What Child Care Providers Need to Know

No. You do not have to be a licensed child care provider to be paid by the state, but this does make it easier. With a license you can provide care for more children, you will receive payments directly from the state, you will be paid at a higher rate, and the children you care for do not have to be siblings. If you are interested in getting a child care license, you can start here.

If you do not have a license, you are still eligible to receive subsidy payments as a "License Exempt" provider, sometimes referred to as "family, friend or neighbor" care. There are two categories of License Exempt providers:

• License Exempt-Related providers - These are providers who are at least 18 years old and are related to the children as a grandparent, aunt, or uncle (including great aunt/uncle) or as a sibling (who does not live in the home with the children). These providers can provide care for between one and six children, and can provide care in the provider's home or the children's home. The children cared for must all be siblings.

• License Exempt-Unrelated providers - These are providers who are at least 18 years old and are not related to the child as a grandparent, aunt, uncle, or sibling. License Exempt-Unrelated providers must provide care in the child's home. The children cared for must all be siblings.

Unlike licensed providers, License Exempt child care providers do not receive subsidy payments from the State of Michigan. The Michigan Department of Education will provide these subsidy payments directly to families, which they then provide to you.

License Exempt providers must be 18 years old, complete a background check, and complete some provider training classes. You can apply to be License Exempt here. You can also call 866-990-3227, ext. 1.

There are several license types you can apply for depending on your situation:

• Licensed Center - A provider who is licensed to provide care in a facility, other than a private home, for one or more children. To learn more about becoming a licensed center, visit this link.

• Licensed Group Home - A provider who is licensed to care for between one and 12 children at one time in the provider's home. To learn about becoming a licensed group home, visit this link.

• Licensed Family Home - A provider who is licensed to care for between one and six children at one time in the provider's home. To learn about becoming a licensed family home, visit this link.

After 29 months of continuous care, licensed group home providers can provide care to up to 14 children and licensed family home providers can provide care for up to seven children.

Licensed and License Exempt providers who want to receive subsidies to provide child care for eligible families need to ask the children’s parents to designate them as the provider using this form. The parent must then submit the form to MDHHS. Licensed providers will then receive the subsidy payment directly from the state.

All providers receiving a subsidy payment will use the State’s I-Billing portal to complete billings every two weeks and to receive payment from Michigan Department of Education. Step-by-step instructions explaining how to use the I-Billing system can be found in the Child Development and Care Handbook. All licensed providers must also be registered with SIGMA Vendor Self Service (VSS) to receive CDC subsidy payments. More information on how to register to receive subsidy payments from the state of Michigan can be found here.

“Stars” are a rating system used by Great Start to Quality to keep track of how much training and experience a licensed child care provider has. With more stars, you will earn a higher subsidy rate from the state for caring for children. You can learn how to earn stars for your licensed child care center here.

To help you improve the quality of your child care, you can contact your Great Start to Quality Resource Center. Find the Resource Center in your region here, or by calling 1-877-614-7328.

Many parents can get the CDC subsidy to help them pay for child care. To be eligible for the subsidy, a parent must:

• Have a child under 13, or a child up to 18 who has special needs,
• Need child care because they are going to work, attending an approved education or training program (including working on a GED or bachelor’s degree), or participating in an approved counseling or treatment program, and
• Have a qualifying income. Parents can use the State's eligibility calculator to see if they are eligible.

They can also visit the MI Bridges site to see if they are eligible for other sources of support, in addition to the child care subsidy.

Once a family is authorized to receive the subsidy, they generally remain eligible for the entire year - even if their income or situation changes. If the family becomes ineligible for the CDC subsidy, they will also be responsible for paying the cost of the care you provide. To learn more about the parent and provider relationship, see the CDC Handbook.

You can bill the CDC program for a child's occasional absences. However you should not bill the CDC program if a child is not expected to return to care. If a child stops attending, you should contact the family to find out if the child will return. Additional guidance on billing-related matters, can be found in the CDC Handbook.

Licensed providers have ongoing requirements to keep their license active. If the license is active and the provider is in good standing with the CDC program, they will continue to be eligible to receive the CDC subsidy from parents. For more information about renewing a child care license visit this link.

The amount you are paid for each child depends on a few factors, including the children’s ages, the number of hours they are approved for, whether you are licensed, your organization’s star rating or training level, and how much the state believes the children’s families can contribute (and therefore pay you directly). You can find more information about payment rates in the CDC Handbook. You can also call the CDC office at 866-990-3227.

The state reimburses eligible providers for care to children from birth through age 13, or through age 18 for children with special needs. Licensed providers who care for younger children receive a higher reimbursement rate. For questions regarding your payment amount, please call the CDC office at 866-990-3227.

The CDC subsidy rate does not change based on the time of day or the day of the week the care is provided.

Licensed child care centers, licensed group homes, and licensed family homes receive payments directly from the state to the provider in the provider’s name.

State payments for care provided by a License Exempt provider are issued from the state directly to the parent in the parent’s name. The parent then pays the child care provider directly.

Some families have a Family Contribution amount that they must pay as a portion of their total child care costs. The amount depends on family size, income and other eligibility factors. The family must pay the Family Contribution amount to the child care provider directly. This applies to both Licensed and License Exempt providers. Family Contributions are temporarily waived for all families, regardless of provider type or rating, until 9/23/2023.

For more information on payments and Family Contribution amounts see the CDC Handbook.

You may charge a family for more than the reimbursement rate that the subsidy provides. The family will then be responsible for paying the difference. However, the amount charged to a CDC family should not be more than what the provider charges non-CDC families.

You can get the most detailed information about the CDC subsidy by reviewing the CDC Handbook, or by visiting www.michigan.gov/child care. You can also get help finding resources 24 hours a day by dialing the United Way helpline at 2-1-1.