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Issue Alert - 06-05-03

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May 18, 2006

Program Area:

Family Independence Program (FIP) cash assistance; Low Income Family (LIF) Medicaid

Issue Summary:

Effective May 1, 2006, FIP grants no longer vary by Shelter Areas or County of Residence – all grants will be at the payment standard for Shelter Area VI;
FIP grants no longer vary depending on whether the adult is exempt from Work First;
FIP grants for families with parents on SSI (Supplemental Security Income) will be reduced to the “Ineligible grantee” payment amount;
The income limit for Low Income Family (LIF) Medicaid will be 37.5% of the federal poverty level (FPL).

Persons Affected:

Families in Shelter areas I through V; Families in shelter area VI with adults who are exempt from Work First; Families with parents receiving SSI

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:

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


The Family Independence Program (FIP) provides cash assistance to very low income families with children under age 18 (or under age 20 but attending secondary school and expected to graduate before they turn 20). 


In the past, FIP benefit amounts could vary not only based on family size, but also based on where the family lives and whether the adults in the family are exempt from Work First.   The 83 counties in Michigan are divided into six Shelter Areas (based on housing costs from decades past), which used to be used to determine FIP grant amounts.  Shelter Areas will continue to be used to determine Medicaid applicants’ deductible amounts. 


In addition, there is a lower benefit amount for families in which the adult is an “ineligible grantee,” which in the past was limited to non-parent caretaker relatives who choose not to receive FIP for themselves or other caretakers with whom a child has been placed by Children Protective Services.


What's Happening?


Beginning May 1, 2006: (1) All counties will use the same FIP payment standards, which will result in a grant increase for many families; (2) There will not be a separate (higher) payment standard for families that are exempt from Work First, causing a reduction in grants for some families; (3) Parents on SSI will be considered “ineligible grantees,” which will mean lower FIP payments for many families.


The payment standards now are:

Group size

Eligible grantee

Ineligible grantee (including SSI recipients)






















8 or more

Add $79 for each additional person


Food Assistance Program (FAP) benefit amounts will be updated to reflect changes in the families’ income from FIP, also.  



The income limit for Low Income Family (LIF) Medicaid, which used to be the same as the FIP payment standards, has been changed to 37.5% of the federal poverty level effective May 1, 2006.  The table below shows the new limits.


Group size

Low Income Family (LIF) Medicaid -          (37.5% of FPL)
























The on-line DHS Program Reference Manual with Tables Charts and Schedules will not be updated until July 2006.



Notices were sent to ALL FIP recipients in the first half of April, advising them of the new payment standards and the fact that “SSI grantees” would receive FIP based on ineligible grantee payment standards, and telling them they would receive a separate notice if their FIP or FAP grants decreased.  The form notices told recipients that they could request a hearing within 90 days of the notice but that a hearing would only be granted if it the reason for the request was an incorrect benefit computation.  The notices did not provide any information about the right to continued benefits at the current level if a hearing were requested prior to the effective date of the action, nor did they cite any legal authority for the change in payments levels.


On April 24, 2006, individual notices were sent to FIP recipients who will have a reduced grant amount (or a termination of assistance) as the result of the new payment standards and policy on treatment of parents on SSI, telling them the new grant amount that they will be receiving effective May 1, 2006.  These notices do not explain the specific reason(s) why the individual’s grant is being reduced, relying instead on a general statement that an explanation of the policy change was sent earlier, a chart of the new payment standards, and a general statement that “The amount of your cash assistance grant is based on the number of people in your eligible group, your grantee status, and your countable income.”

The individual notices, like the notices that were sent to all FIP recipients in early April, indicate that hearings will be granted only for alleged “incorrect grant computation” cases, and do not explain the right to continued benefits if a hearing is requested prior to the effective date of the negative action. 


The notices -- and the related policy regarding notice, hearing, and continued benefits rights in PPB 2006-008 -- violate the Department’s state administrative rules in several respects.


Violation of right to hearing

Mich. Admin. Code Rule 400.903, gives recipients the right to a hearing regarding any reduction or termination of benefits, except in certain cases where the reduction occurs in connection with mass changes resulting from a change in state or federal law.  Here, there has been no change in state or federal law.  A policy is not a law, as recognized in Mich. Admin. Code Rule 400.904(5) (which refers to hearings held where the issue is one of “state or federal law or policy.”   Therefore, it is unlawful to advise recipients that they have no right to a hearing unless they are alleging an “incorrect grant computation.” 


(Note that the policy goes even further in suggesting that no recipients will be entitled to a hearing.  Even if a policy were considered to be a law, recipients would retain the right to challenge the grant computation.)


Violation of right to timely notice

Mich. Admin. Code Rule 400.902(1) requires that notices of grant reductions or terminations be timely, which is defined as at least 10 days prior to the effective date of the action.  The notices sent to affected recipients state that their new grant amounts are effective May 1, 2006 – only 7 days after the notices were sent.  Therefore, they are violating the administrative rule.


Even when negative actions are the result of mass changes required by changes in state or federal law, timely notice is required under Rule 400.902(3).


Violation of right to notice of the reason for the action, the underlying legal basis for action, recipient hearing rights, and the conditions under which aid will be maintained pending the outcome of a hearing

Mich. Admin. Code Rule 400.902(1), requires that a negative action notice explain why the action is being taken; cite the specific regulations supporting the reduction or termination; accurately explain the individual’s right to request a hearing; and include information about the circumstances under which benefits will continue at their current level. 


As discussed above, the negative action notices sent on April 24, 2006 fail to explain the specific reasons for the recipient’s grant reduction.  For example, it would not explain a recipient’s grant is being reduced because they are receiving SSI and thus under the new policy are only eligible for payment at the Ineligible Grantee level.  Likewise, it would not explain that a recipient has been receiving a higher grant because he or she is deferred from Work First and that the higher grant for Work First exempt individuals has been eliminated by the new policy. 


Furthermore, the notices do not cite any regulation, statute, or policy as authority for the reduction or termination of assistance, in clear violation of the state administrative rule.


As also discussed above, the notices incorrectly advise recipients that they have the right to a hearing in only very limited circumstances, although the reduction in grant levels for some individuals is not the result of a change in law and the recipients therefore are entitled to a hearing without limitation.


Violation of substantive and notice requirements regarding “aid pending”

Finally, both the policy contained in PPB 2006-008 and the notices sent to recipients fail to acknowledge the recipients’ right to continue receiving FIP at pre-May 1 levels if a hearing is requested during the “timely notice period,”  which is required to include at least the 10 days preceding the effective date of the action.   The right to “aid pending” extends until a hearing request is lawfully denied, a hearing decision is issued, or an administrative law judge determines at the hearing that the only issue involved is “one of state or federal law or policy,” in which case the aid may be terminated subjected to reinstatement and supplement if a favorable hearing decision subsequently is issued.  Mich. Admin. Code Rule 400.904(5).   Continued assistance pending the outcome of a hearing applies to cases involving mass changes due to changes in law, as well as to other cases.  Mich. Admin. Code. R. 400.902(3). 


DHS has not only violated the substantive requirement of aid pending, but also the requirement that recipient be notified of the right in their negative action notice.   Mich. Admin. Code. R. 400.902. 


What Should Advocates Do?

Non-attorney advocates should encourage recipients who suffer a reduction or termination of FIP to seek legal advice.

Attorney advocates should assist recipients to challenge reductions or terminations that are in violation of law or policy. Contact the Center for Civil Justice or the Michigan Poverty Law Program if you need technical assistance or advice (contact information is at the top of this alert).

Be alert to situations in which Medicaid is improperly terminated because of the loss of FIP eligibility. Recipients may continue to qualify for Low Income Family (LIF) Medicaid or for Transitional Medicaid (TMA) even if they n longer qualify for FIP.

Be alert to situations in which Food Assistance Program (FAP) grant amounts are not determined correctly when FIP grant amounts change. Advocates and clients can use the on-line Food Stamp Calculator at or contact the Food Stamp help line at (800) 481-4989 if they are not sure whether they are receiving the correct FAP grant amount.

What Should Clients Do?

Seek legal advice if you believe that your FIP, FAP, or Medicaid benefits have been improperly reduced or terminated.

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 You can also look in the yellow pages under "attorneys" or call the toll-free lawyer referral number, (800) 968-0738.