Consumer Directed Care & Medicaid Long Term Care: Benefits, Eligibility and How it Works

Consumer Directed Care programs allow individuals who need care to choose their own doctors, medications, medical equipment and non-medical personal care aides and supplies, all within limits. All 50 states and Washington, D.C., offer some form of Consumer Directed Care through their Medicaid Long Term Care programs. Many of these programs allow the Medicaid recipient to choose family members, even spouses in some states, to be paid in-home caregivers.


What is Consumer Directed Care?

Consumer Directed Care (CDC) is also known as Self-Directed Care, Participant Direction, Consumer Directed Services and Self-Administered Services, among other names, including some that are state-specific. Previously, it was commonly called Cash and Counseling.

As all the names suggest, Consumer Directed Care programs give the person who is in need of health care some amount of decision-making power when it comes to that care. The amount of power varies with each program. Those programs vary by state and, if they are funded by Medicaid Long Term Care, also vary by the type of Medicaid Long Term Care. It can range from something as simple as being able to choose from a list of prescription medication options, to something as complex as full control of a predetermined budget where the Medicaid recipient acts as the employer and their caregivers are the employees.

Services and goods provided by Consumer Directed Care can be received in the home of the Medicaid recipient, in an assisted living facility or adult foster care home, or in a family member’s home if that’s where the Medicaid recipient lives. Consumer Directed Care does not apply to Medicaid recipients who live in a nursing home, although they are given some decision-making power by picking the Medicaid-approved nursing home of their choice.

 Family matters: Consumer Directed Care is often used as a way for Medicaid recipients to pay family members who provide them with non-medical, in-home care. A minority of states even allow spouses to be paid as caregivers through Medicaid’s Consumer Directed Care.


How Consumer Directed Care Works in Medicaid

First, the individual must be eligible for and accepted into a Medicaid Long Term Care program that provides Consumer Directed Care. Eligibility is discussed more below, but for an overview of Medicaid eligibility, click here. You can also find out the eligibility details for your specific situation by using our Medicaid Eligibility Requirements Finder.

The Medicaid recipient’s doctors and other caregivers will then complete an assessment of the individual’s needs. Once the assessment is done, the individual, their caregivers and the state Medicaid office will collaborate on a care plan that will meet the preferences, abilities and needs of the individual. This can include Consumer Directed Care that lets the Medicaid recipient select specific medical providers, medications, medical supplies and non-medical personal care aids, who can be family members.

Consumer Directed Caregivers do not need to be medical professionals, although they can be, but they may need to meet certain state-mandated requirements in order to be approved by Medicaid. These requirements can include a background check, a high school diploma, CPR and first aid certification, taking training courses or becoming a state-certified caregiver.

Substitute Decision Makers
If the person receiving Medicaid Long Term Care is not able to make their own choices (a dementia or Alzheimer’s patient, for an example), a proxy can be used to make Consumer Directed Care decisions for them. However, it is important to note that this proxy cannot be the same person that is being paid to be a caregiver for the Medicaid recipient.

Financial Intermediaries
When a Consumer Directed Care plan gives an individual their own budget to fully control their care, the state Medicaid office may also provide Financial Management Services (FMS) to help as needed. The individual can take care of as many financial responsibilities as they want, but the FMS representative can provide all of the following services:

• Billing and documentation
• Payroll duties such as tracking employee hours, issuing pay checks and tax withholding
• Purchasing approved goods and services
• Monitoring budget expenditures


Consumer Directed Care Benefits

Consumer Directed Care promotes personal freedom by allowing an individual to choose who cares for them and how the funds that support their care are spent. This flexibility can help an individual find maximum comfort at home and stay out of a nursing home for as long as possible, which is often preferable to both the individual and the state.

While Consumer Directed Care gives the Medicaid recipient some freedom, they still receive support from the state Medicaid offices. Anyone who has a Consumer Directed Care plan will be assigned a consultant from the state to help them in directing their care services. This is an addition to the help the state provides in creating the plan and the financial management services the state provides for helping the Medicaid recipient handle the responsibilities of maintaining a budget, as described above.

This type of freedom and support was first introduced into the Medicaid program in the 1990s. Before that, Medicaid recipients were simply assigned caregivers and given supplies by the state.


Consumer Directed Care and the Three Types of Medicaid Long Term Care

There are three type of Medicaid Long Term Care relevant to seniors – Nursing Home Medicaid, Home and Community Based Service (HCBS) Waivers , and Aged, Blind or Disabled (ABD) Medicaid.


Eligibility Requirements to Participate in Consumer Directed Care Programs

Since Medicaid is intended for financially needy people, an individual must be at or below an asset limit ($2,000 for an individual in most states for 2024) and an income limit (between about $950 and $2,900 per month for 2024) to be financially eligible for all three types of Medicaid Long Term Care. There are rules that allow an individual to maintain home ownership (if their spouse lives there, for example) or keep other assets (like a burial trust) and still be financially eligible.

For Nursing Home Medicaid or HCBS Waivers, an individual must also be medically eligible, which means they require a Nursing Home Level of Care (NHLOC). Each state has its own definition of NHLOC, but in general it’s about how much skilled nursing is required and how much the individual needs help with the basic activities of daily living – mobility, bathing, dressing, eating and toileting. ABD Medicaid does not have a medical requirement for general coverage, but ABD Medicaid recipients who show a need for long term care goods and services can receive those benefits through ABD Medicaid.


HCBS Waivers and Consumer Directed Care

The most common way for individuals to have Consumer Directed Care through Medicaid is with an HCBS Waiver. Most states have multiple HCBS Waivers that fund healthcare coverage for eligible individuals, and there may be more than one Waiver that offers Consumer Directed Care.

It is important to know that HCBS Waivers are not an entitlement. This means that even if you are financially and medically eligible, and even if your application for an HCBS Waiver is accepted, you are not guaranteed to receive the HCBS Waiver. States only have a limited amount of space in each HCBS Waiver program, and once that space is full, qualified individuals will go on a waiting list that can last for months or even years in some cases.


ABD Medicaid and Consumer Directed Care

People enrolled in ABD Medicaid are also eligible for Consumer Directed Care. States can provide the funding for this Consumer Directed Care through multiple programs – the Home and Community Based State Plan Option (not to be confused with Home and Community Based Waivers), the Community First Choice Option and the Self-Directed Personal Assistant Services Plan Option.

Unlike HCBS Waivers, ABD Medicaid is an entitlement. So, if you meet the eligibility requirements and apply for ABD Medicaid, the state is required by law to enroll you in the program.


Nursing Home Medicaid and Consumer Directed Care

Consumer Directed Care does not apply to Nursing Home Medicaid recipients. All of their health care needs will be handled by the medical and administrative staff at the nursing home, although the Medicaid recipient did have some direction in their care when they chose the nursing home.


Paying Family Members as Care Providers with Medicaid Consumer Directed Care

One of the primary and popular benefits of Consumer Directed Care is being able to pay family members as Medicaid-approved caregivers. This allows the Medicaid recipient to receive care from a loved one of their choosing, and it allows that loved one to be paid for a service they may providing anyway. As a caregiver, a family member can provide and be paid for care a few times a week, or they can be paid for 24-hour care provided if the Medicaid recipient lives in their home. It should be noted that Medicaid will not pay for room and board in these situations, but there may be other state-funded (non-Medicaid) ways the family member caregiver can be reimbursed for room and board.

Adult children are the most common family members who provide paid care, and most states will also allow grandchildren, in-laws and close family friends to be Medicaid-funded caregivers. The 19 states that also allow spouses to be Medicaid-funded caregivers are Alabama, Arizona, California, Colorado, Delaware, Florida, Hawaii, Kentucky, Maryland, Minnesota, Missouri, Montana, New Hampshire, New Jersey, North Carolina, North Dakota, Oklahoma, Oregon and Wisconsin.

More on getting paid by Medicaid as a caregiver.

 Non-Medicaid Consumer Directed Care: Consumer Directed Care is not exclusive to Medicaid. There are other state-sponsored programs, many of them for veterans, that give participants some decision-making power when it comes to their health care.