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Issue Alert - 04-09-01

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Sep 17, 2004

Issue Summary:

Michigan's policies for determining incoming eligibility or spenddown amounts for "SSI related" Medicaid eligiblity categories violate federal Medicaid law

Persons Affected:

Individual who 1) are applying for or who have a spenddown for disability related Medicaid or Medicaid for seniors (age 65 or older), 2) live with a spouse (or, for children with disabilities, parent) and 3) that spouse or parent is paying child support for children living outside the home.

For More Information:

Michigan Poverty Law Program 611 Church Street, Suite 4A Ann Arbor, MI 48104-3000(734) 998-6100(734) 998-9125 Fax



What's Happening?

When eligibility for SSI is determined, federal SSI regulations require the agency to exclude any income that is used by the applicant’s spouse (or parent, for an applicant who is a child) to pay child support. See 20 CFR 416.1161(a)(10). When the Michigan Family Independence Agency (FIA) calculates how much income is counted in determining an applicant’s eligibility or spenddown (deductible) for SSI-related Medicaid categories, FIA does not exclude the amount of income that is paid out as child support by the applicant’s spouse – or, if the applicant is a child, by the applicant’s parent. See, e.g. PEM 500, 530, 540, and 541. This violates federal Medicaid law because it is more restrictive than the SSI rules. EXAMPLE: John receives $700 a month in Social Security disability benefits. He lives with his wife, Lisa, who is entitled to $400 per month in unemployment benefits but receives only $300 per month because her court ordered child support payments of $100 per month are withheld from her unemployment compensation checks. UNDER MICHIGAN'S POLICY for SSI-related Medicaid budgeting, when John applied for Medicaid, he was told that he has a Medicaid spenddown (deductible) of $539 per month because he and Lisa have combined countable income of $1,080 per month -- which is over the $1041 income limit for ADCare Medicaid and is $539 more than the $541 Medicaid Protected Income Level for his county. Under Michigan Medicaid policy, John and Lisa’s total countable income is calculated as follows: Gross unearned income of $1,100 - $20 standard deduction = $1080. UNDER FEDERAL SSI BUDGETING RULES, the income that Lisa uses to pay child support would not be counted. Therefore, Lisa and John's budgeted income would be only $980 per month ($1,100 gross unearned income minus $100 paid-out child support and minus $20 standard deduction). Therefore, John would be fully eligible for Medicaid under the ADCare category, with its income limit of $1,041 per month. FIA and the Department of Community Health have agreed that the policy currently used is not legal, but they have not changed the policy and it is not clear when they will issue policy that complies with federal law.

What Should Advocates Do?

Identify clients who may have been denied Medicaid or assigned an unlawfully high Medicaid spenddowns because of Michigan’s unlawful policy. Share this issue alert with organizations who are likely to be working with individuals who are likely to be hurt by the current policy (organizations working with senior citizens and/or persons receiving SSI or Social Security Disability Benefits). . Contact the Center for Civil Justice for more information about this issue or for assistance in identifying legal options for clients who have been affected by this policy.

What Should Clients Do?

Seek legal help (see below). If you were denied Medicaid or were assigned a high spenddown more than 90 days ago, you also should re-apply.

Finding Help

Most legal aid and legal services offices handle these types 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 LawHelp web site ( or look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.