Michigan program aims to expand benefits for child care workers

• The Michigan Department of Lifelong Education, Advancement and Potential announced $4.4 million to pilot the Nurture Benefits program
• Child care providers can enroll through the Small Business Association of Michigan for health, life and retirement benefits 
• The program aims to address critical shortages in the child care industry 

Emma Knode is exactly the kind of worker Michigan needs more of. 

She works at a child care center in Lansing and has a psychology degree with a focus in child development. At 26 years old, she’s passionate and wants to make this a lifelong career — but she’s not sure she can.

She’s no longer covered by her father’s health insurance as of this year, and, like most child care workers in Michigan, her employer offers no benefits. She makes too much to receive Medicaid, but not enough to afford health insurance on her $15-an-hour salary while also paying off student loans.

The state is trying to change that for Knode and the thousands of child care workers in the state, many of whom receive no benefits and earned, on average, just 61% of the state’s average annual income in 2023. 

Unable to attract workers, Michigan is facing a child care crisis, with the understaffed industry unable to support the needs of all of the families lining up for limited slots. 

The Michigan Department of Lifelong Education, Advancement and Potential (MiLEAP) recently announced a $4.4 million pilot program in collaboration with the Small Business Association of Michigan. The program, Nurture Benefits, will subsidize health, life and retirement benefits for Michigan’s child care workers.

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Knode’s employer has already said she will sign up for the pilot program so her workers have a shot at affordable health care.

“That is something I'm really looking forward to, having that sense of stability and peace of mind,” Knode said. “I'm glad that I won't — hopefully — have to make those hard decisions when it comes to financials, because that is definitely a hindrance, and I could see how that would affect people coming into the field and leaving the field, as well.” 

The funding comes from a $33 million federal grant awarded to Michigan last year by the US Department of Health and Human Services. Any licensed or license-exempt child care provider in Michigan working 30 or more hours per week will be eligible for the program. Child care employers will be able to enroll in the program starting this fall, with benefits available in 2026.

The Small Business Association of Michigan is designing plans and benefits packages that child care employers will be able to purchase. They intend to offer three options for health insurance through Blue Cross Blue Shield, at varying price points. 

“What we're approaching is a base offering, a medium, and then a richer plan benefit,” said Michelle Beebe, SBAM’s chief revenue officer. “The state is subsidizing the majority of the base plan, and then the employer, if they want to offer (a higher level of) benefits, either the employee or the employer could pay the difference.” 

Child care providers will be able to receive better rates and fees for 401(k) plans because they will be grouped together as one large employer. 

Pricing for benefits packages will be finalized in the next few weeks, before the open enrollment period begins. 

Beebe said SBAM is working to ensure preventative benefits, including behavioral health benefits, are included in all of the health insurance plans. 

“We are committed to making sure that these benefits include behavioral health,” Beebe said. “That's been a very big thing that we've heard from the child care industry. The stress of this industry and the burnout is a big issue, and providers having access to behavioral health benefits is a really big deal and preventative, and so we're making sure that, at the bare minimum, every plan has this in there and they have access to pharmacy benefits.” 

A 2022 study found that children in kindergarten through third grade who had access to high quality child care as infants demonstrated higher skills in letter and word identification, vocabulary, oral comprehension and math. 

Emily Laidlaw, deputy director of Early Education at MiLEAP, stressed the importance of quality child care in a young person’s development. 

“Children have a better ability to learn and meet their milestones when they have a consistent teacher in those early years,” Laidlaw said. “When child care providers aren't able to offer the basic benefits, it becomes incredibly difficult to keep staff, and that instability means fewer quality care options for families or teacher turnover for children in programs.” 

Nearly half of Michigan’s children currently live in “child care deserts,” where there are three or more children for every available spot in child care centers, according to a Michigan State University study. Lack of access to child care has cost the state an estimated $2.9 billion, according to a Michigan Chamber of Commerce report. 

“This has become a top public policy issue of ours because the availability of child care makes the difference between whether or not people can reliably show up for work, and having reliable child care makes for good and dependable and experienced workers,” SBAM President Brian Calley said. 

The Nurture Benefits pilot program aims to address shortages by attracting more childcare workers and allowing them to stay in the profession. Since the state requires a 1:4 teacher-to-child ratio for infants and toddlers, additional staff allows daycares to offer more spots to children. 

“The underlying goal here is to address shortages of child care workers and we think the best way to do that is to provide strong retention tools, and benefit packages are at the heart of that,” Calley said. “We know that employees need these kinds of benefits to be successful.” 

Nationwide, medical care benefits were available to 72% of private industry workers in 2024, according to the US Bureau of Labor Statistics. But, in an SBAM survey of more than 4,000 early education and childcare workers, only 21% said they were offered benefits from their employer.

Many child care facilities are small businesses that can’t afford or aren’t eligible for the types of insurance that larger companies have. Calley said Nurture Benefits will allow childcare providers to group together and join a managed risk pool with the same rights that larger employers have. 

Brittany Hartwell is the director of Little Blessings Learning Center in Lansing, which has eight staff members who are all uninsured or on Medicaid.

Hartwell and her 7-year-old daughter are on Medicaid, which still has copayments that she sometimes can’t afford. She’s concerned for herself and her employees with the uncertainty of Medicaid cuts as a result of the federal “big, beautiful bill” signed into law this month. 

“It definitely is a damper to not  … be able to provide insurance or different benefits, because we know as working families that's important,” Hartwell said. “If I need to take my kids to the dentist or the doctor, I can't be paying hundreds of dollars out of pocket. In the past, I've had people turn down the job offer simply because we weren't able to offer benefits.” 

Jacqueline Taylor, owner of Little Dreamers Early Learning Center, has also lost educators who went on to work in different careers because of the low pay and lack of benefits. 

“Trying to get medical treatments without insurance was just really difficult for all of us, and I've even experienced that as well as an owner, needing to go to the doctor and having to pay out of pocket,” Taylor said. “MiLEAP coming out with Nurture Benefits has just been an answered prayer …  to see that the state is listening and that they really are trying to figure out ways to collaborate with us to help lift up the industry of early education.” 

The Nurture Benefits program will be available for the next two years, but Laidlaw said MiLEAP hopes to seek funding to continue the program if it is successful. The department will be looking at enrollment numbers and collecting feedback from child care providers to continually improve and meet their needs. 

“Our aim with this initial pilot is to test the model, gather data and refine,”  Laidlaw said. “We're always looking for ways to make successful programs permanent, but first we need to get started with our pilot program and see how it works.” 

At Little Dreamers, Taylor hopes the pilot program will continue so Knode can keep working with her and her business can continue to grow. 

“The state has no idea what we can do with a properly funded team,” Taylor said. “I believe that they'll be really shocked at how this has been the missing piece that I think the economy has needed (and) is really just ensuring that our youngest learners are all set.”