What Is Agency with Choice? How It Compares to Self-Direction’s Employer Model

• Fiscal/Employer Agent (F/EA): A self-direction model in which you, or a representative acting on your behalf, are the legal employer of your caregiver.
• Agency with Choice (AWC): A self-direction model in which an agency is the legal employer of your caregiver, while you choose and direct their work.
• Financial Management Services (FMS) provider or fiscal intermediary (FI): The organization that provides administrative and financial support within a self-direction program, such as processing payroll and handling employment taxes.

In other words, F/EA and AWC describe how the employer relationship is structured. An FMS provider or fiscal intermediary is the organization that carries out the administrative work. To learn more about FMS providers, see our blog, “What Is a Financial Management Services Provider in Self-Directed Care?“

The Centers for Medicare & Medicaid Services (CMS) also describes a few less common variations, including a government-run version of the F/EA model and a public authority model used in some states. Terminology can also differ from one state to the next, so the names in your program’s materials may not match these exactly.

Agency with Choice is a shared-employer setup. You and an agency split the employer role for your caregiver, and each of you handles different parts of the job.

• The agency is your caregiver’s official employer. It hires them and takes care of the legal and paperwork side of being an employer.
• You’re the managing employer. You (or a representative you choose) pick your caregiver and direct their day-to-day work.

This is also how the CMS describes it. You may also see it called co-employment.

Here’s what that usually looks like day to day:

1. You choose your caregiver. In many programs, this can be a friend or family member, depending on your program’s rules.
2. The agency hires them. Your caregiver goes through the agency’s hiring process and becomes an agency employee.
3. You direct the care. You set the schedule, explain how you want tasks done, and oversee the day-to-day support.
4. The agency handles the employer paperwork. That includes payroll, tax withholding, and employer compliance requirements.

Agency with Choice is typically offered through Medicaid programs that help people get care at home or in their community, including waiver programs and state developmental disability programs. Whether it’s available to you depends on your state and program.

In the Fiscal/Employer Agent model, you’re your caregiver’s employer. That might sound like a big job, but you don’t do it alone. A financial management services (FMS) provider works alongside you as your employer agent, handling the payroll and tax side so you can focus on the care. (In legal terms, you’re the “common-law employer,” which simply means you hold the official employer role.)

Here’s how the work is typically divided:

• You, or a representative you choose, are the employer. You recruit, hire, and supervise your caregiver, and if it’s ever not a good fit, you can make a change.
• Your FMS provider handles the paperwork. It processes your caregiver’s pay using your approved budget, withholds and files employment taxes, and manages the related forms.

The CMS describes this model as offering the highest level of choice and control, with less of the employer workload falling on you. It can also work in programs where you manage an individual budget (sometimes called budget authority) on top of hiring and managing your caregivers.

Both models let you choose your caregiver and direct your care. The main difference is who the official employer is, and that shapes who handles what. Here’s the quick version, with more detail below.

• Agency with Choice: The agency is the official employer, and you’re the managing employer.
• Fiscal/Employer Agent: You, or your representative, are the employer. In legal terms, that’s called the “common-law employer.”

• Agency with Choice: You choose your caregiver, but the agency completes the formal hiring, so your caregiver needs to meet the agency’s hiring requirements.
• Fiscal/Employer Agent: You recruit, interview, and hire directly, within your program’s rules. Your FMS provider helps with the enrollment paperwork.

• Agency with Choice: In many programs, you can decide you no longer want a caregiver working with you. Because the agency is the official employer, it handles the formal end of employment.
• Fiscal/Employer Agent: As the employer, you decide whether to make a change, and your FMS provider helps process it.

• Agency with Choice: The agency processes payroll and handles employment taxes.
• Fiscal/Employer Agent: Your FMS provider processes payroll and withholds, files, and pays employment taxes on your behalf.

• Agency with Choice: The agency handles required background checks and onboarding as part of its hiring process.
• Fiscal/Employer Agent: Your FMS provider coordinates the background checks and employment verification your program requires, such as Form I-9, before your caregiver can begin.

This is where the two models differ most in practice, so it’s worth a closer look. You may also see this called legal liability.

• Agency with Choice: Because the agency is the official employer, it generally holds primary responsibility for employer obligations like employment taxes, labor law compliance, and workers’ compensation coverage.
• Fiscal/Employer Agent: You’re the legal employer, but you’re not handling it alone. Your FMS provider takes care of the employer tasks that come with the role, and CMS notes that it helps make sure required taxes are withheld and paid and that labor and workers’ compensation requirements are met. Under federal rules for employer agents, you and your FMS provider share responsibility for federal employment tax withholding.

Not sure what your specific responsibilities would be? Your case manager, your program materials, or your FMS provider can walk you through how it works in your program.

With Agency with Choice, caregivers may get a little more built-in support. CMS notes this can include training opportunities and a single employer to bring concerns to. With the Fiscal/Employer Agent model, your caregiver works directly for you, and your FMS provider supports the payroll and administrative side. Either way, caregiver training may be offered, depending on your state’s requirements.

• You review and approve your caregiver’s time, since you’re the one who knows what care was provided.
• Background check requirements vary by state and program.

It’s easy to mix up Agency with Choice and traditional agency home care, but they work very differently.

With traditional agency care, the agency picks which of its employees to send, sets the schedule, and supervises the work. You generally can’t hire your own friend or relative.

With Agency with Choice, you still choose your caregiver and direct their work. The agency’s role is mainly administrative, handling the employer side of things behind the scenes.

One thing to keep an eye on: CMS notes that if an Agency with Choice agency starts operating like a traditional agency, you can lose some of the choice and control that self-direction is meant to give you.

For a closer look at how traditional agency care compares to self-direction, read our related blog, “Self-Directed vs. Agency Home Care: What’s the Difference?“

Neither model is right for everyone. The better fit depends on how much responsibility you want and what your program offers.

Agency with Choice may be a good fit if you:

• Want to choose your caregiver but would rather have an agency be the official employer
• Are comfortable with the agency’s hiring requirements and processes

The Fiscal/Employer Agent model may be a good fit if you:

• Want the most direct control over hiring, supervising, and managing your caregiver
• Are comfortable being the official employer, knowing your FMS provider handles payroll and taxes
• Want to manage an individual budget, if your program offers it (this is sometimes called budget authority)

Feeling unsure about being the employer? That’s a common worry, and you don’t have to take it on alone. Many programs let you choose a representative, like a trusted family member or friend, to help manage those responsibilities. You can also read the guide, “Debunking Common Myths About Self-Direction” for answers to other common concerns.

One more thing to keep in mind: what’s available depends on where you live. Some states offer only one model, while others offer both.

If you want to choose your own caregiver and direct your care as the employer, the Fiscal/Employer Agent model may be a strong fit, with an FMS provider handling payroll, taxes, and paperwork behind the scenes. To see whether self-directed care is a good option for you or a loved one, take our short questionnaire below. You can also find your state program to learn what is available where you live, or read how to hire and manage a caregiver under self-direction.

Public Partnerships (PPL) is a Financial Management Services provider that supports self-direction under the Fiscal/Employer Agent model. PPL does not operate as an Agency with Choice, is not a home care agency, and does not assign caregivers or provide direct care. Instead, PPL helps participants serve as the employer of the caregivers they choose by handling payroll, employment taxes, enrollment paperwork, and compliance. PPL supports approximately 50 self-direction programs across the country.

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