community-based services (HCBS) waivers. Guidelines for the use of funds may vary depending on the funding authority and the state of residence, but many areas permit friends and family members to serve as paid caregivers.

Depending on where you live, cash and counseling programs may also be referred to by several other names, including:

• Consumer-directed care
• Self-directed services
• Participant-directed services
• In-home supportive services

What Services Can Beneficiaries Receive Through Cash and Counseling Programs?

Cash and counseling programs are generally associated with long-term care services and support. These services are designed to help beneficiaries by providing assistance in two primary areas: basic activities and instrumental activities of daily living.

Basic Activities of Daily Living

Through cash and counseling programs, Medicaid beneficiaries may hire caregivers to help them execute one or more of the basic activities of daily living, such as:

• Eating
• Dressing
• Toileting
• Ambulating
• Maintaining personal hygiene

Instrumental Activities of Daily Living

Caregivers hired through a Medicaid cash and counseling program may also provide assistance with instrumental activities of daily living, which are considered vital to remaining independent. This may include qualified housekeeping tasks and other errands such as:

• Grocery shopping
• Communication tasks
• Medication management
• Light house cleaning
• Meal preparation
• Laundry
• Transportation

How Cash and Counseling Programs Work

Cash and counseling programs vary depending on the program and the state of residence. However, many of the following steps apply regardless of where you live:

1. Applying for Medicaid: If you want to participate in a cash and counseling program, you must first apply for Medicaid in your state of residence.
2. Applying for a cash and counseling program: Once you're approved for Medicaid, qualified beneficiaries must also meet state eligibility requirements for local cash and counseling programs. You’ll typically need to file a separate application for these programs.
3. Assessment: For most programs, beneficiaries must undergo a thorough assessment to determine their functional needs. Input from a physician and relevant caregivers is often required.
4. Care plan creation: Created after assessing an individual’s functional needs, the care plan defines the type and amount of care that’s required, including supportive equipment. It should typically also include a contingency for when a primary worker is unavailable to provide essential care services.
5. Budget development: The budget is then individually tailored to the care plan using a state-provided calculation based on anticipated costs and service utilization. The budget may include a procedure for evaluating a beneficiary’s expenditures and making any necessary adjustments.
6. Caregiver/service selection: After a formal plan has been set, the beneficiary may hire and train a caregiver of their choice, or they may designate a representative to perform these tasks on their behalf. States typically must offer resources, such as counseling and financial management services, to support program participants.

Requirements for Caregivers

Although self-directed care programs typically permit beneficiaries to choose anyone, including a friend or family member, to provide care and services, some states have additional requirements that must be met prior to hiring, such as:

• Background checks
• Special caregiver training
• Licensing or registration as a personal care assistant

Some states may also exclude spouses and legal guardians or will only pay caregivers who live at a different address than the beneficiary. Your local Medicaid office can provide additional information regarding state-specific requirements for hiring caregivers.

Caregiver Payments

The average pay for caregivers through Medicaid cash and counseling programs varies based on the individual program and the state of residence. Because the beneficiary assumes the role of employer, they must be responsible for paying their caregiver and  paying the appropriate taxes. However, some states offer financial management services for a small fee, which typically comes out of the budget for care.

Other Ways to Find Consumer-Directed Care

In addition to Medicaid cash and counseling programs, individuals in need of long-term support may be able to receive self-directed care through several other channels, including:

• The U.S. Department of Veterans Affairs Veteran-Directed Care Program: This program is designed to help veterans who need help bathing, dressing or executing other activities of daily living. Veterans are provided with a budget, which may be managed by the individual or a designated representative.
• The U.S. Department of Veterans Affairs Aid and Attendance (A&A) benefits and Housebound allowance: These programs supplement a veteran's regular pension with monthly payments designed to help pay for in-home care. Surviving spouses may also qualify for this benefit. 

State programs and other nonprofit assistance may be available, depending on where you live. Some long-term care insurance plans may also permit self-directed care.