Medicaid Cash & Counseling Programs and Their Relevance to Families with Alzheimer’s / Dementia

Last Updated: December 27, 2022


What is Medicaid Cash and Counseling?

 Cash and Counseling programs in many states allow persons with Alzheimer’s and related dementias to hire and pay whomever they choose as caregivers, including family members or close friends. More broadly, cash and counseling gives Medicaid Long Term Care recipients power over their own care.

The Medicaid cash and counseling program, which allows persons to self-direct their care, including hiring loved ones as caregivers, have expanded to all 50 states, as well as the District of Columbia. Cash and counseling is called by other names, depending on the state:

– Consumer directed services
– Self-directed care
– Participant-directed services
– State-specific Medicaid program names, such as Medi-Cal In-Home Supportive Services, or the New Jersey Personal Preference Program

The ability of Medicaid recipients, including those with Alzheimer’s disease and other dementias, to self-direct their own care allows much more freedom in controlling which long-term care services and supports they receive. Particularly popular is the option to hire the caregiver of one’s choosing, which in many states can include family members (often an adult child), and even a spouse.

Often a relative already provides informal care for a person with dementia, or said another way, they are caregiving without being paid. In fact, more than 16 million Americans provide more than 17 billion hours of unpaid caregiving for loved ones with dementia every year.. Medicaid cash and counseling programs provide a way for these informal caregivers to be compensated for providing care.

Also worth noting: If a Medicaid recipient is unable to self-direct his or her own care, because of cognitive decline or some other reason, a representative can be named to make decisions on behalf of the individual. While the representative is often a family member or close family friend, the representative cannot also be the “hired” caregiver.


Eligibility Requirements

There are eligibility requirements for both Medicaid care recipients and the caregivers selected by them (or their representatives).

Care Recipients

To participate in a consumer-directed Medicaid program, persons with dementia must meet financial and functional eligibility requirements. Depending on the state, the cash and counseling program may be an option through the regular state Medicaid plan or be part of a Medicaid waiver. The income limit for the regular state Medicaid program is often more restrictive than the income limit for a Medicaid waiver.

In 2023, for a single applicant, the monthly income limit for state plan Medicaid is generally limited to 100% of the SSI Federal Benefit Rate of $914 or 100% of the Federal Poverty Level which is $1,132.50. For an HCBS Medicaid waiver, income is usually limited to $2,742 per month. Assets, for both programs, are frequently restricted to $2,000.

In addition to the financial requirements, applicants are normally required to need nursing home-level care in order to be eligible. While this terminology is interpreted differently based on individual state and Medicaid program requirements, nursing home level of care is frequently determined based on the need for assistance with completing activities of daily living (ADLs).

Examples of ADLs include:

– bathing

– personal hygiene (grooming)

– dressing and undressing

– using the bathroom and cleaning up after oneself

– mobility

– transitioning from the bed to a chair

– eating

Even those programs that don’t require a nursing home level of care still often require a Medicaid applicant to need assistance with a specific number of daily living activities.

 Being diagnosed with Alzheimer’s does not automatically make an individual medically eligible for Medicaid or a specific Medicaid program such as cash and counseling.

For state-specific Medicaid eligibility requirements, click here.

For patients over the income and asset limits, it is not an automatic cause for disqualification. Professional Medicaid planners can assist in restructuring finances for qualification purposes. Find a professional planner here.



While care recipients are able to hire the caregivers of their choosing, some states and programs limit the relation of persons who can be hired. For instance, adult children, grandchildren, in-laws, close family friends, and ex-spouses are frequently able to be hired as caregivers, but some states do not allow spouses to be hired.

Caregiver requirements may include some or all of the following:

– having a high school diploma
– becoming a state-licensed care provider
– undergoing a background check
– CPR and first aid certification,
– taking caregiver training courses

Remember that a caregiver cannot also serve as a “decision maker” (representative) for a dementia care recipient who is unable to self-direct his or her own care.


How Does Cash and Counseling Work?

While all cash and counseling programs are not identical, the person with dementia essentially becomes the “employer”, although a designated representative may offer assistance. Generally speaking, the process works as follows:

Step 1: The person with dementia meets Medicaid’s self-directed program eligibility requirements and is approved for Medicaid.

Step 2: The recipient undergoes a very thorough assessment of his or her needs. This assessment includes input from his or her physician and informal caregiver (if applicable). The specific care needs are determined.

Step 3: A service plan, also called a personalized care plan, is created.

Based on one’s care plan, recipients are able to purchase approved services and supports. Most commonly, program participants are approved to hire a caregiver, and the plan indicates the number of care hours required for a specific time period. For example, the care plan may indicate that 12 hours of assistance are required per week.

 Caregivers may provide a variety of assistance, including:
– personal care (help with ADLs)
– light house cleaning
– laundry
– preparing meals
– shopping for essentials
– transportation

An individualized budget is determined based on the type of care, the amount of care that is needed, and the average cost in the area. Self-directed programs may require that the person with dementia work with a financial management service company for assistance with calculating payroll tax, logging caregiver hours, and processing payments. When this is the case, a percentage of the caregiver’s payment is taken as a fee for services.

How Much Can a Caregiver be Paid?
The average cost of caregiving in the recipient’s state and the type of care needed will be factored into determining the rate of pay for the chosen caregiver, so compensation will vary widely depending on those factors.

While it is not possible to give a standard estimated hourly pay rate that a caregiver should expect, the rate of caregiver payment is generally several dollars less per hour than the going rate for home care workers in one’s geographic region.

In some states, caregiver payment is complicated by the relationship with the recipient and/or the living situation. For example, an adult child who lives in the home of the Medicaid recipient, and stands to inherit that home, might be paid less or have the value of the house considered as their payment. This is called the Child Caregiver Exception, and it demonstrates that a number of complicating factors can affect compensation via Medicaid for caregiving.


Benefits of Cash & Counseling for Persons with Dementia

Cash and counseling programs give persons with dementia a greater degree of freedom and independence in deciding what services and supports they receive. Persons who have Alzheimer’s disease can be resistant to change, and the ability to make decisions—such as hiring, training, managing, and even firing their own caregivers—allows them to maintain a greater degree of control.

Informal caregivers already providing care might be able to be paid via a cash and counseling program. This type of program also presents the opportunity for dementia patients to hire a caregiver with whom they already have a bond when the need for care arises. This ability to choose their own caregiver is huge, as recent data from the Alzheimer’s Association indicates that almost 80% of elderly persons with dementia receive unpaid caregiver assistance with at least one activity of daily living, such as taking a bath, getting dressed, or eating.

All in all, cash and counseling programs help those with dementia remain living in their homes or the homes of loved ones when otherwise they might require nursing home care.


Through What Avenues are These Programs Available?

Participant-directed Medicaid programs are commonly available through Medicaid waivers, but they are also available through regular state Medicaid plans. Some states offer multiple participant-directed programs. For instance, a state might offer self-direction through both their state program and a waiver, or offer participant-direction through several waiver programs.

Traditionally, state Medicaid would pay for institutional Medicaid (nursing home care), but not long-term care in the community. However, over time this has changed, and more states are offering long-term care, such as personal care assistance, through their state plans with the option of participant-direction.

 In many states, Medicaid for older adults who need daily, long-term care is called Aged, Blind and Disabled (ABD) Medicaid. This is different from Medicaid waivers, though some of the benefits are the same.

Formally, consumer directed care via the state plan might be referred to as the Home and Community Based Services (HCBS) 1915(i) state plan option. A handful of states are also offering consumer directed attendant care (personal care assistance) via the Community First Choice (CFC) 1915(k) state plan option.

State plan programs are entitlement programs, which means that if a person with dementia meets the eligibility requirements, he or she will receive benefits and cannot be put on a waitlist.

Long-term consumer directed care is frequently offered via Medicaid waivers. Generally speaking, this option is available through Home and Community Based Services (HCBS) Medicaid waivers, also frequently called 1915(c) waivers. Via these waivers, a variety of home and community based supports are generally available and often include the following:

– personal care assistance (help with ADLs)
– adult day care
– homemaker services
– personal emergency response systems (PERS)
– respite care
– home modifications for safety and accessibility purposes.

Unlike state plan options, Medicaid waivers are not entitlement programs, and meeting the eligibility requirements does not ensure applicants will receive benefits. Stated differently, Medicaid waivers set participant enrollment caps, and once all the participant slots have been filled, waitlists form. Waitlists may be short, or they could be months or years long.

In addition to Medicaid cash and counseling options, there are other consumer directed care options. These include Veterans programs, such as Veteran Directed Care, formerly called Veteran Directed HCBS, and the Aid & Attendance Pension, as well as non-Medicaid state programs.


How to Apply

To find out if there is a consumer directed program in the state in which you or a loved one resides, families should contact their local Medicaid office. Find your state’s administering agency here.

For persons who are already eligible and receiving Medicaid benefits, the application process is straightforward. One should speak with the local Medicaid agency about applying and ask if the program has a waitlist.

For persons who are not receiving Medicaid benefits or are unsure if they are eligible, a non-binding Medicaid eligibility pre-screen is available here. Applicants will first need to apply for Medicaid, then apply for the specific Medicaid program that allows for consumer directed care. The application process can be time consuming and may take several months before an application is approved. Also, as mentioned previously, there may be a waitlist to receive benefits via Medicaid waivers.