Changes on CDASS (The Consumer Directed Attendant Support Services)
Office of Community Living
1570 Grant Street
Denver, CO 80203
Dear CDASS Member,
This is to notify you of an upcoming change to the Consumer Directed Attendant Support Services (CDASS) Financial Management Services (FMS) employer models. The Department of Health Care Policy and Financing is presenting a policy change to Medical Services Board on December 11, 2015 to remove the Agency with Choice Model from the CDASS regulation.
The approval of this policy change will mean that individuals participating in CDASS must use the Fiscal Employer Agent CDASS FMS model. Please contact your FMS vendor if you are not aware of which CDASS FMS model you are using.
Why is this change happening?
The U.S. Federal Government amended the Fair Labor Standards Act (FLSA) to allow home care workers to be eligible for minimum wage and overtime requirements. FLSA requires compensation for attendants whose work time exceeds 12 hours in a single day or 40 hours in a week. Attendants who worked for more than one member would also have to be compensated for their travel time from one member’s home to another member’s home to perform services. CDASS members may not be aware they are employing an attendant who is working for other individuals which could negatively affect their allocations by unforeseen travel time and overtime costs.
To address these issues, the Department worked with CDASS members, family members, attendants, providers, and others to develop a plan to implement the Fair Labor Standards Act (FLSA) into CDASS.
This collaborative effort resulted in the decision to remove the Agency with Choice model from CDASS and to require all CDASS members to use the Fiscal Employer Agent model.
How will this impact me?
All CDASS members or authorized representatives must obtain a Federal Employer Identification Number (FEIN) if they don’t already have one. Using the FEIN to bill for CDASS attendant services allows the member or their authorized representative to more effectively control costs that affect their allocation for services. A member using an FEIN will not share overtime or travel time costs with other CDASS members because the member will be the sole employer of the attendant. Members who share both an authorized representative and attendant(s) will be required to make scheduling changes to ensure there are no overtime and/or travel time costs.
CDASS members currently using the Agency with Choice model should begin working with their selected FMS vendor to prepare for this upcoming policy change. The Department will waive the open enrollment deadline to change Financial Management Service models or vendors to accommodate members who need to convert from the Agency with Choice model to Fiscal Employer Agent model. Please work with your case manager and selected Financial Management Service vendor to facilitate this change.
Consumer Direct Colorado is available to assist in answering your questions related to the Fiscal Employer Agent model. Additional information related to the Fiscal Employer Agent model will be posted on the Consumer Direct Colorado website when available.
Additional information on FLSA: www.dol.gov/whd/homecare
There are three Financial Management Service agencies available in CDASS. You can choose to stay with your current agency or you can change agencies.
The three agencies are:
- ACES$ Financial Management Services – www.MyCIL.org
- (844) 776-7595
- Morning Star Financial Services – www.morningstarfs.com
- (844) 450-5444
- Public Partnerships, LLC – www.publicpartnerships.com
- (888) 752-8250
If you have questions or need additional information, please contact your case manager or any one of the FMS agencies.
Department of Health Care Policy and Financing
Frequently Asked Questions about Using a Fiscal/Employer Agent
Prepared by the National Resource Center for Participant-Directed Services
1. What is a Fiscal/Employer Agent?
A Fiscal/Employer Agent (F/EA) provides Financial Management Services (FMS) by performing payroll and administrative functions for self-directing individuals. Just like a regular payroll provider, an F/EA makes sure workers get paid on time and that taxes are handled correctly. However, in order to fully protect participants from financial risk, an F/EA takes on full liability for each participant-employer’s tax responsibilities related to participation in a self direction program.
2. How is a Fiscal/Employer Agent different from a payroll provider?
Every Fiscal/Employer Agent operates under Section 3504 of the Internal Revenue Code, which requires the agent to take on joint federal tax liability with every participant to whom the agent provides FMS. (Regular payroll providers do not share their clients’ tax liabilities.) The F/EA is financially responsible for making sure each participant’s tax payments, filing, and reporting are done correctly.1 If an F/EA makes a tax mistake while providing FMS, tax authorities will always hold the F/EA—not the participant— financially liable for the mistake. This protects program participants from personal financial risk.
3. What are the benefits of using a Fiscal/Employer Agent?
Programs that use the Fiscal/Employer Agent model of FMS allow participants to have maximum control over the services they receive while being protected from financial risk. Unlike in the Agency with Choice model of FMS, participants using an F/EA can hire workers directly and perform all employer duties themselves. However, the F/EA still bears tax liability for each participant-employer.
4. As a participant-employer who uses a Fiscal/Employer Agent, what is my status at the IRS?
The IRS has a special tax classification designed specifically for self-directing individuals who hire workers and use an F/EA. The IRS officially classifies these individuals as “Home Care Service Recipients”, a special type of household employer. The Internal Revenue Manual, which instructs IRS agents on how to enforce tax regulations, has detailed instructions in place for Home Care Service Recipients. The Manual directs IRS agents to handle participants’ tax matters with the greatest possible sensitivity. The Manual also makes clear to IRS agents that an F/EA is responsible for handling wages and taxes related to Home Care Service Recipients, and the F/EA should be the only point of contact about tax issues related to participants’ program activity. Therefore, the F/EA handles and is liable for all issues related to a participant’s tax matters relating to the participant’s activity in a self direction program.
In the event of a tax problem related to participation in a self direction program, the IRS has stated publicly that they would pursue the F/EA, not the participant, for any taxes and penalties due. The IRS internal databases also reflect this position, as the IRS has reported that upon establishment as a Home Care Service Recipient in the IRS systems, the participant-employer’s individual filing requirements and opportunity to get notices, liens and levies from the IRS are removed and instead those filing requirements and opportunities for notices, liens and levies are connected to the Fiscal/Employer Agent who has submitted an IRS Form 2678, Employer Appointment of Agent on the participant-employer’s behalf.
5. What happens if my Fiscal/Employer Agent goes out of business and there are unpaid taxes? Would I be liable then?
The IRS has stated publicly that they would pursue the funding source, that is, the Medicaid program, for unpaid taxes. If a Fiscal/Employer Agent in a Medicaid-funded program went out of business with unpaid taxes, the IRS policy would be to recover the amount due from the state Medicaid program, NOT from participants. The IRS recognizes that self direction programs are publicly funded, and their tax procedures and requirements for Fiscal/Employer Agents are designed so that participants are always shielded from personal financial risk. Participants are fully protected even when an F/EA goes out of business.
1. Required F/EA federal tax procedures and responsibilities are set forth in IRS Revenue Procedure 2013-39.