Government payment for group homes in Michigan comes through two separate streams, not one check. Supplemental Security Income or State Disability Assistance pays the provider for room and board, and Medicaid waiver programs pay separately for care services. In 2026, Michigan’s SDA rate for adult foster care providers serving residents who need personal care is $1,110 per month, and the federal SSI maximum for an eligible individual is $994 per month. Medicaid service payments layered on top vary by each resident’s assessed needs and can range from modest amounts for basic support to much higher figures for residents who need intensive behavioral or medical care.
Room and Board: What SSI and SDA Pay
Most residents in Michigan adult foster care (AFC) homes rely on SSI or SDA to cover their housing, utilities, and meals. Federal Medicaid law bars waiver programs from paying for room and board — Section 1915(c) of the Social Security Act authorizes waiver payments only for “home or community-based services (other than room and board).”1Social Security Administration. Social Security Act 1915 – Provisions Respecting Inapplicability and Waiver of Certain Requirements So the room-and-board money has to come from the resident’s own benefit.
The federal SSI maximum for an eligible individual in 2026 is $994 per month, after a 2.8 percent cost-of-living increase.2Social Security Administration. SSI Federal Payment Amounts Michigan’s MDHHS sets the state’s AFC provider rates each year through its Adult Community Placement bulletins. For 2026, the SDA personal care rate paid to AFC providers is $1,110 per month, up from $1,080 in 2025. The SDA rate for homes for the aged is lower, at $383 per month.3Michigan Department of Health and Human Services. ASB 2026-003 Adult Community Placement SSI/SDA Provider Rates
Residents don’t hand over the entire benefit. Each resident keeps a personal needs allowance — $44 per month for SSI recipients and $49 per month for SDA recipients — and everything above that goes to the provider for room and board.3Michigan Department of Health and Human Services. ASB 2026-003 Adult Community Placement SSI/SDA Provider Rates For a provider, that room-and-board figure is tight on its own. The Medicaid service payments layered on top are what make the numbers work.
Medicaid Waivers: What Pays for Care
The larger and more variable government payments come through Medicaid’s Home and Community-Based Services waivers, which cover the actual hands-on care: help with bathing, dressing, medications, behavioral support, community living skills, and similar assistance. Michigan runs two waiver programs relevant to group home residents.
Habilitation Supports Waiver
The Habilitation Supports Waiver (HSW) serves people with intellectual and developmental disabilities. It covers residential support, community living assistance, employment services, and therapeutic interventions under Section 1915(c) of the Social Security Act, which lets states pay for community-based care as an alternative to institutional placement.4Medicaid.gov. Home and Community-Based Services 1915(c) Michigan’s local Community Mental Health Services Programs (CMHSPs) and regional Prepaid Inpatient Health Plans (PIHPs) manage the waiver funds and contract directly with AFC providers.
There is no single statewide fee schedule for HSW payments. Rates are negotiated between each CMHSP and the individual provider, based on what the resident’s person-centered plan calls for. A resident who needs round-the-clock behavioral support generates substantially higher service payments than a resident who mostly needs help with daily activities. Two people living in the same group home can have very different Medicaid amounts attached to their care.
MI Choice Waiver Program
The MI Choice Waiver Program serves older adults and people with physical disabilities who meet a nursing-facility level of care but can receive that care in a community setting. It pays for home and community-based services for Medicaid beneficiaries who would otherwise need institutional placement.5Michigan Department of Health and Human Services. MI Choice Waiver Program Regional waiver agencies determine eligibility, authorize services, and manage care plans for MI Choice participants who live in AFC settings.
Why Payment Amounts Vary So Much
Two AFC providers in different parts of Michigan serving residents with similar diagnoses can receive noticeably different government payments. A few factors drive the spread.
The biggest is the resident’s assessed level of care. Michigan’s person-centered planning process evaluates each resident’s functional needs and builds a service plan around them, and the payment follows the plan. Someone who needs two-to-one staffing for behavioral support costs far more to serve than someone who mainly needs help getting dressed and managing medications.
Staffing composition matters too. Homes that employ specialized behavioral technicians or nurses can negotiate higher service rates than homes providing basic personal care. Facility size cuts both ways: large group homes can spread fixed costs across more residents but also face higher regulatory and staffing minimums.
Geography shapes rates because CMHSPs negotiate locally rather than following a rigid statewide schedule. A home in metro Detroit faces different labor and housing costs than one in the Upper Peninsula, and those cost differences get built into the payment amounts.
How the Money Actually Reaches the Home
AFC providers get paid through a reimbursement model. They deliver services first, then bill afterward. Michigan’s Medicaid claims run through the Community Health Automated Medicaid Processing System (CHAMPS), the state’s web-based platform for provider enrollment, claims, prior authorization, eligibility verification, and payment tracking.6Michigan Department of Health and Human Services. Community Health Automated Medicaid Processing System (CHAMPS)
For waiver services, the routing depends on the program. HSW providers typically bill through their contracting CMHSP or PIHP, which then processes claims through the state Medicaid system. MI Choice providers bill through their waiver agency. In both cases the provider must be enrolled in CHAMPS and keep current licensing through the Michigan Department of Licensing and Regulatory Affairs.
Room and board runs on a different track. The SSI or SDA payment goes to the resident, and the resident pays the AFC provider. In practice, a representative payee often handles the payment for residents who can’t manage their own finances. The AFC home does not bill Medicaid for room and board, because Medicaid doesn’t cover it.
Tax Treatment of Provider Payments
Government payments to AFC providers are generally taxable income, with one significant exception. Under IRS Notice 2014-7, Medicaid waiver payments can be excluded from gross income when the care provider lives in the same home as the person receiving care. The IRS treats these as “difficulty of care” payments under Section 131 of the Internal Revenue Code.7Internal Revenue Service. Certain Medicaid Waiver Payments May Be Excludable from Income
This matters most for AFC family home operators, who are required by Michigan law to live in the home they operate. If the provider shares the residence with a care recipient and does not maintain a separate home, the Medicaid waiver payments for that recipient’s care can be excluded from the provider’s taxable income. The exclusion does not apply to respite care providers or to staff who work in a group home but live somewhere else.
Whether or not the exclusion applies, providers who receive $600 or more in medical and health care payments in a year should expect reporting documents. Medical and health care payments are reported on Form 1099-MISC.8Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC A tax professional familiar with Medicaid waiver income can help confirm which exclusions apply to a given provider.