Case Studies of Six State Personal Assistance Service Programs Funded by the Medicaid Personal Care Option. VI. Attendant Issues: Family Providers, Wages, Benefits, Withholding

12/01/1991

A. Family Provider Regulations

Family members, other than spouse or parent of minor, are allowed to become paid providers. The exclusion of spouses is problematic, according to advocates. If an applicant is married, his/her spouse is required to provide PAS and housekeeping if physically capable, except during the spouse's work hours. Although many families benefit from flexible regulations on family providers, the low pay and lack of benefits make family providers the only viable option for many consumers. Because most recipients are from families with low incomes, the PAS stipend may become an important part of household resources, making it difficult for recipients to move out of the family home. Despite these problems, DSS representatives think that flexibility on this point is a strength of the program. A cost-cutting proposal to eliminate family providers, based on the assumption that the family would continue to provide PAS, seems unlikely to be implemented.

B. Attendant Wages

Wages usually are at or near minimum wage, but each county pays a different rate, from $3.35 to $6.00 per hour (the highest rates are in the suburban Detroit area). It is possible to make individual exceptions for a higher hourly rate, which is important for individuals needing very reliable attendants (e.g. for high level quads). A two-party check is usually issued to the consumer, who must sign it in order for the attendant to receive payment. Low wages are being challenged by a number of advocacy groups.

C. Attendant Benefits

Social security is theoretically provided for independent providers, but this depends on the recipients doing the withholding. Unemployment should be provided for attendants working for consumers with exceptions over the $333 limit.

D. Withholding and Liability Issues

FICA withholding policy is probably the weakest feature of the program. In order to avoid responsibility for withholding (and the concomitant expenditures), the state has gone to great lengths to demonstrate that they are not the attendant employer. No workers compensation is provided to attendants, and claims brought against the state have been settled out of court. By federal law, all employees are required to have FICA withheld. For employees earning over $333 per month, federal and state unemployment insurance must also be withheld. The current service cap is therefore driven more by administrative expediency than consumer need.

The attendant is considered an employee of the client. The employer (the client) is supposed to pay half of the FICA, the attendant is supposed to pay the other half. Not surprisingly, in some situations these minimum wage workers don't pay these taxes and instead keep the entire amount. The state adds the employer share of the FICA to the reimbursement check, but some consumers sign the entire amount over to the attendant, rather than keep track of the withholding. It takes a diligent and informed recipient to actually apply for an employer number, cash the check, deduct both the recipient and employer share of FICA, bank it and pay the IRS every quarter.

The employment tax withholding system is not automated, and the state does not furnish the IRS with copies of the attendant list. Some of the adult service workers interviewed admitted telling their clients "don't worry about withholding", on the assumption that the IRS will rarely go after such small sums of money. However, if the IRS does become aware of an attendant's employment, either through a workers compensation claim or social security claim, they may send a letter ordering the recipient to pay back taxes. The counties deal with such cases individually, and may pay back taxes if required.

The DSS recognizes that this solution is untenable in the long term, and has recommended changes. The system in general fails to provide even the most basic protection to attendants, and this is a major barrier to hiring and retaining quality attendants. The DSS recommends developing an automated withholding system with payment directly to IRS, but the projected cost ($3 million) precludes implementation in the near future. Advocates say, at the very least, consumers should be offered training on withholding procedures.

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