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Issue Alert - 13-06-02

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Date:

Jun 12, 2013

Program Area:

Child Development and Care Program (CDC) and all other Department of Human Services (DHS)-administered benefits programs

Issue Summary:

CDC payments for care provided in the child’s home will be paid by DHS to the parent or substitute parent, and payments from the parent/substitute parent to the child care provider will be treated as earned income (NOT as self-employment income) for purposes of determining the provider’s eligibility for DHS-administered benefits

Persons Affected:

Child care providers who care for a child in the child’s home and parents/substitute parents who received CDC payments for care provided in the child’s home

For More Information:

Center for Civil Justice
320 S. Washington, 2nd Floor
Saginaw, MI 48607
(989) 755-3120, (800)724-7441
Fax: (989) 755-3558
E-mail: mailto:info@ccj-mi.org

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


Background

Child Development and Care (CDC) payments are available to help low income families pay for child care when parents (or other adults acting as the children’s parents) are unavailable to provide care because of employment, approved education or other work-related activities, or approved family preservation activities).  Child care may be provided in licensed child care centers or licensed child care homes, or by unlicensed providers, such as providers caring for the child in the child’s own home or certain related providers caring for the child in the relative’s home.

What's Happening?

Beginning July 1, 2013, all CDC payments for unlicensed child care providers (providers caring for the child in the child’s home and relative providers) will be paid to the parent (or substitute parent) rather than to the provider.  The parent will be the provider’s employer. 

This new policy is announced in Bridges Policy Bulletin 2013-011 and BEM 706 p. 3, effective July 1, 2013.  The Bulletin is available at http://www.mfia.state.mi.us/OLMWeb/exf/BP-2013-011.pdf and the policy is available at http://www.mfia.state.mi.us/OLMWeb/exf/bem/706.pdf.

If the unlicensed child care provider applies for benefits from DHS (such as FIP, FAP, etc.), the  amounts the provider receives as payment for care provided in the child’s home will be treated as “income from employment,” but amounts received for care provided in the relative provider’s home will be treated as “income from self-employment.” 

DHS will allow unlicensed child care providers who care for the child in the provider’s home (relative providers) to deduct certain expenses of self-employment, in accordance with policy in BEM 502, before the income is counted in determining eligibility for, or the amount of, benefits administered by DHS.   For providers who care for the child in the child’s home, gross income will be counted in determining the provider’s eligibility and benefit amount, under BEM 503. 

Because the CDC payment will be made to the parent beginning July 1, 2013, the DHS payment for care provided to unlicensed providers should not be subject to garnishment or attachment, pursuant to the Social Welfare Act, MCL 400.63.  This has been a problem in the past for some providers who have debts, even though the payments should have been exempt from garnishment because they are earnings from work.

If the federal government treats the parent-provider relationship as an employer-employee relationship, rather than as an independent contractor arrangement, the parent may have obligations to pay make FICA contributions, etc.  

Relatives who care for children in the children’s home may want to begin providing care in the provider’s home to ensure they can claim expenses if they are applying for, or receiving, assistance from DHS.

What Should Advocates Do?

  1. Educate clients and community organizations about these issues. Help clients find legal advice if they need it.

What Should Clients Do?

Seek legal advice if you are sent a notice that your benefits will be reduced or terminated because you no longer are considered to be self-employed. 

Finding Help

Most legal aid and legal services offices handle these types of cases, and they do not charge a fee. You can locate various sources of legal and related services, including the free legal aid office that serves your county, at MichiganLegalHelp.org. You can also look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.