Michigan Direct Care Worker Wage Increase: Amounts and Eligibility

Michigan’s direct care worker wage increase adds $3.40 per hour to eligible workers’ pay through September 30, 2026, with a separate $0.85 per hour bump for non-clinical support staff in nursing facilities. The money is funded through Medicaid pass-through payments administered by the Michigan Department of Health and Human Services (MDHHS) under Public Act 22 of 2025.¹ Your employer pays you the premium through regular payroll, then bills the state to be reimbursed.

Current Premium Amounts

Two tiers apply for pay periods between October 1, 2024, and September 30, 2026:

Direct care workers: $3.40 per hour, or $272 per biweekly pay period for salaried employees ($3.40 × 80 hours). Overtime hours are reimbursed at $5.10 per hour.
Non-clinical support staff in nursing facilities: $0.85 per hour, or $68 per biweekly pay period for salaried employees. Overtime hours are reimbursed at $1.28 per hour.

Home Help caregivers hired directly by individuals through Michigan’s self-directed care programs receive the same $3.40 premium, but it’s rolled into their combined hourly rate rather than paid as a separate line. Effective January 1, 2026, that combined Home Help individual caregiver rate is $17.13 per hour, which pairs the $13.73 state minimum wage with the $3.40 premium.²

Who Qualifies

Eligibility depends on both where you work and what you do there. This is not a universal raise for every care worker in Michigan.

Eligible Facilities

Skilled nursing facilities qualify only if they are certified to participate in Medicaid or Medicare. Facilities holding only a state license, and hospice residences, are excluded.¹

Adult foster care homes and homes for the aged qualify if they receive a Personal Care Supplement (PCS) payment for a Medicaid resident or receive Medicaid payments through MI Choice, Behavioral Health, or MI Health Link. Private-pay-only facilities do not qualify.³

Eligible Roles

In skilled nursing facilities, the $3.40 direct care tier covers registered nurses, licensed practical nurses, competency-evaluated nursing assistants, and respiratory therapists. The $0.85 non-clinical tier covers housekeeping, dietary workers, laundry staff, maintenance workers, medical records personnel, social services staff, diversion therapy aides, and beauty and barber shop workers.¹

In adult foster care homes and homes for the aged, staff qualify only for hours when they are awake and actually providing direct care to residents.³

Who Is Excluded

Contract workers. Only employees on the facility’s payroll qualify.
State of Michigan employees.
Central office and corporate headquarters staff.
Any hours not spent on direct care, including paid time off and sick leave.

Administrators or managers who occasionally provide hands-on care can receive the premium for those specific hours, but those hours must be tracked separately from their other duties.¹

How the Premium Reaches Your Paycheck

The premium is a pass-through. Your employer pays you first, then submits documentation to MDHHS for reimbursement. MDHHS also reimburses the employer’s share of Social Security and Medicare (FICA) taxes tied to the premium, so those payroll tax costs don’t come out of the facility’s own budget.³

Providers cannot pay the premium as a single lump sum. It has to flow through regular payroll cycles, and facilities must keep payroll records, resident charting, and other documentation showing workers actually received the money. The entire premium must go to eligible employees; providers cannot absorb any portion for other operating costs.³

How Overtime Works

Under the Fair Labor Standards Act, the regular rate used to calculate overtime must include nearly all compensation tied to hours worked, including wage supplements.⁴ The $3.40 premium isn’t a discretionary bonus, so it has to be folded in before time-and-a-half is calculated.

MDHHS reimburses overtime at $5.10 per hour for direct care workers (1.5 × $3.40) and $1.28 per hour for non-clinical staff (1.5 × $0.85).¹ Check your pay stubs during weeks you worked over 40 hours. If your premium hours are being paid at straight time during overtime, that’s a wage violation.

Tax Impact for Workers

The premium is taxable income. It shows up on your W-2 and counts toward your adjusted gross income, which can affect eligibility for income-based programs like the Earned Income Tax Credit or personal Medicaid coverage. If you’re near a benefits threshold, the extra $3.40 per hour is worth factoring into your planning.

What to Do If You’re Not Receiving It

Start with your supervisor or payroll department. Many issues are processing errors, particularly after a payroll system change or turnover in administrative staff.

If the problem persists, file a wage complaint with Michigan’s Bureau of Employment Relations, Wage and Hour Division. The bureau provides an online form, and complaints alleging non-payment of wages must be filed within 12 months of the violation.⁵ Save your pay stubs, work schedules, and any written communication with your employer about the premium. That documentation matters if the complaint moves into an investigation.

For adult foster care homes and homes for the aged, MDHHS ties reimbursement to proof that workers were paid the increase before the provider submits for reimbursement.³ A provider that collects reimbursement without paying workers faces consequences from both MDHHS and state wage enforcement.

When the Current Increase Expires

The current premium runs through September 30, 2026, the end of Michigan’s fiscal year. Each renewal has required a new appropriations act, so whether the premium continues into FY2027 depends on legislative action in the 2026 session. The program has survived multiple renewal cycles and grown from $2.00 to $3.40 per hour, but nothing guarantees another extension. Watch for announcements from MDHHS and the legislature as the deadline approaches.

1
State of Michigan. Skilled Nursing Facility COVID-19 Response: Direct Care Worker Wage Increase Frequently Asked Questions
2
Michigan Department of Health and Human Services. Home Help Individual Caregiver Pay Rate Increase (L 25-75)
3
State of Michigan. Home for the Aged and Adult Foster Care COVID-19 Response: Direct Care Worker Wage Increase Frequently Asked Questions
4
U.S. Department of Labor. Fact Sheet 56A: Overview of the Regular Rate of Pay Under the Fair Labor Standards Act
5
State of Michigan. Online Employment Wage Complaint Form