A significant incentive to work is increased income! Many Michigan low-income public assistance recipients do not receive the federal Earned Income Credit for which they qualify because they do not file federal income tax returns. This could be a significant additional incentive to make work pay. We will pursue a waiver from the Department of Health and Human Services (HHS) for 100 percent federal funding for an advance monthly Earned Income Credit (EIC) program administered by DSS. All AFDC recipients who work and raise children (more than 51,000 families) would be eligible to receive the monthly advance through DSS. This will increase the family income throughout the year. This credit has no impact on a family's eligibility for AFDC-- it is reward for working!

Cash Out Food Stamps for Employed Recipients

Another way to reward working public assistance recipients and to increase their personal responsibility is to provide them with cash rather than food stamps. An additional benefit is the loss of the stigma of food stamps usage. We will pursue a waiver from the United States Department of Agriculture (USDA) for food stamp cash-out for employed AFDC recipients.

Grant Diversion to Existing Jobs

Michigan operates a pilot program using AFDC grants to offset the salary costs of newly hired public assistance recipients for six months. This approach has been used successfully to create new jobs in the pilot community, and has given the recipients on-the-job training and employment in a real job.

The current federal regulations restrict the diversion to "new" jobs only. Michigan will request a federal waiver to allow a grant diversion demonstration to any established, unfilled position as well. This change should give public assistance recipients a hand up in getting a job and could help draw new employers to Michigan for job expansion.

Managed Care Buy In

Lack of health coverage, loss of health coverage, or even the threat of losing health coverage has a profound impact on decisions to seek a job or keep a job. Currently, recipients may face loss of Medicaid coverage when transitional Medicaid coverage ends (for those that qualify, transitional coverage ends 12 months after leaving AFDC due to employment), or when leaving welfare for non-employment reasons. Michigan will offer Medicaid Buy In for persons in specific groups:

• Persons whose transitional Medicaid coverage ends, and no employer-based coverage is available;
• Children for whom a child support order requires the purchase of health coverage.

The cost of the premiums would be determined actuarially to cover, at a minimum, the state general fund costs of coverage. We will request a waiver to consider the payments made to managed care providers for persons in the Medicaid Buy In program to be eligible for federal Medicaid matching at the regular match rate where possible.

Simplification--Cashing Out Earned Income Child Care Deductions

Michigan has two systems for covering the expenses of child care when an individual is employed. It treats AFDC recipients who are employed in one way and employed low-income people who are not on assistance in another. The AFDC recipient in essence receives less credit for child care needs than the non-recipient. We propose to make the credit equal by eliminating child care as a deduction from earned income and to add a day care category to the current system to pay for child care with no co-pay for all employed AFDC recipients.

Simplification--Exempt One Vehicle

To simplify policy across programs and to acknowledge the need for reliable transportation as a way to secure employment, we will exempt one vehicle per household without regard to the value of the vehicle. We will seek a waiver to exclude one vehicle of unspecified value for AFDC. For AFDC cases who also receive food stamps, exemption of the vehicle under AFDC would result in it not being considered in determining food stamp eligibility.

Job Search as a Condition of Eligibility