FMS Model Comparison: Bill Payer vs Co-Employer vs Sole Employer in California

If you are a participant in California's Self-Determination Program (SDP), one of the most important decisions you will make is choosing your Financial Management Services (FMS) model. The SDP offers three distinct FMS models, each with its own service code, employer structure, and level of responsibility. Understanding the differences between the Bill Payer (service code 315), Co-Employer (service code 316), and Sole Employer (service code 317) models is essential to making the right choice for your family.

This guide breaks down all three FMS models side by side so you can compare them clearly and confidently.

What Is an FMS Provider?

Before diving into the three models, it helps to understand what Financial Management Services actually do. An FMS provider handles the financial and administrative tasks associated with employing workers who provide services to SDP participants. Depending on the model, these tasks can include payroll processing, tax withholding, workers' compensation insurance, benefits administration, and compliance with state and federal labor laws.

Every SDP participant is required to use an FMS provider. The question is which model best fits your situation.

The Three FMS Models at a Glance

California's Department of Developmental Services (DDS) has established three FMS service codes, each corresponding to a different employer arrangement:

• Service Code 315 — Bill Payer Model: The FMS acts only as a fiscal intermediary. The participant (or their representative) is the employer of record.
• Service Code 316 — Co-Employer Model: The FMS shares employer responsibilities with the participant. Both parties are considered co-employers.
• Service Code 317 — Sole Employer Model: The FMS is the sole employer of record for the participant's workers.

Each model offers a different balance between participant control and administrative support.

Side-by-Side Comparison Table

| Feature | Bill Payer (315) | Co-Employer (316) | Sole Employer (317) | |---|---|---|---| | Employer of Record | Participant or representative | Shared between FMS and participant | FMS provider | | Who Hires Workers | Participant | Participant (with FMS support) | FMS provider | | Who Fires Workers | Participant | Participant (with FMS support) | FMS provider (with participant input) | | Payroll Processing | FMS processes payroll on behalf of participant | FMS handles payroll | FMS handles payroll | | Tax Withholding & Filing | FMS files under participant's EIN or SSN | FMS files under its own EIN | FMS files under its own EIN | | Workers' Compensation | Participant must secure coverage | FMS provides coverage | FMS provides coverage | | Unemployment Insurance | Participant's responsibility | FMS responsibility | FMS responsibility | | Wage and Hour Compliance | Participant's responsibility | Shared responsibility | FMS responsibility | | Setting Worker Schedules | Participant | Participant | Participant (with FMS oversight) | | Training Workers | Participant | Participant (FMS may assist) | FMS may provide or require training | | Level of Participant Control | Highest | Moderate | Lower (but participant still directs services) | | Administrative Burden on Participant | Highest | Moderate | Lowest | | Best Suited For | Experienced self-directors who want full control | Families wanting support with shared responsibility | Those who prefer minimal administrative duties |

Detailed Breakdown of Each Model

Bill Payer Model (Service Code 315)

The Bill Payer model gives participants the most control and the most responsibility. Under this arrangement, you (or your authorized representative) are the legal employer of your support workers. You recruit, hire, train, schedule, supervise, and if necessary terminate your employees.

The FMS provider in this model acts as a fiscal agent. They process payroll, cut checks, and handle the mechanics of tax reporting. However, the tax filings are done under your name and tax identification number, not the FMS provider's. This means you will need to obtain an Employer Identification Number (EIN) from the IRS if you do not already have one.

One of the most significant responsibilities in the Bill Payer model is workers' compensation insurance. You are responsible for securing and maintaining a workers' comp policy for your employees. This can be challenging for individual employers, as coverage for domestic or in-home workers is sometimes difficult to find and can be expensive.

The Bill Payer model works well for participants or families who have experience managing employees, are comfortable with employer obligations, and want maximum flexibility in how they direct their services.

Key considerations for the Bill Payer model:

• You must obtain your own EIN
• You are responsible for workers' compensation insurance
• You bear the risk of employment-related liability
• You have complete control over hiring, scheduling, and supervision
• Administrative demands are the highest of the three models

Co-Employer Model (Service Code 316)

The Co-Employer model is the middle ground. It splits employer responsibilities between the participant and the FMS provider. Both parties share the legal status of employer, which means both have certain obligations under employment law.

In practice, the participant still directs the day-to-day work. You choose who you want to hire, set schedules, supervise tasks, and decide how services are delivered. The FMS provider handles the administrative and compliance side: payroll runs under the FMS provider's EIN, the FMS secures workers' compensation coverage, and the FMS manages unemployment insurance filings.

This shared arrangement reduces the participant's administrative burden while preserving meaningful control over services. The co-employer structure also provides a layer of protection because the FMS provider's compliance infrastructure helps ensure that wage and hour laws, tax obligations, and insurance requirements are met.

The Co-Employer model is popular among families who want to stay actively involved in selecting and directing their workers but prefer not to handle the full weight of employer compliance on their own.

Key considerations for the Co-Employer model:

• No need to obtain your own EIN for payroll purposes
• Workers' compensation is provided through the FMS
• You still choose your workers and direct their services
• Shared liability means the FMS helps manage compliance risks
• A good balance of control and support for most families

Sole Employer Model (Service Code 317)

The Sole Employer model places the FMS provider in the role of legal employer for your support workers. The FMS handles hiring paperwork, payroll, tax filings, workers' compensation, unemployment insurance, and all other employer obligations.

This does not mean you lose your voice. You still direct the services you receive, communicate your preferences and needs, and have input into who provides your care. However, the FMS has the final authority on employment decisions because they carry the legal and financial responsibility as the employer of record.

The Sole Employer model is designed for participants who want the least amount of administrative involvement. It is especially helpful for families who are new to self-determination, those who may not have the time or capacity to manage employment logistics, or situations where the participant's representative prefers to focus entirely on care coordination rather than payroll and compliance.

Key considerations for the Sole Employer model:

• The FMS is the employer of record for all workers
• The FMS handles all payroll, taxes, insurance, and compliance
• You still direct how services are provided
• Hiring and termination decisions involve the FMS
• Administrative burden on the participant is minimal

Which Model Is Right for You?

Choosing the right FMS model depends on your family's comfort level with employer responsibilities, how much administrative work you want to take on, and how much direct control matters to you. Here are some questions to help guide your decision.

Choose the Bill Payer Model (315) if:

• You have experience managing employees or running a household payroll
• You want full control over every aspect of your workers' employment
• You are comfortable obtaining your own EIN and securing workers' compensation insurance
• You prefer to be the sole decision-maker for hiring, firing, and scheduling

Choose the Co-Employer Model (316) if:

• You want to pick your own workers and direct their daily tasks
• You prefer to have professional support for payroll, taxes, and insurance
• You want shared liability rather than carrying all employer risk yourself
• You are looking for a balance between hands-on involvement and administrative ease

Choose the Sole Employer Model (317) if:

• You want to focus on directing services without managing employment paperwork
• You are new to the Self-Determination Program and want the most supported experience
• You prefer the FMS to handle hiring logistics, compliance, and risk
• Administrative tasks feel overwhelming or are not a good use of your time

A Note on Switching Models

It is possible to change your FMS model if your needs evolve. If you start with the Sole Employer model and later feel confident managing more responsibilities, you can transition to the Co-Employer or Bill Payer model. Similarly, if the Bill Payer model becomes too burdensome, you can move to a model with more FMS support. Your Independent Facilitator and FMS provider can help you navigate any transitions.

Understanding the Service Codes

For reference, the three FMS service codes used in California's Self-Determination Program are:

• Service Code 315 — Financial Management Services, Bill Payer
• Service Code 316 — Financial Management Services, Co-Employer
• Service Code 317 — Financial Management Services, Sole Employer

These codes are used in your Individual Program Plan (IPP) and spending plan to identify which FMS model you are using. When reviewing your budget or communicating with the Regional Center, these codes indicate the type and scope of financial management support you receive.

How Costs Differ Between Models

The rate structure for each FMS model reflects the scope of services provided. Generally, the Bill Payer model (315) carries the lowest FMS fee because the provider's role is limited to fiscal processing. The Co-Employer model (316) has a moderate fee that accounts for the added compliance and insurance responsibilities the FMS shares. The Sole Employer model (317) typically has the highest FMS fee because the provider assumes full employer obligations including workers' compensation, unemployment insurance, and all regulatory compliance.

However, when evaluating cost, consider the full picture. Under the Bill Payer model, you will pay a lower FMS fee but also need to independently purchase workers' compensation insurance, which can be a significant expense. The Co-Employer and Sole Employer models bundle that coverage into the FMS arrangement, which can simplify budgeting and sometimes provide access to better insurance rates through the FMS provider's group coverage.

AbleRoot Supports All Three FMS Models

At AbleRoot Financial Management Services, we work with families across all three FMS models in California's Self-Determination Program. Whether you choose the Bill Payer, Co-Employer, or Sole Employer arrangement, our team provides reliable payroll processing, clear reporting, and responsive support tailored to your model.

We understand that every family's situation is different. Some participants thrive with full control under the Bill Payer model. Others appreciate the partnership of the Co-Employer arrangement. And many families find that the Sole Employer model gives them the peace of mind they need to focus on what matters most — quality care and services for their loved one.

If you are exploring the Self-Determination Program or considering a change in your FMS model, we are happy to walk you through your options. AbleRoot offers free consultations to help you understand which model fits your family's needs, your budget, and your comfort level with employer responsibilities. Reach out to our team anytime — we are here to help you navigate self-determination with confidence.