Opinion ID: 4561573
Heading Depth: 3
Heading Rank: 2

Heading: IHSS payments as wages

Text: Next, we reject MHA’s underlying assumption that a parent provider’s compensation under the IHSS program seeks to replicate the wages and hours of a parent who is employed outside the home. A parent’s employment is relevant only to the extent it relates to the parent’s suitability or availability to provide IHSS services to a child. (MPP, § 30-763.451; Dept. AllCounty Letter No. 19-02 (January 9, 2019) (All-County Letter 4 This conclusion focuses on Reilly’s general entitlement to benefits under the Section 8 voucher and IHSS programs, and does not consider any other basis for terminating these benefits such as the failure to comply with any program requirements. 23 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. 19-02).) As section 12300, subdivision (e) explains, the predicate for a paid parent provider is that “no other suitable provider is available.” (§ 12300, subd. (e); see MPP, § 30-763.451.) In providing the necessary in-home care to a disabled child, a parent forgoes any outside employment — not to displace otherwise competent professional caregivers — but to prevent a third party caregiver’s “inappropriate placement or inadequate care” for their child. (§ 12300, subd. (e).) For instance, in its 2019 All-County Letter 19-02, the Department clarified the paid parent provider requirements: “The paid parent IHSS provider requirements, set forth in MPP Section 30-763.451, do not require or imply that a parent must have marketable job skills or a work history to be their child’s paid IHSS provider, as long as it is the recipient child’s needs which prevent the parent from maintaining or obtaining fulltime employment.” (All-County Letter 19-02, supra, at p. 4, italics added.) Likewise, parents who retire or are laid off may also serve as their child’s provider only if their retirement or layoff is due to the child’s need for IHSS services. (Id. at p. 6.) In short, “if a parent is not employed full-time for a reason other than the recipient child’s IHSS needs . . . that parent would not qualify as a paid parent IHSS provider.” (Id. at p. 4.) Second, even assuming Reilly’s IHSS compensation represents her wages, this does not mean that providing inhome care to her child is “an employment for all purposes.” (Basden v. Wagner, supra, 181 Cal.App.4th at p. 940.) In Basden v. Wagner, the Court of Appeal recognized certain duties — such as the state being responsible for the provider’s unemployment compensation, workers’ compensation, federal and state income tax and the like — that would suggest providing IHSS full-time could be considered an employment. The court, however, 24 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. pointed out that “the Legislature defined IHSS providers as employees for limited circumstances, but undisputedly not for all circumstances. More significantly, nothing in the statutes even remotely suggests the Legislature defined the provision of in-home, full-time, IHSS funded care by a parent to a child as full-time employment . . . .” (Ibid., italics omitted.) The question here is whether a parent’s compensation for providing in-home care is “specifically excluded” from the definition of annual income for purposes of the HUD regulation. (24 C.F.R. § 5.609(a)(3), (c)(16) (2020).) As explained above, we conclude that IHSS compensation to a parent provider is excluded from income. (See ante, at pp. 14–15.) Nevertheless, the dissent maintains that “[u]nlike funds that reimburse a family’s expenditures, funds provided by the state to compensate for the family’s caregiving activities are available to meet the family’s daily needs. That is their purpose.” (Dis. opn., post, at p. 25, italics added.) This characterization gravely misconstrues the nature and scope of IHSS services. Under the IHSS program, the main focus is on assessing the disabled individual’s “service needs and authorizing service hours to meet those needs.” (§ 12301.2, subd. (a)(1).) A caregiver will be compensated only for those authorized service hours and nothing more. As previously explained (see ante, at p. 21), because many tasks are discrete and completed throughout the day, a provider might not be compensated for time spent waiting in between those tasks. Contrary to the dissent’s suggestion, excluding a parent’s IHSS compensation from income would not artificially reduce a family’s income and thereby increase any resulting rent subsidy. At best, a parent’s IHSS compensation will offset a portion of the costs of keeping 25 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. a developmentally disabled family member at home, and would not go far in meeting the family’s daily needs. The dissent’s related assertion — i.e., family providers “are effectively selling their labor to the state, and the resulting income is indistinguishable, in its impact on the family’s standard of living, from money earned working outside the home” (dis. opn., post, at p. 25) — is likewise long on conclusion but short on facts. (See ibid. [“to receive funds from IHSS a parent must accept their disabled child’s care as, in effect, their job”].) In the case of Reilly’s daughter, K.R., for example, she required protective supervision that is “only available” if “a need exists for twenty-four-hours-a-day of supervision in order for the recipient to remain at home safely.” (MPP, § 30-757.173(a).) A person needing 24-hour supervision would require a provider’s services for 720 hours in a 30-day month. However, an IHSS provider is limited to a statutory cap of 283 hours of compensation. (§§ 12303.4, 14132.95, subd. (g).) The discrepancy between a parent provider’s actual hours of service and compensation belies any assertion that IHSS payments, at least with respect to protective supervision, are intended to represent wages the parent would have earned outside the home, where compensation would be based on every hour worked. Finally, we find it significant that the IRS also treats inhome care payments — whether the provider is related or unrelated to the disabled individual — as excludable from a provider’s income under Internal Revenue Code section 131. (26 U.S.C. § 131; see Rev. Proc. 2014-7, 2014-4 I.R.B. 445.) In 2014, the IRS explained that Medicaid waiver payments to states, which are used to fund IHSS payments through the state MediCal program (see ante, at pp. 5–6 & fn. 2), should be excluded 26 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. from a provider’s gross income. (Rev. Proc. 2014-7, 2014-4 I.R.B. 445.) It equated these payments to foster care payments, which are considered “difficulty of care” payments excludable from a provider’s income under Internal Revenue Code section 131. (26 U.S.C. § 131(a) [“Gross income shall not include amounts received by a foster care provider . . . as qualified foster care payments”].) “The programs share the objective of enabling individuals who otherwise would be institutionalized to live in a family home setting rather than in an institution, and both difficulty of care payments and Medicaid waiver payments compensate for the additional care required.” (Rev. Proc. 2014- 7, 2014-4 I.R.B. 445 [these foster parents “ ‘are saving the taxpayers’ money by preventing institutionalization of these children’ ”].) As relevant here, the IRS makes no distinction between care provided by a parent or by a third party — the exclusion for Medicaid waiver payments “will apply whether the care provider is related or unrelated to the eligible individual.” (Ibid., italics added.) Seeking to downplay any impact an IRS interpretation has on a HUD regulation, MHA notes that HUD has indicated that the “tax rules are different from the HUD program rules.” (HUD, HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs (Nov. 2013) ¶ 5-1.) Be that as it may, we do not conclude that the IRS’s interpretation is dispositive or compels the outcome in this case. We do, however, acknowledge that it provides persuasive insight, one that is consistent with the rulemaking record of the HUD regulation (24 C.F.R. § 5.609(c)(16) (2020)). (See ante, at pp. 11–13) For example, though payments to foster parents and inhome care payments are both considered “difficulty of care” 27 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. payments excludable from a provider’s taxable income, these payments would receive unequal treatment under MHA’s interpretation of the regulation. Under 24 Code of Federal Regulations part 5.609(c)(2) (2020), “[p]ayments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the tenant family, who are unable to live alone)” are excluded from income for purposes of Section 8 housing. If a family takes into their home an unrelated disabled adult who is unable to live alone, and receives payment from the State for providing care to that adult, such payments are excluded from the family’s income. However, if that same family receives payment for providing the same care but to a developmentally disabled family member, those payments would not be excluded from income. To ascribe this interpretation to HUD, which would impose a financial penalty on a family simply because the care is given to a disabled family member rather than a disabled stranger, would not only be inconsistent with the IRS’s treatment of both payments, there is no evidence in the regulation’s rulemaking record that HUD intended different treatment.