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Issue Alert - 03-01-01

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Jan 15, 2003

Issue Summary:

Budget cuts eliminate or reduce programs and services for low-income people in Michigan.

Persons Affected:

Low-income individuals and families in Michigan.


Medicaid, State Emergency Relief, and Child Day Care (CDC)

What's Happening?

In late December 2002, the legislature approved budget transfers that cut funding for agency spending on many programs that provide assistance to low-income people in Michigan. This issue alert discusses several of the cuts that are expected to have the greatest impact on low-income people.MEDICAID CUTSFunding for the Caretaker Relative Medicaid category is eliminated. Tens of thousands of individuals who qualify for Medicaid under this category will be affected by this cut when it is implemented. Family Independence Agency (FIA) and Department of Community Health (DCH) policies for implementation of this cut are expected to be issued by the end of February. Many of the parents and kinship caregivers who receive full Medicaid coverage each month under this category probably will be eligible for Medicaid under other categories. However, relatively few of the parents and kinship caregivers who have received spenddown Medicaid coverage under this category in months that their medical expenses are high will qualify for other Medicaid categories. Parents and kinship caregivers may be affected by the cut if they are:(1) under age 65 and not disabled according to Supplemental Security Income (SSI) disability standards and (2) not receiving Family Independence Program (FIP) cash assistance and(3) not receiving 12 months of Transitional Medicaid as a former FIP recipient who had earnings when their FIP case closed and (4) not eligible for Low Income Family (LIF) or other Medicaid categories besides the Caretaker Relative category.When FIA and DCH policies eliminating caretaker relative Medicaid are issued, FIA should begin reviewing the casefile and other available information about each Caretaker Relative Medicaid recipient to determine whether the recipient is eligible under another Medicaid category. If FIA determines that the recipient is eligible under another category, Medicaid should continue without interruption. If not, FIA should contact the individual to request additional information that might establish eligiblity for another Medicaid category (such as pregnancy, a new and disabling medical condition, reduced income, etc.). If the agency then determines that the recipient is not eligible for Medicaid under any Medicaid category, it must send the recipient a "negative action" notice stating that Medicaid eligiblity will end. The recipient will have 90 days to request a hearing on the Medicaid termination if s/he thinks that it is incorrect or unlawful. If FIA receives the original, signed hearing request within 10 days of the date the negative action notice is sent ot the recipient, the recipient's Medicaid will continue pending the outcome of the hearing. For more thorough information about the elimination of the Caretaker Relative Medicaid category and what advocates and individuals should do about this cut, see the Center for Civil Justice's article, "Tens of Thousands of Parents and Kinship Caregivers Are Likely to Lose Medicaid Coverage," posted on the Michigan Poverty Law Program's website ( payments to providers are cut. Payments to Community Mental Health (CMH) programs, hospitals, home health service providers, nursing homes, and Health Maintenance Organizations (HMOs) for services provided to Medicaid recipients are reduced. It remains to be seen whether the cuts in provider payments will result in reduced quality and access for recipients. Even before these cuts were enacted,HMOs were pulling out of the Medicaid program in some parts of the state, because of the low payment levels. Funding for the Children's Waiver Home Care program is cut. This program provides services to children with severe disabilities for whom in-home care is less expensive than care in a nursing home or other long-term care facility. Families that are able to care for their children at home as a result of these waivers already have experienced problems in accessing a sufficient number of hours of skilled nursing care for their children under the Waiver program, due to very restrictive agency policies that were adopted in early 2002. The reduction in funding for this program in 2003 is, in turn, based on reduced expenditures in 2002. Elimination of Medicaid Outreach for the remainder of 2003. All funding for Medicaid outreach activities, which have been primarily aimed at children and pregnant women who might qualify for Healthy Kids Medicaid categories, has been eliminated. As a result, efforts to increase access to health care for low-income children and pregnant women, and to reduce the number of uninsured children in Michigan, will be hampered. FAMILY INDEPENDENCE AGENCY CUTS Funding is eliminated for SSI advocates who previously helped State Disability Assistance and State Medical Program recipients with disabilities to qualify for federally funded SSI (supplemental Security Income) benefits. Elimination of this program may mean that individuals with disabilities will be unrepresented in the SSI application and appeal processes. It also is likely to increase the demand for representation by legal services and legal aid offices. Funding for State Emergency Relief (SER) assistance to purchase furniture is eliminated. FIA eliminated furniture purchase as a covered item under SER effective January 1, 2003. Needy individuals and families will have to rely on private agencies for help in obtaining beds, tables and chairs.Funding for local FIA offices to pay for emergency food and shelter is reduced. Local FIA offices will receive 20% less funding to use for providing emergency food and shelter in their communities. This will increase the burden on local food pantries, soup kitchens, and other faith-based and non-profit organizations. Child Day Care payments to relative providers will be reduced beginning February 1, 2003. Parents who use relative providers for child care may be forced to find another provider if the parent is unable to make up the difference and the relative is financially unable to accept the reduced payment. Many parents rely on a relative because no other providers are available or appropriate for their situation. This often is true for parents whose children have disabilities or for parents who are working variable hours or evening hours. Parents should be reminded that under the Family Independence Program (FIP) policies they have "good cause" for reducing or refusing work or Work First participation if they cannot find appropriate, available child care for the hourly rate that FIA pays under the Child Day Care program. To establish "good cause", parents usually will need to work with their local 4C agency to establish that there are no other licensed providers available to meet their child-care needs. Child Day Care payments for parents with income above 150% of poverty level will be "phased out", beginning February 1, 2003. FIA will no longer approve new applicants for Child Day Care payments if their family income is over 150% of the federal poverty level ($2,307 per month for a family of 4). FIA policy for implementation of this change has not been issued. Therefore, it is not known whether a family that begins receiving Child Day Care when their income is below 150% of poverty level will be cut off of Child Day Care if their income goes above that level. It appears that parents who are already receiving Child Day Care and whose income is over 150% of poverty will be able to continue receiving Child Day Care indefintely. Parents with family incomes above 150% of poverty should be cautioned that it will be important for them to complete the recertification process in a timely manner to prevent their Child Day Care from closing because they will not be approved if they have to submit a new application. Funding for reimbursements for local office volunteers is cut. This cut may affect the availability of volunteer drivers to help individuals who are entitled to Medicaid tranportation help, and other volunteer services. DEPARTMENT OF CAREER DEVELOPMENT CUTS Welfare to Work funding for programs designed to provide employment and training services to assist parents of children that receive FIP cash assistance has been reduced. Because the Welfare to Work program has a federal match, the $200,000 cut in state funding for the program will result in the total loss of $600,000 in employment and training services under these programs ($200,000 state funding + $400,000 federal). The Department of Career Development has issued an Office of Workforce Development (OWD) Policy Issuance redistributing TANF, Reed Act, Tobacco, Fund, and Welfare to Work funding to local Michigan Works Agencies following this cut.

What Should Advocates Do?

1. Identify individuals who will be affected by these cuts and help them prepare for the cuts by seeking help through other programs. (For example, Caretaker Relative Medicaid recipients may be able to qualify for disability-based Medicaid or for coverage under a County-based Health Plan. They may be able to get prescription coverage through a drug company's Indigent Program or through the local Community Mental Health agency.) 2. Document the effects of the cuts on low-income individuals and share that information with legislators, policy makers, and the press.(See the Center for Civil Justice's article, "Tens of Thousands of Parents and Kinship Caregivers Are Likely to Lose Medicaid Coverage," posted on the Michigan Poverty Law Program's website,, for a form that can be used to document the loss of Caretaker Relative Medicaid and to share that information with the Center for Civil Justice.) 3. Refer clients to a legal advocate when there are questions about whether the individual is entitled to continued assistance or benefits under a program that is being cut or eliminated.

What Should Clients Do?

1. Get legal advice if you have questions about whether you are being wrongfully denied services or eligibility, or your benefits are being unlawfully reduced.2. Contact legislators, policymakers, and the press about the effects that the cuts are having on you or your family members.3. Begin planning for the cuts by looking for other sources of help with your needs.

Finding Help

Most legal aid and legal services office handle these type of cases, and they do not charge a fee. You can locate the "free" legal services or legal aid office that serves your county on the Michigan Legal Assistance Network website ( or look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738