Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY2002-FY2004
Congressional research reportMar 27, 2006
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Cash and Noncash Benefits for Persons with
Limited Income: Eligibility Rules, Recipient
and Expenditure Data, FY2002-FY2004
(name redacted), Coordinator
Specialist in Social Policy
March 27, 2006
Congressional Research Service
7-....
www.crs.gov
RL33340
CRS Report for Congress
Prepared for Members and Committees of Congress
Cash and Noncash Benefits for Persons with Limited Income
Summary
More than 80 benefit programs provide aid—in cash and noncash form—that is directed
primarily to persons with limited or low income. Such programs constitute the public “welfare”
system, if welfare is defined as income-tested or need-based benefits. This definition omits social
insurance programs like Social Security and Medicare.
Income-tested benefit programs in FY2004 cost approximately $583 billion: $427 billion in
federal funds and $156 billion in state-local funds (Table 1). Spending on these programs
represented 18.6% of all federal spending, with medical aid accounting for 9% of the budget.
Total low-income spending in FY2004 equaled 5% of the gross domestic product and set a record
high, up $34 billion (6.2%) from the previous peak of FY2003. In current dollars, spending on
income-tested programs increased during the year for all forms of aid except jobs, training,
services, and energy aid. Higher medical spending accounted for $26 billion of the net increase in
FY2004, and 55 cents of every low-income dollar went for medical assistance. Expressed in
constant FY2004 dollars (Table 2), income-tested spending increased by 3.8% from the 2003
level.
The composition of low-income spending differed by level of government (Tables 3 and 4).
Medical aid consumed nearly 82% of state-local funds, but 46% of federal low-income dollars.
Most income-tested programs provide benefits in the form of cash, goods, or services to persons
who make no payment and render no service in return. However, in the case of the job and
training programs and some educational benefits, recipients must work or study for wages, grants,
or loans. Further, the block grant program of Temporary Assistance for Needy Families (TANF)
requires adults to start work after a period of enrollment, the food stamp program imposes work
and training requirements, and public housing requires residents to engage in “self-sufficiency”
activities or perform community service. Finally, the Earned Income Tax Credit (EITC) is
available only to workers.
An unduplicated count of beneficiaries of income-tested programs is not available. Enrollment in
TANF and food stamps remained below 1994-1995 peak levels during 2002-2004 (although food
stamp enrollment rose from the 2000-2002 period), while Medicaid enrollment set a record high.
Average 2004 monthly numbers: food stamps, 24.9 million; TANF, 4.7 million; and Supplemental
Security Income (SSI), 7.1 million. During the year, 56.1 million persons received Medicaid
services, and in calendar year 2004, EITC payments went to an estimated 19.2 million tax filers.
Census Bureau data indicate that 5.8 million families with children were poor in 2003 before
receiving cash aid from TANF, General Assistance (GA), or the EITC, compared with 6.7 million
in 1996 (the last full year of the pre-TANF welfare program). Among these families, the EITC
was received by 43.8% of those with a female head, and by 67.8% of those with a male present
(Figure 3).
Congressional Research Service
Cash and Noncash Benefits for Persons with Limited Income
Contents
Introduction ................................................................................................................................1
Trends in Spending .....................................................................................................................4
Annual Spending Data ..........................................................................................................4
Spending Trends by Level of Government.......................................................................6
Medical Benefits .............................................................................................................6
Means-Tested Share of Federal Budget............................................................................7
Refundable Income Tax Credits.......................................................................................7
Composition of Spending.......................................................................................................... 13
Noncitizen Eligibility for Major Federal Benefits ...................................................................... 14
Aid Received by Poor Families With Children .......................................................................... 15
Income Tests of the Benefit Programs ....................................................................................... 16
Medical Aid .............................................................................................................................. 26
1. Medicaid............................................................................................................................... 26
Funding Formula ................................................................................................................ 26
Eligibility Requirements ..................................................................................................... 27
Families, Pregnant Women, and Children ...................................................................... 28
Aged and Persons with Disabilities ............................................................................... 30
The Medically Needy.................................................................................................... 33
Individuals Qualifying Under Demonstration Waivers ................................................... 34
Aliens ........................................................................................................................... 34
Medicaid Purchase of COBRA Coverage ...................................................................... 34
Benefits .............................................................................................................................. 35
2. Medical Care For Veterans Without Service-Connected Disability ......................................... 36
Funding Formula ................................................................................................................ 36
Eligibility Requirements ..................................................................................................... 36
Benefit Levels..................................................................................................................... 37
3. State Children’s Health Insurance Program (SCHIP).............................................................. 38
Funding Formula ................................................................................................................ 38
Eligibility Requirements ..................................................................................................... 40
Benefit Levels..................................................................................................................... 41
4. Indian Health Services........................................................................................................... 44
Funding Formula ................................................................................................................ 44
Eligibility Requirements ..................................................................................................... 44
Benefit Levels..................................................................................................................... 44
5. Consolidated Health Centers ................................................................................................. 45
Funding Formula ................................................................................................................ 45
Eligibility Requirements ..................................................................................................... 45
Benefit Levels..................................................................................................................... 46
6. Maternal and Child Health Services Block Grant................................................................... 46
Funding Formula ................................................................................................................ 46
Eligibility Requirements ..................................................................................................... 47
Benefit Levels..................................................................................................................... 47
7. Title X Family Planning Services .......................................................................................... 48
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Cash and Noncash Benefits for Persons with Limited Income
Funding Formula ................................................................................................................ 48
Eligibility Requirements ..................................................................................................... 48
Benefit Levels..................................................................................................................... 48
8. Medical Assistance to Refugees, Asylees, Other Humanitarian Cases .................................... 49
Funding Formula ................................................................................................................ 49
Eligibility Requirements ..................................................................................................... 49
Benefit Levels..................................................................................................................... 49
Cash Aid ................................................................................................................................... 50
9. Supplemental Security Income (SSI) ..................................................................................... 50
Funding Formula ................................................................................................................ 50
Eligibility Requirements ..................................................................................................... 50
Benefit Levels..................................................................................................................... 51
10. Earned Income Tax Credit (EITC) ....................................................................................... 53
Funding Formula ................................................................................................................ 53
Eligibility Requirements ..................................................................................................... 53
Benefit Levels..................................................................................................................... 54
11. Temporary Assistance for Needy Families (TANF) .............................................................. 56
Funding Formula ................................................................................................................ 56
Federal Funding ............................................................................................................ 56
State-Local Funding...................................................................................................... 57
Eligibility Requirements ..................................................................................................... 57
Basic Eligibility ............................................................................................................ 57
Ineligible Persons.......................................................................................................... 58
Work/conduct Requirements ......................................................................................... 58
Benefit Levels..................................................................................................................... 59
Cash Assistance ............................................................................................................ 59
Related Programs .......................................................................................................... 59
Other Benefits............................................................................................................... 59
12. Foster Care.......................................................................................................................... 60
Funding Formula ................................................................................................................ 60
Eligibility Requirements ..................................................................................................... 60
Benefit Levels..................................................................................................................... 61
13. Child Tax Credit.................................................................................................................. 61
Funding Formula ................................................................................................................ 61
Eligibility Requirements ..................................................................................................... 61
Benefit Levels..................................................................................................................... 62
14. Pensions for Needy Veterans, their Dependents, and Survivors ............................................ 62
Funding Formula ................................................................................................................ 62
Eligibility Requirements ..................................................................................................... 63
Benefits .............................................................................................................................. 63
15. Adoption Assistance ............................................................................................................ 64
Funding Formula ................................................................................................................ 64
Eligibility Requirements ..................................................................................................... 64
Benefit Levels..................................................................................................................... 64
16. Dependency and Indemnity Compensation (DIC) and Death Compensation for
Parents of Veterans................................................................................................................. 65
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Cash and Noncash Benefits for Persons with Limited Income
Funding Formula ................................................................................................................ 65
Eligibility Requirements ..................................................................................................... 65
Benefit Levels..................................................................................................................... 65
17. General Assistance to Indians .............................................................................................. 66
Funding Formula ................................................................................................................ 66
Eligibility Requirements ..................................................................................................... 66
Benefit Levels..................................................................................................................... 67
18. Cash Assistance to Refugees, Asylees, Other Humanitarian Cases ....................................... 68
Funding Formula ................................................................................................................ 68
Eligibility Requirements ..................................................................................................... 68
Benefit Levels..................................................................................................................... 69
Food Aid................................................................................................................................... 69
19. Food Stamps ....................................................................................................................... 69
Funding Formula ................................................................................................................ 69
Eligibility Requirements ..................................................................................................... 70
Income.......................................................................................................................... 70
Assets ........................................................................................................................... 71
Employment-Related Requirements .............................................................................. 72
Other Limitations .......................................................................................................... 72
Benefit Levels..................................................................................................................... 73
20. School Lunch Program (Free and Reduced-Price Components)............................................ 74
Funding Formula ................................................................................................................ 74
Eligibility Requirements ..................................................................................................... 74
Benefit Levels..................................................................................................................... 75
21. Special Supplemental Nutrition Program for Women, Infants, and Children (The WIC
Program)................................................................................................................................ 76
Funding Formula ................................................................................................................ 76
Eligibility Requirements ..................................................................................................... 76
Benefit Levels..................................................................................................................... 77
22. Child and Adult Care Food Program (Lower-Income Components)...................................... 77
Funding Formula ................................................................................................................ 77
Eligibility Requirements ..................................................................................................... 78
Benefit Levels..................................................................................................................... 78
23. School Breakfast Program (Free and Reduced-Price Components)....................................... 79
Funding Formula ................................................................................................................ 79
Eligibility Requirements ..................................................................................................... 80
Benefit Levels..................................................................................................................... 80
24. Nutrition Program for the Elderly ........................................................................................ 81
Funding Formula ................................................................................................................ 81
Eligibility Requirements ..................................................................................................... 81
Benefit Levels..................................................................................................................... 82
25. The Emergency Food Assistance Program (TEFAP) ............................................................ 82
Funding Formula ................................................................................................................ 82
Eligibility Requirements ..................................................................................................... 83
Benefit Levels..................................................................................................................... 83
26. Summer Food Service Program ........................................................................................... 83
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Cash and Noncash Benefits for Persons with Limited Income
Funding Formula ................................................................................................................ 83
Eligibility Requirements ..................................................................................................... 84
Benefit Levels..................................................................................................................... 84
27. Commodity Supplemental Food Program (CSFP)................................................................ 84
Funding Formula ................................................................................................................ 84
Eligibility Requirements ..................................................................................................... 85
Benefit Levels..................................................................................................................... 85
28. Food Distribution Program on Indian Reservations (FDPIR)................................................ 85
Funding Formula ................................................................................................................ 85
Eligibility Requirements ..................................................................................................... 86
Benefit Levels..................................................................................................................... 86
29. Farmers’ Market Nutrition Programs ................................................................................... 86
Funding Formula ................................................................................................................ 86
Eligibility Requirements ..................................................................................................... 87
Benefit Levels..................................................................................................................... 87
30. Special Milk Program (Free Segment) ................................................................................. 88
Funding Formula ................................................................................................................ 88
Eligibility Requirements ..................................................................................................... 88
Benefit Levels..................................................................................................................... 88
Housing Aid.............................................................................................................................. 89
31. Section 8 Low-Income Housing Assistance ......................................................................... 89
Funding Formula ................................................................................................................ 89
Eligibility Requirements ..................................................................................................... 89
Benefit Levels..................................................................................................................... 90
32. Low-Rent Public Housing ................................................................................................... 91
Funding Formula ................................................................................................................ 91
Eligibility Requirements ..................................................................................................... 91
Benefit Levels..................................................................................................................... 92
33. Rural Housing Loans (Section 502) ..................................................................................... 93
Funding Formula ................................................................................................................ 93
Eligibility Requirements ..................................................................................................... 93
Benefit Levels..................................................................................................................... 94
34. Home Investment Partnerships Program (HOME) ............................................................... 95
Funding Formula ................................................................................................................ 95
Eligibility Requirements ..................................................................................................... 95
Benefit Levels..................................................................................................................... 95
35. Housing For The Elderly and Persons With Disabilities ....................................................... 96
Funding Formula ................................................................................................................ 96
Eligibility Requirements ..................................................................................................... 96
Benefit Levels..................................................................................................................... 97
36. Rural Rental Assistance Payments (Section 521) ................................................................. 98
Funding Formula ................................................................................................................ 98
Eligibility Requirements ..................................................................................................... 98
Benefit Levels..................................................................................................................... 98
37. Section 236 Interest Reduction Payments ............................................................................ 99
Funding Formula ................................................................................................................ 99
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Cash and Noncash Benefits for Persons with Limited Income
Eligibility Requirements ..................................................................................................... 99
Benefit Levels..................................................................................................................... 99
38. Housing Opportunities for People with AIDS Program (HOPWA) ..................................... 100
Funding Formula .............................................................................................................. 100
Eligibility Requirements ................................................................................................... 100
Benefit Levels................................................................................................................... 101
39. Rural Rental Housing Loans (Section 515) ........................................................................ 101
Funding Formula .............................................................................................................. 101
Eligibility Requirements ................................................................................................... 102
Benefit Levels................................................................................................................... 102
40. Rural Housing Repair Loans and Grants (Section 504) ...................................................... 103
Funding Formula .............................................................................................................. 103
Eligibility Requirements ................................................................................................... 103
Benefit Levels................................................................................................................... 103
41. Farm Labor Housing Loans (Section 514) and Grants (Section 516) .................................. 104
Funding Formula .............................................................................................................. 104
Eligibility Requirements ................................................................................................... 104
Benefit Levels................................................................................................................... 105
42. Section 101 Rent Supplements .......................................................................................... 105
Funding Formula .............................................................................................................. 105
Eligibility Requirements ................................................................................................... 105
Benefit Levels................................................................................................................... 106
43. Rural Housing Self-Help Technical Assistance Grants (Section 523) and Rural
Housing Site Loans (Sections 523 and 524).......................................................................... 106
Funding Formula .............................................................................................................. 106
Eligibility Requirements ................................................................................................... 106
Benefit Levels................................................................................................................... 107
44. Indian Housing Improvement Grants ................................................................................. 108
Funding Formula .............................................................................................................. 108
Eligibility Requirements ................................................................................................... 108
Benefit Levels................................................................................................................... 108
45. Section 235 Homeownership Assistance for Low-Income Families.................................... 109
Funding Formula .............................................................................................................. 109
Eligibility Requirements ................................................................................................... 109
Benefit Levels................................................................................................................... 110
46. Rural Housing Preservation Grants (Section 533) .............................................................. 110
Funding Formula .............................................................................................................. 110
Eligibility Requirements ................................................................................................... 111
Benefit Levels................................................................................................................... 111
47. Homeownership and Opportunity for People Everywhere (HOPE) Programs..................... 112
Funding Formula .............................................................................................................. 112
Eligibility Requirements ................................................................................................... 112
Benefit Levels................................................................................................................... 113
Educational Assistance............................................................................................................ 113
48. Federal Pell Grants............................................................................................................ 113
Funding Formula .............................................................................................................. 113
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Cash and Noncash Benefits for Persons with Limited Income
Eligibility Requirements ................................................................................................... 113
Benefit Levels................................................................................................................... 114
49. Head Start ......................................................................................................................... 115
Funding Formula .............................................................................................................. 115
Eligibility Requirements ................................................................................................... 115
Benefit Levels................................................................................................................... 116
50. Subsidized Federal Stafford and Stafford/Ford Loans......................................................... 116
Funding Formula .............................................................................................................. 116
Eligibility Requirements ................................................................................................... 116
Benefit Levels................................................................................................................... 117
51. Federal Work-Study Program ............................................................................................ 118
Funding Formula .............................................................................................................. 118
Eligibility Requirements ................................................................................................... 118
Benefit Levels................................................................................................................... 119
52. Federal TRIO Programs..................................................................................................... 119
Funding Formula .............................................................................................................. 119
Eligibility Requirements ................................................................................................... 119
Upward Bound............................................................................................................ 120
Student Support Services............................................................................................. 120
Talent Search .............................................................................................................. 120
Educational Opportunity Centers................................................................................. 120
Ronald E. McNair Postbaccalaureate Achievement...................................................... 120
Benefit Levels................................................................................................................... 121
53. Supplemental Educational Opportunity Grants .................................................................. 121
Funding Formula .............................................................................................................. 121
Eligibility Requirements ................................................................................................... 122
Benefit Levels................................................................................................................... 122
54. Title I Migrant Education Program .................................................................................... 122
Funding Formula .............................................................................................................. 122
Eligibility Requirements ................................................................................................... 123
Benefit Levels................................................................................................................... 123
55. Perkins Loans.................................................................................................................... 123
Funding Formula .............................................................................................................. 123
Eligibility Requirements ................................................................................................... 124
Benefit Levels................................................................................................................... 124
56. Leveraging Educational Assistance Partnerships (LEAP) ................................................... 124
Funding Formula .............................................................................................................. 124
Eligibility Requirements ................................................................................................... 125
Benefit Levels................................................................................................................... 125
57. Health Professions Student Loans and Scholarships ........................................................... 126
Funding Formula .............................................................................................................. 126
Eligibility Requirements ................................................................................................... 126
Loans.......................................................................................................................... 126
Scholarships................................................................................................................ 127
Loan Repayments ....................................................................................................... 127
Benefit Levels................................................................................................................... 127
Loans.......................................................................................................................... 127
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Cash and Noncash Benefits for Persons with Limited Income
Loan Repayments ....................................................................................................... 128
Scholarships................................................................................................................ 128
58. Fellowships for Graduate and Professional Study .............................................................. 129
Funding Formula .............................................................................................................. 129
Eligibility Requirements ................................................................................................... 129
Javits Fellowships ....................................................................................................... 129
GAANN Fellowships .................................................................................................. 130
Thurgood Marshall Fellowships .................................................................................. 130
Benefit Levels................................................................................................................... 130
Javits Fellowships ....................................................................................................... 130
GAANN Fellowships .................................................................................................. 131
Thurgood Marshall Fellowships .................................................................................. 131
59. Migrant High School Equivalency Program (HEP) ............................................................ 131
Funding Formula .............................................................................................................. 131
Eligibility Requirement ..................................................................................................... 132
Benefit Levels................................................................................................................... 132
60. College Assistance Migrant Program (CAMP)................................................................... 132
Funding Formula .............................................................................................................. 132
Eligibility Requirements ................................................................................................... 132
Benefit Levels................................................................................................................... 133
61. Close Up Fellowships........................................................................................................ 133
Funding Formula and Eligibility Requirements ................................................................. 133
Ellender Fellowships................................................................................................... 133
Close Up Fellowships ................................................................................................. 133
Benefit Levels................................................................................................................... 134
62. D.C. School Choice Incentive Program.............................................................................. 134
Funding Formula .............................................................................................................. 134
Eligibility Requirements ................................................................................................... 134
Benefit Levels................................................................................................................... 135
Services .................................................................................................................................. 135
63. Child Care and Development Block Grant ......................................................................... 135
Funding Formula .............................................................................................................. 135
Discretionary Funds .................................................................................................... 135
Entitlement Funds ....................................................................................................... 136
Eligibility Requirements ................................................................................................... 136
Benefit Levels................................................................................................................... 137
64. TANF Services .................................................................................................................. 137
Funding Formula .............................................................................................................. 137
Eligibility Requirements ................................................................................................... 137
Benefit Levels................................................................................................................... 138
65. Social Services Block Grant (Title XX) ............................................................................. 138
Funding Formula .............................................................................................................. 138
Eligibility Requirements ................................................................................................... 139
Benefit Levels................................................................................................................... 139
66. TANF Child Care .............................................................................................................. 139
Funding Formula .............................................................................................................. 139
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Cash and Noncash Benefits for Persons with Limited Income
Eligibility Requirements ................................................................................................... 139
Benefit Levels................................................................................................................... 140
67. Homeless Assistance Grants .............................................................................................. 140
Funding Formula .............................................................................................................. 140
Eligibility Requirements ................................................................................................... 141
Benefit Levels................................................................................................................... 141
68. Community Services Block Grant...................................................................................... 142
Funding Formula .............................................................................................................. 142
Eligibility Requirements ................................................................................................... 142
Benefit Levels................................................................................................................... 142
69. Legal Services (LSC) ........................................................................................................ 143
Funding Formula .............................................................................................................. 143
Eligibility Requirements ................................................................................................... 143
Benefit Levels................................................................................................................... 143
70. Social Services for Refugees, Asylees, Other Humanitarian Cases ..................................... 144
Funding Formula .............................................................................................................. 144
Eligibility Requirements ................................................................................................... 144
Benefit Levels................................................................................................................... 145
71. Emergency Food and Shelter Program............................................................................... 145
Funding Formula .............................................................................................................. 145
Eligibility Requirements ................................................................................................... 146
Benefit Levels................................................................................................................... 146
Jobs and Training Programs .................................................................................................... 146
72. TANF Work Activities ....................................................................................................... 146
Funding Formula .............................................................................................................. 146
Eligibility Requirements ................................................................................................... 146
Benefit Levels................................................................................................................... 147
73. Job Corps .......................................................................................................................... 147
Funding Formula .............................................................................................................. 147
Eligibility Requirements ................................................................................................... 147
Benefit Levels................................................................................................................... 148
74. Youth Activities................................................................................................................. 148
Funding Formula .............................................................................................................. 148
Eligibility Requirements ................................................................................................... 149
Benefit Levels................................................................................................................... 149
WIA Program of Youth Activities ................................................................................ 149
75. Adult Activities ................................................................................................................. 150
Funding Formula .............................................................................................................. 150
Eligibility Requirements ................................................................................................... 150
Benefit Levels................................................................................................................... 150
76. Senior Community Service Employment Program (SCSEP) .............................................. 151
Funding Formula .............................................................................................................. 151
Eligibility Requirements ................................................................................................... 151
Benefit Levels................................................................................................................... 152
77. Welfare-to-Work Grants .................................................................................................... 152
Funding Formula .............................................................................................................. 153
Congressional Research Service
Cash and Noncash Benefits for Persons with Limited Income
Eligibility Requirements ................................................................................................... 153
Benefit Levels................................................................................................................... 154
78. Food Stamp Employment and Training Program................................................................ 154
Funding Formula .............................................................................................................. 154
Eligibility Requirements ................................................................................................... 155
Benefits ............................................................................................................................ 155
79. Foster Grandparents .......................................................................................................... 155
Funding Formula .............................................................................................................. 155
Eligibility Requirements ................................................................................................... 156
Benefit Levels................................................................................................................... 156
80. Senior Companions ........................................................................................................... 156
Funding Formula .............................................................................................................. 156
Eligibility Requirements ................................................................................................... 157
Benefit Levels................................................................................................................... 157
81. Targeted Assistance to Refugees, Asylees, Other Humanitarian Cases................................ 157
Funding Formula .............................................................................................................. 157
Eligibility Requirements ................................................................................................... 158
Benefit Levels................................................................................................................... 158
82. Native Employment Works Program.................................................................................. 158
Funding Formula .............................................................................................................. 158
Eligibility Requirements ................................................................................................... 159
Benefit Levels................................................................................................................... 159
Energy Assistance ................................................................................................................... 159
83. Low-Income Home Energy Assistance (LIHEAP) ............................................................. 159
Funding Formula .............................................................................................................. 159
Eligibility Requirements ................................................................................................... 160
Benefit Levels................................................................................................................... 161
84. Weatherization Assistance ................................................................................................. 161
Funding Formula .............................................................................................................. 161
Eligibility Requirements ................................................................................................... 162
Benefit Levels................................................................................................................... 162
Figures
Figure 1. Expenditures for Income-Tested Benefits, FY1975-2004 ..............................................6
Figure 2. Composition of Income-Tested Benefits ..................................................................... 13
Figure 3. Cash and Noncash Benefits Received by Poor Families with Children, 2003 .............. 16
Tables
Table 1. Expenditures of Major Needs-Tested Benefit Programs, by Form of Benefit and
Level of Government, FY2002-FY2004 ...................................................................................3
Table 2. Total Expenditures for Need-Based Benefits, FY1968-FY2004 ......................................4
Congressional Research Service
Cash and Noncash Benefits for Persons with Limited Income
Table 3. Federal Spending for Income-Tested Benefits by Form of Benefit, FY1968FY2004....................................................................................................................................8
Table 4. State-Local Spending for Income-Tested Benefits by Form of Benefit, FY19682004 ........................................................................................................................................9
Table 5. Total Spending for Income-Tested Benefits by Form of Benefit, FY1968FY2004.................................................................................................................................. 11
Table 6. Spending Trends by Form of Benefits, FY1978-2004 ................................................... 13
Table 7. Income Eligibility Tests Used by Benefit Programs ...................................................... 17
Table 8. Bureau of the Census Poverty Thresholds for 2004 ...................................................... 23
Table 9. 2005 Federal Poverty Income Guidelines ..................................................................... 23
Table 10. Eligibility Levels for Free and Reduced Price Meals for the Period of July 1,
2005-June 30, 2006................................................................................................................ 24
Table 11. Lower Living Standard Income Level (LLSIL) for a Family of Four—Effective
July 22, 2005 ......................................................................................................................... 25
Table 12. EITC Parameters for Tax Years 2003-2005................................................................. 55
Table 13. Food Stamp Income Limits ........................................................................................ 71
Table 14. Need-Based Benefits: Medical Benefits—Expenditures and Enrollment Data,
by Program, FY2002-FY2004 .............................................................................................. 163
Table 15. Need-Based Benefits: Cash Benefits—Expenditures and Enrollment Data, by
Program, FY2002-FY2004................................................................................................... 164
Table 16. Need-Based Benefits: Food Benefits—Expenditures and Enrollment Data, by
Program, FY2002-FY2004................................................................................................... 167
Table 17. Need-Based Benefits: Housing Benefits—Expenditures and Enrollment Data,
by Program, FY2002-FY2004 .............................................................................................. 169
Table 18. Need-Based Benefits: Education Benefits—Expenditures and Enrollment Data,
by Program, FY2002-FY2004 .............................................................................................. 171
Table 19. Need-Based Benefits: Services—Expenditures and Enrollment Data, by
Program, FY2002-FY2004................................................................................................... 174
Table 20. Need-Based Benefits: Jobs and Training—Expenditures and Enrollment Data,
by Program, FY2002-FY2004 .............................................................................................. 175
Table 21. Need-Based Benefits: Energy Aid—Expenditures and Enrollment Data, by
Program, FY2002-FY2004................................................................................................... 176
Contacts
Author Contact Information .................................................................................................... 178
Acknowledgments .................................................................................................................. 178
Congressional Research Service
Cash and Noncash Benefits for Persons with Limited Income
Introduction
More than 80 benefit programs provide cash and noncash aid that is directed primarily to persons
with limited income. These benefit programs cost approximately $583 billion in FY2004, a
record high. This sum was up $34 billion (6.2%) from the previous peak of FY2003, and it
equaled 5% of the gross domestic product (GDP). Federal funds provided 73.2% of the total.
Higher medical spending accounted for $26 billion of the net increase in FY2004, and 55 cents
out of every dollar spent on persons with limited income went for medical benefits. Federal lowincome spending represented 18.6% of the federal budget, with 9% attributed to medical
assistance. See Table 1 for an FY2002-FY2004 summary.
After adjustment for price inflation, 2004 spending on persons with limited income was up by
approximately $21.5 billion (3.8%) from that of 2003, the previous peak. Real spending increases
(2004 dollars) were dominated by medical assistance (up $19 billion). Other increases were in
food benefits, $3.3 billion; cash aid, $2.4 billion; and housing, $0.6 billion. Spending in real
terms dropped in the following areas: education benefits, by $2.3 billion; jobs and training, by
$0.9 billion; services, by $0.6 billion; and energy aid by $0.2 billion.
Spending for “human capital” programs (those providing education and employment and training
activities) accounted for 6.2% of all dollars spent on persons with limited income (compared with
19.2% for cash assistance and 55.3% for medical aid).
This report consists of a catalog of 84 need-based programs.1 For each program, the report
provides the funding formula, eligibility requirements, and benefit levels. At the end of the report,
Tables 14-21 provide expenditure data (federal and state/local) and recipient data for FY2002FY2004, program by program. One program is new to this series of reports: the D.C. School
Choice Incentive Program. In addition, two programs have been dropped because of the difficulty
of obtaining reliable current data: General Assistance (Medical Component) and General
Assistance (Nonmedical Component); spending for these programs was only from state and local
sources, rather than federal.
Most of these programs base eligibility on individual, household, or family income, but some use
group or area income tests (see Table 7), and a few offer help on the basis of presumed “need.”
Most provide income “transfers.” That is, they transfer income in the form of cash, goods, or
services to persons who make no payment and render no service in return. However, in the case
of the job and training programs and some educational benefits, recipients must work or study for
wages, training allowances, stipends, grants, or loans. Further, the TANF block grant program
requires adults to commence work (defined by the state) after a period of enrollment, the Food
Stamp program imposes work and training requirements, and public housing programs require
recipients to engage in “self-sufficiency” activities or to perform community service. Finally, the
Earned Income Tax Credit (EITC) is available only to workers.
This report excludes income maintenance programs that are not income-tested, including social
insurance and many veterans’ benefits, and all but two tax-transfer programs. Thus, it excludes
Social Security cash benefits, unemployment compensation, and Medicare. Outlays for the Old1
The number of programs in this report is somewhat arbitrary. For example, the Temporary Assistance for Needy
Families (TANF) program is listed under cash, services, child care, and work activities, but could also be viewed as a
single program.
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1
Cash and Noncash Benefits for Persons with Limited Income
Age, Survivors, and Disability Insurance programs (Social Security cash benefit programs) in
FY2004 totaled $502 billion, financed primarily from payroll tax collections. The report also
excludes payments, even though financed with general revenues, that may be regarded as
“deferred compensation,” such as veterans’ housing benefits and medical care for veterans with a
service-connected disability.
The report includes two tax-transfer programs, the EITC for low-income workers with children
and the child tax credit. The EITC reduces the taxes of working families with gross income below
specified limits and makes direct payments (“refunds”) to those whose income is below the tax
threshold or whose tax liability is smaller than their credit. Before the 2001 tax law, the child tax
credit was refundable only to some taxpayers with three or more children, but it now is
refundable (up to certain limits) for those with earnings above $10,000. This report treats the
direct payment component of these credits, but not the reduction in tax liability, as a welfare
expenditure. Other tax benefits are excluded from the report because they are not refundable
(make no direct payments). Further, in most cases they impose no income test for eligibility.
Examples of these other tax benefits are the deductibility of mortgage interest and property taxes
on owner-occupied homes (equivalent to outlays of $61.4 billion and $18.7 billion, respectively,
in 2004). These tax transfers increase families’ disposable income by reducing their tax liability,
and are known as “tax expenditures.” (The standard deduction and personal exemption in the
income tax code also decrease families’ taxable income.)
Congressional Research Service
2
Table 1. Expenditures of Major Needs-Tested Benefit Programs, by Form of Benefit and Level of Government, FY2002-FY2004
(in millions of current dollars)
Federal expenditures
FY2002
FY2003
State-local expenditures
FY2004
FY2002
FY2003
Total expenditures
FY2004
FY2002
FY2003
FY2004
Medical care
164,123
178,978
194,816
114,241
117,525
127,768
278,364
296,503
322,584
Cash aid
82,311
90,657
93,965
16,516
16,520
18,084
98,827
107,177
112,049
Food benefits
36,994
41,138
45,460
2,497
2,680
2,662
39,491
43,818
48,122
Housing aid
34,607
37,449
38,881
6
5
1
34,613
37,454
38,882
Education
24,754
29,062
27,435
1,701
1,734
1,760
26,455
30,796
29,195
Services
17,283
18,767
18,271
4,973
4,510
4,946
22,256
23,277
23,217
Jobs/training
7,179
6,646
6,131
934
1,045
876
8,113
7,691
7,007
Energy aid
2,003
2,254
2,118
122
122
141
2,125
2,376
2,259
$369,254
$404,951
$427,077
$140,990
$144,141
$156,238
$510,244
$549,092
$583,315
Total
Source: Table prepared by the Congressional Research Service (CRS).
Note: Program data on which this table is based are found in the summary tables (Tables 14-21) at the back of the report.
CRS-3
Cash and Noncash Benefits for Persons with Limited Income
Trends in Spending
Annual Spending Data
Total expenditures on cash and noncash programs for low-income persons multiplied many times
between 1968 and 2004 (Table 2). Even after allowance for price inflation, spending more than
sextupled, rising 557% during the 36 years, a period when the U.S. population rose by an
estimated 46%.2 Measured in constant 2004 dollars,3 the annual rate of growth in spending over
the whole period was 5.4%. However, the growth pattern was uneven. Real spending almost
tripled in the first 10 years, declined in some years (1979, 1982, 1996, and 1997), and in the last
seven years rose at an annual rate of 3.7%. Total per capita spending for low-income programs
grew in real terms (constant FY2004 dollars) from $422 in FY1968 to a peak of $1,986 in
FY2004.
Table 2.Total Expenditures for Need-Based Benefits, FY1968-FY2004
(in millions of dollars)
Total spending
Fiscal
year
Federal current
dollars
State-local current
dollars
Current
dollars
Constant dollars
(2004)
1968
11,406
4,710
16,116
88,793
1973
27,294
10,054
37,348
163,449
1975
40,208
14,753
54,961
198,846
1976
50,506
16,990
67,496
228,027
1977
56,187
18,892
75,079
235,801
1978
64,432
20,151
84,583
248,190
1979
71,336
21,304
92,640
246,383
1980
81,403
24,633
106,036
248,270
1981
89,408
29,045
118,453
249,690
1982
90,543
31,706
122,249
239,986
1983
95,495
33,982
129,477
245,547
1984
100,837
36,191
137,028
249,596
1985
107,267
38,230
145,497
255,617
1986
109,476
40,811
150,287
257,694
1987
115,608
43,364
158,972
265,042
1988
126,098
46,580
172,678
276,462
2
Based on the resident U.S. population.
Current dollars were translated into FY2004 constant value dollars by use of the Consumer Price Index (CPI) for all
urban consumers.
3
Congressional Research Service
4
Cash and Noncash Benefits for Persons with Limited Income
Total spending
Fiscal
year
Federal current
dollars
State-local current
dollars
Current
dollars
Constant dollars
(2004)
1989
136,254
51,587
187,841
287,087
1990
153,673
61,065
214,738
312,619
1991
180,494
73,933
254,427
352,587
1992
211,121
88,146
299,267
402,565
1993
227,325
88,683
316,008
412,597
1994
250,405
102,421
352,826
448,888
1995
262,905
108,210
371,115
459,244
1996
268,823
107,213
376,036
452,673
1997
274,980
110,312
385,292
451,796
1998
280,965
114,554
395,519
456,351
1999
291,798
117,389
409,187
463,196
2000
305,659
122,897
428,556
470,217
2001
342,877
133,986
476,863
506,870
2002
369,254
140,990
510,244
534,343
2003
404,951
144,141
549,092
561,846
2004
427,077
156,238
583,315
583,315
Source: Table prepared by the Congressional Research Service (CRS). FY1968 and FY1973 data are from
Income Security for Americans: Recommendations of the Public Welfare Study. Report of the Subcommittee on Fiscal
Policy of the Joint Economic Committee. December 5, 1974. Table 4, p. 28 of Joint Economic Committee study
(the 1968 federal total has been increased by $54 million to correct a typographical error in that table, and the
1973 federal total has been increased by $101 million to include Title X family planning, previously omitted from
this report series). Data for FY1975-FY2001 are from previous editions of this report (revised to incorporate
public housing capital fund costs, to account for new estimates of some program outlays, and to provide
historical data for some newly added programs). Data for FY2002-FY2004 are from Table 1 of this report.
Figure 1 shows the course of expenditures for income-tested benefits from FY1975-FY2004. The
upper line shows total real spending (federal and state-local spending); the bottom line shows
state-local spending alone; the space between represents federal spending. Throughout this period
federal expenditures accounted for more than 70% of the total. The federal share rose above 76%
in 1978-1980, then began a general decline. In the 1995-2004 decade it averaged 71.9%, reaching
a peak of 73.7% in FY2003 and dropping slightly to 73.2% in FY2004.
Congressional Research Service
5
Cash and Noncash Benefits for Persons with Limited Income
Figure 1. Expenditures for Income-Tested Benefits, FY1975-2004
(in millions of constant 2004 dollars)
Source: Figure prepared by the Congressional Research Service.
Spending Trends by Level of Government
Tables 3, 4, and 5 present 1968-2004 spending on low-income programs in constant 2004
dollars, by form of benefit; Table 3 displays federal spending; Table 4, corresponding state-local
data; and Table 5, total low-income spending amounts. Measured in constant 2004 dollars,
federal spending for income-tested benefits climbed from $63 billion in FY1968 to $427 billion
in FY2004, an increase of 580%. State-local spending (constant dollars) rose from $26 billion to
$156 billion during the same period, an increase of 502%. Total spending on means-tested
programs increased from $89 billion to $583 billion in these years, an increase of 557%.
Cash aid was the leading form of federal means-tested assistance until 1980, when it was
overtaken by medical benefits. Two years later, in 1982, federal spending declined for all forms of
aid except subsidized housing, in which case outlays reflected earlier commitments, and
education benefits. However, beginning in 1983, real federal spending for low-income programs
climbed steadily before declining in FY1996 and FY1997. Federal spending set successive new
record highs during FY1998-FY2004. State-local spending rose in all years after 1979, except for
1993, 1996, and 2003.
Medical Benefits
Since 1979, medical spending has accounted for more than 50 cents of every low-income
program dollar spent by state-local governments. In 1989, the share climbed to 60%; in 1997 it
exceeded 70%, and starting in 2002, spending on medical benefits has topped 80% of all statelocal spending on means-tested programs. Medical assistance has accounted for a much smaller—
but growing—share of federal expenditures for low-income programs: about 25% until the mid1980s, above 30% in the 1990s, and an average of 43% from 2000-2003, with an increase to
nearly 46% in 2004.
Congressional Research Service
6
Cash and Noncash Benefits for Persons with Limited Income
Means-Tested Share of Federal Budget
As a component of the federal budget, spending on means-tested programs for persons with
limited income averaged 13% from 1975-1979, dropped to 12% in the 1980s, and since 1994 has
equaled or exceeded 17% each year. In 2001 it rose above 18%, and in 2004 was 18.6%.
Refundable Income Tax Credits
The earned income tax credit has become the nation’s largest program of income-tested cash
benefits for families with children. In FY2004, the U.S. Treasury paid out $34 billion in
refundable earned income tax credits (chiefly for earners with children) and $9 billion in child tax
credits. The total was almost 25% larger than federal SSI payments for the aged, blind, and
disabled ($35 billion), and was more than five and a half times as much as cash assistance from
federal TANF dollars ($6.5 billion). (TANF expenditures for work activities, child care, and other
services exceeded TANF cash aid.)
Congressional Research Service
7
Table 3. Federal Spending for Income-Tested Benefits by Form of Benefit, FY1968-FY2004
(in millions of constant FY2004 dollars)
Fiscal year
Medical
benefits
Cash aid
Food benefits
Housing
benefits
Education
benefits
Jobs/training
Services
Energy aid
Total
1968
15,102
27,752
4,920
4,314
4,738
3,906
2,110
0
62,843
1973
29,142
37,527
16,871
16,525
7,969
4,039
7,374
0
119,449
1975
34,678
46,089
23,296
18,383
7,887
7,775
7,363
0
145,470
1976
36,976
50,409
26,105
19,804
12,480
15,561
9,199
95
170,628
1977
41,394
49,300
24,359
22,343
10,920
17,032
10,170
948
176,467
1978
42,741
47,086
24,968
22,914
11,934
28,462
10,156
801
189,061
1979
43,646
45,032
27,598
25,593
12,795
24,644
9,715
699
189,723
1980
45,420
44,435
30,646
25,675
11,449
20,194
8,745
4,030
190,595
1981
46,908
44,182
33,071
25,993
10,091
15,843
8,143
4,235
188,465
1982
45,230
42,354
30,770
26,205
15,283
7,831
6,091
3,981
177,744
1983
44,707
42,482
34,318
26,823
14,077
8,547
6,266
3,880
181,102
1984
45,253
43,321
34,091
26,450
14,592
9,794
6,264
3,909
183,674
1985
48,981
43,018
34,016
28,665
16,718
6,843
6,239
3,972
188,452
1986
51,053
45,144
32,822
25,662
17,241
6,217
5,813
3,764
187,716
1987
58,593
45,780
33,166
23,314
16,285
6,305
6,014
3,286
192,744
1988
61,835
48,533
32,366
25,197
17,847
6,001
7,187
2,920
201,886
1989
64,814
50,685
31,843
26,668
19,080
5,831
6,833
2,490
208,244
1990
73,120
53,057
34,752
28,690
20,033
5,787
5,946
2,335
223,720
1991
86,545
58,581
38,810
29,798
20,597
6,082
7,215
2,503
250,130
1992
105,838
65,531
44,138
33,316
18,297
6,750
7,857
2,267
283,994
1993
111,048
69,657
45,404
36,143
18,688
6,229
7,635
2,003
296,808
1994
119,196
80,658
45,944
35,841
18,622
6,184
9,697
2,439
318,581
1995
125,496
84,053
45,544
36,368
18,732
5,725
7,440
1,981
325,337
CRS-8
Fiscal year
Medical
benefits
Cash aid
Food benefits
Housing
benefits
Education
benefits
Jobs/training
Services
Energy aid
Total
1996
125,105
84,280
44,747
37,031
18,566
4,863
7,598
1,419
323,610
1997
126,392
84,250
41,488
37,106
19,359
4,451
7,825
1,574
322,444
1998
127,970
84,162
38,283
35,992
19,597
4,818
11,905
1,450
324,178
1999
135,470
84,179
36,901
33,609
19,562
5,408
13,703
1,482
330,312
2000
143,144
82,262
35,092
33,636
16,388
7,013
15,666
2,171
335,373
2001
154,205
87,798
35,265
34,088
25,936
7,417
17,608
2,135
364,453
2002
171,875
86,199
38,741
36,241
25,923
7,518
18,099
2,098
386,694
2003
183,135
92,763
42,094
38,319
29,737
6,800
19,203
2,306
414,357
2004
194,816
93,965
45,460
38,881
27,435
6,131
18,271
2,118
427,077
Source: Table prepared by the Congressional Research Service. Rows may not add to totals shown because of rounding.
Table 4. State-Local Spending for Income-Tested Benefits by Form of Benefit, FY1968-2004
(in millions of constant FY2004 dollars)
Fiscal year
Medical
benefits
Cash aid
Food benefits
Housing
benefits
Education
benefits
Jobs/training
Services
Energy aid
Total
1968
11,355
13,719
n.a.
n.a.
n.a.
237
639
0
25,950
1973
18,228
23,182
n.a.
n.a.
n.a.
245
2,346
0
44,000
1975
23,918
24,425
2,022
n.a.
517
141
2,352
0
53,376
1976
26,365
25,912
2,139
n.a.
527
132
2,324
n.a.
57,399
1977
27,918
25,675
2,553
n.a.
581
179
2,428
n.a.
59,334
1978
28,641
24,654
2,562
n.a.
695
185
2,391
n.a.
59,129
1979
29,617
22,803
1,051
n.a.
668
207
2,314
n.a.
56,660
1980
30,906
22,819
1,070
n.a.
670
190
2,021
n.a.
57,675
1981
32,947
23,181
1,223
n.a.
616
177
3,082
n.a.
61,225
1982
34,464
21,932
1,411
n.a.
528
147
3,730
29
62,242
1983
35,811
22,397
1,485
n.a.
573
150
3,983
47
64,445
CRS-9
Fiscal year
Medical
benefits
Cash aid
Food benefits
Housing
benefits
Education
benefits
Jobs/training
Services
Energy aid
Total
1984
37,397
22,563
1,730
n.a.
550
142
3,461
78
65,922
1985
37,878
23,103
1,808
n.a.
798
142
3,382
54
67,164
1986
39,554
24,215
1,891
n.a.
849
125
3,258
86
69,978
1987
41,025
24,708
1,946
n.a.
852
118
3,301
347
72,297
1988
43,476
24,645
1,824
n.a.
871
115
3,362
283
74,576
1989
47,400
25,201
1,776
n.a.
833
148
3,210
275
78,843
1990
53,277
25,928
1,798
n.a.
916
389
6,411
181
88,899
1991
65,755
26,817
1,818
n.a.
758
608
6,544
157
102,457
1992
76,909
28,393
1,941
3,094
826
640
6,651
118
118,571
1993
75,665
28,008
2,045
1,737
1,000
734
6,509
93
115,789
1994
86,201
29,163
2,252
2,055
1,149
832
8,557
98
130,306
1995
90,603
29,297
2,265
2,877
1,182
1,004
6,580
100
133,907
1996
89,092
27,018
2,311
2,960
1,150
775
5,669
88
129,063
1997
91,784
24,899
2,315
2,880
1,203
209
5,989
75
129,353
1998
95,426
21,491
2,236
3,009
1,312
825
7,782
91
132,173
1999
98,906
21,778
2,304
n.a.
1,347
989
7,462
96
132,883
2000
103,589
21,322
2,375
558
1,505
1,257
4,143
93
134,844
2001
111,176
20,453
2,459
797
1,719
1,299
4,390
125
142,417
2002
119,637
17,296
2,615
7
1,781
978
5,208
128
147,649
2003
120,255
16,904
2,742
5
1,774
1,069
4,615
125
147,489
2004
127,768
18,084
2,662
1
1,760
876
4,946
141
156,238
Source: Table prepared by the Congressional Research Service. Rows may not add to totals shown because of rounding.
Note: n.a.: Not available.
CRS-10
Table 5.Total Spending for Income-Tested Benefits by Form of Benefit, FY1968-FY2004
(in millions of constant FY2004 dollars)
Fiscal year
Medical
benefits
Cash aid
Food benefits
Housing
benefits
Education
benefits
Jobs/training
Services
Energy aid
Total
1968
26,457
41,471
4,920
4,314
4,738
4,143
2,749
0
88,793
1973
47,370
60,709
16,871
16,525
7,969
4,284
9,720
0
163,449
1975
58,596
70,514
25,318
18,383
8,404
7,916
9,714
0
198,846
1976
63,341
76,321
28,243
19,804
13,007
15,693
11,524
95
228,027
1977
69,312
74,975
26,913
22,343
11,501
17,211
12,597
948
235,801
1978
71,382
71,740
27,529
22,914
12,629
28,647
12,547
801
248,190
1979
73,263
67,835
28,649
25,593
13,463
24,851
12,029
699
246,383
1980
76,326
67,254
31,716
25,675
12,119
20,384
10,766
4,030
248,270
1981
79,855
67,363
34,294
25,993
10,706
16,020
11,225
4,235
249,690
1982
79,694
64,285
32,181
26,205
15,811
7,978
9,821
4,011
239,986
1983
80,518
64,880
35,803
26,823
14,650
8,697
10,248
3,928
245,547
1984
82,650
65,883
35,821
26,450
15,142
9,936
9,725
3,987
249,596
1985
86,859
66,121
35,824
28,665
17,516
6,985
9,621
4,027
255,617
1986
90,607
69,359
34,714
25,662
18,090
6,343
9,071
3,849
257,694
1987
99,618
70,488
35,112
23,314
17,137
6,424
9,315
3,633
265,042
1988
105,311
73,178
34,190
25,197
18,718
6,116
10,549
3,204
276,462
1989
112,215
75,886
33,619
26,668
19,913
5,979
10,043
2,765
287,087
1990
126,397
78,985
36,550
28,690
20,949
6,176
12,357
2,516
312,619
1991
152,300
85,398
40,628
29,798
21,355
6,691
13,758
2,659
352,587
1992
182,747
93,924
46,079
36,410
19,123
7,390
14,508
2,385
402,565
1993
186,714
97,664
47,449
37,880
19,688
6,963
14,144
2,096
412,597
1994
205,397
109,821
48,196
37,896
19,771
7,017
18,254
2,537
448,888
1995
216,098
113,350
47,808
39,245
19,913
6,728
14,019
2,081
459,244
1996
214,198
111,298
47,058
39,992
19,716
5,639
13,267
1,507
452,673
CRS-11
Fiscal year
Medical
benefits
Cash aid
Food benefits
Housing
benefits
Education
benefits
Jobs/training
Services
Energy aid
Total
1997
218,175
109,149
43,803
39,986
20,562
4,660
13,813
1,649
451,796
1998
223,397
105,652
40,519
39,001
20,909
5,643
19,687
1,541
456,351
1999
234,376
105,958
39,204
33,609
20,909
6,397
21,165
1,578
463,196
2000
246,732
103,585
37,468
34,195
17,893
8,271
19,809
2,265
470,217
2001
265,381
108,250
37,723
34,885
27,655
8,716
21,998
2,261
506,870
2002
291,511
103,495
41,356
36,248
27,704
8,496
23,307
2,225
534,343
2003
303,390
109,666
44,836
38,324
31,511
7,870
23,818
2,431
561,846
2004
322,584
112,049
48,122
38,882
29,195
7,007
23,217
2,259
583,315
Source: Table prepared by the Congressional Research Service (CRS). Rows may not add to totals shown because of rounding.
CRS-12
Cash and Noncash Benefits for Persons with Limited Income
Composition of Spending
The dramatic change since 1978 in the composition of total spending for income-tested benefits is
shown in Figure 2 and in Table 6. In FY1978, spending for cash relief and medical aid was
nearly equal. Each accounted for 29% of total welfare spending covered by this report.
Thereafter, spending for medical benefits rapidly overtook cash aid, reaching 50% in FY1999 and
topping 55% in 2004.
Figure 2. Composition of Income-Tested Benefits
(in billions of constant 2004 dollars)
FY2004
FY1978
Jobs/
training
11.5%
Services
5.1%
Education
5.0%
Medical aid
28.8%
Education
5.1%
Services
4.0%
Energy aid
0.4%
Jobs/ training
1.2%
Energy aid
0.3%
Housing
6.7%
Housing
9.2%
Medical
aid
55.3%
Food aid
8.2%
Food aid
11.1%
Cash
19.2%
Cash
28.9%
Source: Figure prepared by the Congressional Research Service.
Table 6. Spending Trends by Form of Benefits, FY1978-2004
(in billions of constant 2004 dollars)
FY1978
FY1988
FY1992
FY1996
FY2000
FY2002
FY2004
Medical aid
71.4
105.3
182.7
214.2
246.7
291.5
322.6
Cash
71.7
73.2
93.9
111.3
103.6
103.5
112.0
Food aid
27.5
34.2
46.1
47.1
37.5
41.4
48.1
Housing
22.9
25.2
36.4
40.0
34.2
36.2
38.9
Education
12.6
18.7
19.1
19.7
17.9
27.7
29.2
Jobs/training
28.6
6.1
7.4
5.6
8.3
8.5
7.0
Services
12.5
10.5
14.5
13.3
19.8
23.3
23.2
Energy aid
0.8
3.2
2.4
1.5
2.3
2.2
2.3
$248.2
$276.5
$402.6
$452.7
$470.2
$534.3
$583.3
Total
Source: Table prepared by the Congressional Research Service.
Congressional Research Service
13
Cash and Noncash Benefits for Persons with Limited Income
Noncitizen Eligibility for Major Federal Benefits
Depending on the program, the eligibility of noncitizens for major federal means-tested benefit
programs—food stamps, Supplemental Security Income (SSI), Temporary Assistance for Needy
Families (TANF), Medicaid, and Section 8 housing assistance—varies with their immigration
status, work history, date of entry, date of enrollment in a benefit program, age, and length of
legal residence. The basic outline of current noncitizen eligibility rules was established by the
1996 welfare reform law (P.L. 104-193), although prior laws for these programs had contained
some limits on participation by noncitizens (typically barring temporary or illegal residents). This
law sharply restricted welfare eligibility for noncitizens, although the limits it put in place have
since been eased (in 1997, 1998, and 2002). The basic rules now are as follows.
4
•
Nonimmigrants (those admitted temporarily for a limited purpose such as
students, visitors, and temporary workers) are ineligible for all major benefits, as
are unauthorized (“illegal”) aliens who are in the U.S. in violation of immigration
law and for whom no legal relief or recognition has been extended.
•
Legal permanent residents with a substantial (generally, 10-year) work history
documented by Social Security and those with a military connection (legally
present active duty military personnel, honorably discharged veterans, and their
immediate families) are eligible for all major benefits. 4
•
In the case of food stamps, legal permanent residents without a substantial work
history are eligible after five years lawful residence following entry. However,
this five-year ineligibility period does not apply to (1) persons lawfully resident
in the U.S. as of August 22, 1996 (the date of enactment of the welfare reform
law), and age 65+ at the time, (2) persons receiving government disability
benefits, and (3) children under age 18.
•
In the case of SSI, legal permanent residents without a substantial work history
are eligible only if they are (1) persons who were receiving SSI benefits as of
August 22, 1996, or (2) individuals lawfully resident in the U.S. as of August 22,
1996, who are now disabled. [Note: Pre-1996 SSI law barred eligibility for those
with temporary or illegal status.]
•
In the case of TANF, legal permanent residents without a substantial work history
are (1) eligible, at state option, if lawfully resident in the U.S. as of August 22,
1996, and (2) for post-August-1996 entrants, eligible, at state option, five years
after entry.
•
In the case of Medicaid, eligibility rules for legal permanent residents without a
substantial work history are the same as for TANF, except that coverage is
required for SSI recipients.
•
In the case of Section 8 housing assistance, legal permanent residents are eligible
(with no time, work history, or age restrictions), as are noncitizens who were
receiving benefits as of August 22, 1996. [Note: Pre-1996 housing law barred
eligibility for those with temporary or illegal status.]
In housing programs, legal permanent residents are eligible without regard to work history or military connection.
Congressional Research Service
14
Cash and Noncash Benefits for Persons with Limited Income
•
In humanitarian cases—asylees, refugees, Cuban/Haitian entrants, parolees and
conditional entrants, victims of abuse (battery or cruelty by a family member),
victims of trafficking in persons, and certain persons with similar status—
individuals are (1) eligible for food stamps after entry or grant of status as an
asylee, refugee, Cuban/Haitian entrant, or other humanitarian category, (2)
eligible for SSI if they were SSI recipients as of August 22, 1996, or for seven
years after entry or grant of status, (3) eligible for TANF for five years after entry
or grant of status, and then eligible at state option, (4) eligible for Medicaid for
seven years after entry or grant of status, and then eligible at state option, and (5)
eligible for Section 8 housing assistance (with no time limits).5
Aid Received by Poor Families With Children
The Census Bureau reports that 7.6 million families (including 5.8 million with children) in 2003
had total pre-tax money income—after counting any cash from the programs of TANF,
Supplemental Security Income (SSI), and General Assistance (GA)—that was below their poverty
threshold.6 The Bureau found that the money income poverty rate among related children in
families was 17.2%, the highest since 1998 (18.3%).
Overall, 35.9 million persons were classified as poor on the basis of 2003 pre-tax money income
(compared with 31.1 million in 2000, the year preceding the most recent economic recession). Of
these persons, 68.0% were in households that received means-tested aid from at least one of eight
programs (TANF, SSI, GA, school lunch, food stamps, Medicaid, subsidized housing, lowincome home energy assistance). By race and ethnicity, the following percentages of poor persons
were in households that received pre-tax aid from one or more of the eight programs: nonHispanic whites, 55.2%; blacks, 80.9%; and persons of Hispanic origin, 80.3%.
Figure 3 depicts income-tested aid provided to families with children who were poor before
receiving any cash aid from TANF, GA, or the EITC. In 2003, these families totaled 6.1 million
(compared with 5.1 million in 2000): 3.7 million with a female householder and 2.4 million with
a male householder (chiefly two-parent families). These numbers, based on CRS estimates,
include unrelated subfamilies (the Bureau excludes these subfamilies from its “family” counts).
As the chart shows, all but 9.3% of the female-headed families and 12.0% of the male-present
families whose pre-tax, pre-welfare money income fell short of the poverty threshold received
means-tested aid. For male-present families, the EITC, which goes only to persons with earnings,
was the dominant form of aid. In all, 67.8% of male-present families who were poor before
transfers received the EITC (compared with 75.2% in 2000); for 23.8% the EITC was the only
aid. Among female-headed families who were poor before transfers, 43.8% received the EITC
(compared with 59.6% in 2000); for 10.4% the EITC was the only aid. Various combinations of
cash assistance (TANF, GA, EITC) and noncash aid—food stamps, housing subsidies, Medicaid,
5
This description of Section 8 rules for humanitarian cases assumes, as appears to be the practice of Public Housing
Agencies, that the noncitizen rules laid out under the 1996 welfare reform act apply—despite potentially conflicting
law (for some limited noncitizen categories) contained in Section 214 of the Housing and Community Development
Act of 1980.
6
U.S. Bureau of the Census, Poverty in the United States: 2003. Current Population Reports, Series P-60, No. 226,
Aug. 2004, and unpublished table available at http://pubdb3.census.gov/macro/032004/pov/new04_100_01.htm.
Congressional Research Service
15
Cash and Noncash Benefits for Persons with Limited Income
or coverage under the State Children’s Health Insurance Program (SCHIP)—went to 27.1% of
female-headed families and to 9.2% of male-present families.7
Figure 3. Cash and Noncash Benefits Received by Poor Families with Children, 2003
Source: Chart based on CRS analysis of March 2004 Current Population Survey data.
Notes: Cash welfare benefits shown are: Temporary Assistance to Needy Families (TANF) and General
Assistance (GA). Noncash benefits shown are: Food Stamps, Medicaid, State Children’s Health Insurance
Program (S-CHIP), and Housing Assistance.
Poor = poor before receiving cash welfare.
Income Tests of the Benefit Programs
More than 90% of the programs in this report have an explicit test of income. The others base
eligibility on area of residence, enrollment in another means-tested program, or other factors that
presume need. The explicit income tests are of five kinds: income ceiling related to (1) one of the
federal government’s official poverty measures (federal poverty income guidelines or Census
Bureau poverty thresholds); (2) state or area median income; (3) the lower living standard income
level of the Bureau of Labor Statistics; (4) an absolute dollar standard; (5) a level deemed to
indicate “need.” Table 7 classifies the programs in this report by type of income test. Tables 8-11
present, respectively, Census Bureau poverty thresholds for 2004, federal poverty income
guidelines for 2005, income eligibility limits for subsidized meals (July 2005-July 2006), and
lower living standard income levels, effective in July 2005.
7
These combinations are shown in Figure 3 slices of the pie charts, labeled as (1) EITC and (other) cash benefits, (2)
TANF or GA, food stamps, and Medicaid or SCHIP; (3) TANF or GA, food stamps, and Medicaid or SCHIP and
housing assistance; and (4) other combinations of cash and noncash aid.
Congressional Research Service
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Table 7. Income Eligibility Tests Used by Benefit Programs
Limit related to:
Program
Official
poverty
measure
Lower living
income level
State/area
median
income
Dollar
amount
Income
deemed needy
Area of
residence
Enrollment/
eligibility for other
program
Other
Medical Benefits
1. Medicaid
Xa
Xb
2. Veterans’ medical care (no service
disability)
3. SCHIP
Xc
X
Xd
X
Xe
4. Indian health services
X
5. Consolidated health centers
Xf
6. Maternal and child health services
Xh
7. Title X family planning
Xf
Xg
Xg
8. Medical aid for refugees, asylees,
others
Xb
Cash aid
9. SSI
Xi
10. EITC (refunds)
X
Xj
11. TANF
Xb
12. Foster care
Xb
Xc
Xb
Xc,k
13. Child tax credit
X
14. Veterans’ pensions
X
15. Adoption assistance
Xk
16. DIC (veterans’ parents)
X
17. General assistance to Indians
Xb
18. Cash aid—refugees, asylees, others
Xb
CRS-17
Limit related to:
Program
Official
poverty
measure
Lower living
income level
State/area
median
income
Dollar
amount
Income
deemed needy
Area of
residence
Enrollment/
eligibility for other
program
Other
Food benefits
19. Food stamps
X
Xl
20. School lunch (free/reduced price)
X
Xm
21. WIC
X
Xn
22. Child and adult care food program
X
23. School breakfast (free/reduced price)
X
Xm
24. Nutrition program for the elderly
Xo
25. The emergency food assistance
program
26. Summer food service
Xb
X
27. Commodity supplemental food
X
28. Food distribution for Indians
X
X
29. Farmers’ market nutrition programs
X
30. Special milk (free)
X
X
Housing benefits
31. Section 8 low-income housing aid
X
32. Public housing
X
33. Rural housing loans (Section 502)
X
34. HOME
X
35. Housing for special groups
(aged/disabled)
X
36. Rural rental assistance (Section 521)
X
37. Section 236 interest reduction
payments
X
38. Housing for people with AIDS
X
CRS-18
X
Limit related to:
Program
Official
poverty
measure
Lower living
income level
State/area
median
income
39. Rural rental housing loans (Section
515)
X
40. Rural housing repair loans and grants
(Section 504)
X
41. Farm labor housing loans and grants
(sections 514 and 516)
Dollar
amount
Income
deemed needy
Area of
residence
Enrollment/
eligibility for other
program
Other
X
42. Section 101 rent supplements
X
43. Rural self-help grants and site loans
(sections 523 and 524)
X
44. Indian housing improvement grants
X
X
45. Section 235 homeownership
X
46. Rural housing preservation grants
(Section 533)
X
47. HOPE
X
X
Education
48. Pell grants
49. Head Start
Xp
X
50. Stafford and Stafford/Ford loans
Xp
51. Federal work-study
Xp
52. TRIO programs
53. Supplemental educational opportunity
grants
X
Xp
54 Chapter 1 migrant education
Xq
55. Perkins loans
Xp
56. Leveraging educational assistance
(LEAP)
Xb
CRS-19
Limit related to:
Program
Official
poverty
measure
57. Health professions student loans and
scholarships
Xr
Lower living
income level
State/area
median
income
Dollar
amount
Income
deemed needy
Area of
residence
Enrollment/
eligibility for other
program
Other
Xs
58. Fellowships for graduate/professional
study
Xp
59. Migrant high school equivalency
Xt
60. College assistance migrant program
Xt
61. Close Up fellowships
62. D.C. school choice incentives
Xu
X
Xcc
Services
63. Child care and development block
grant
Xv
Xw
64. TANF services (other than child care)
X
Xb
65. Social services (Title XX)
Xx
Xb
66. TANF child care
Xb
X
X
67. Homeless assistance
Xy
68. Community services block grant
X
69. Legal services
X
70. Social services for refugees, asylees,
others
Xb
71. Emergency food and shelter
Xy
Jobs and training
72. TANF work activities
X
73. Job Corps
Xz
Xz
X
74. Youth training
Xz
Xz
X
75. Adult training
CRS-20
Xaa
Limit related to:
Program
76. Senior community service
employment
Official
poverty
measure
Lower living
income level
State/area
median
income
Dollar
amount
Income
deemed needy
Area of
residence
X
Enrollment/
eligibility for other
program
Other
X
77. Welfare-to-work
X
78. Food stamp employment/training
X
79. Foster grandparents
X
80. Senior companions
X
81. Targeted aid for refugees, asylees,
others
Xb
82. Native employment works
Xb
X
Energy aid
83. Low-income home energy assistance
Xbb
84. Weatherization assistance
X
X
X
X
X
Note: Short titles and abbreviations are used in this table. See the table of contents for full titles.
a.
States must extend Medicaid to certain persons whose income is below the federal poverty income guideline (or a multiple of it) but who do not receive cash aid.
These persons are pregnant women, children born after September 30, 1983, the aged, the blind, and the disabled.
b.
Need is decided by state, locality, Indian tribe (or Alaskan Native village).
c.
Eligible for Medicaid, foster care, and adoption assistance are persons who do not qualify for TANF cash assistance but who would be income-eligible for AFDC under
the terms in effect on July 16, 1996 (with some modifications allowed for Medicaid) if that program had not been replaced by TANF. Also eligible for Medicaid in most
states are persons eligible for SSI.
d.
Veterans receiving veterans’ pensions or eligible for Medicaid are automatically eligible for free VA medical care.
e.
If a state’s Medicaid limit for children is at or above 200% of the poverty guideline, it may give SCHIP to children whose family income is within 150% of the Medicaid
limit (thus, up to 50% above the Medicaid limit).
f.
The law limits free care to those below the federal poverty income guidelines.
g.
All residents of the area served are eligible, but fees must be charged to the nonpoor.
h.
The stated purpose of the Maternal and Child Health (MCH) Services Block Grant law is to enable states to assure access to quality MCH services to mothers and
children, particularly those with low income (or limited availability of health services). The law defines low income in terms of the federal poverty income guidelines.
This block grant, which took effect in FY1981, includes funding for crippled children’s services.
CRS-21
i.
For basic federal SSI payment.
j.
States decide need for an optional state supplement to SSI.
k.
A blind or disabled child who is eligible for SSI also may be eligible for adoption assistance.
l.
Households composed wholly of recipients of SSI or GA or of recipients of TANF cash or services automatically meet food stamp assets and income tests but their
benefits must be calculated by food stamp rules.
m. Food stamp eligibility is accepted as documentation of eligibility for the free school lunch and free school breakfast programs.
n.
States may give automatic eligibility to public assistance recipients.
o.
The law requires preference for those with greatest economic or social need.
p.
Need is decided by a system known as the federal needs analysis methodology, which is set forth in Part F of Title IV of the Higher Education Act (HEA) as amended.
q.
There is no income test. Migratory children are presumed to be needy.
r.
For forgiveness of loans made to needy students who fail to complete studies.
s.
Need for loans is decided by the educational institution, by use of a needs analysis system approved by the Secretary of Education “in combination with other
information” about the student’s finances. For all health professional scholarships and for loans to students of medicine and osteopathy, federal regulations define the
required “exceptional financial need.”
t.
Regulations require the educational institution to determine that migratory students need the financial assistance provided.
u.
Law makes eligible middle school and secondary students who are “economically disadvantaged.”
v.
Federal income ceiling is 85% of state median for family of same size.
w.
Under the law, at least 70% of entitlement Child Care Development Fund (CCDF) assistance must be used for families receiving TANF, trying to leave welfare through
work, or at risk of becoming eligible for TANF.
x.
Applies to families aided with TANF dollars transferred to Title XX (their income cannot exceed 200% of the federal poverty guidelines).
y.
Need is decided by agencies administering the benefits.
z.
The federal poverty income guideline is used if higher than 70% of the lower living standard income level of the Department of Labor.
aa. The law requires preference for “low-income” persons if funds are limited.
bb. States have the option of setting limits below outer federal ceilings (but cannot set a ceiling below 110% of the federal poverty income guideline).
cc. Eligible students must be residents of the District of Columbia. A lottery is used if more eligible students apply than can be accommodated with available funding.
CRS-22
Cash and Noncash Benefits for Persons with Limited Income
Table 8. Bureau of the Census Poverty Thresholds for 2004
1 person (unrelated individual)
$9,645
Under 65 years
9,827
65 years and over
9,060
2 persons
12,334
Householder under 65 years
12,714
Householder 65 years and over
11,430
3 persons
15,067
4 persons
19,307
5 persons
22,831
6 persons
25,788
7 persons
29,236
8 persons
32,641
9 persons or more
39,048
Source: U.S. Department of Commerce, Bureau of the Census (August 30, 2005).
Table 9. 2005 Federal Poverty Income Guidelines
Size of family unit
Forty-eight contiguous
states and D.C.
Alaska
Hawaii
1
$ 9,570
$11,950
$11,010
2
12,830
16,030
14,760
3
16,090
20,110
18,510
4
19,350
24,190
22,260
5
22,610
28,270
26,010
6
25,870
32,350
29,760
7
29,130
36,430
33,510
8
32,390
40,510
37,260
For each additional
person, add
3,260
4,080
3,750
Source: Federal Register, vol. 70, no. 33, Feb. 18, 2005, p. 8374.
Congressional Research Service
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Cash and Noncash Benefits for Persons with Limited Income
Table 10. Eligibility Levels for Free and Reduced Price Meals for the Period of July 1,
2005-June 30, 2006
Maximum annual income levels
Family size
Free meals: 130%
federal poverty
income guidelines
Reduced price
meals: 185% federal
poverty income guidelines
48 contiguous United States, District of Columbia, Guam, and territories
1
$12,441
$17,705
2
16,679
23,736
3
20,917
29,767
4
25,155
35,798
5
29,393
41,829
6
33,631
47,860
7
37,869
53,891
8
42,107
59,922
Add for each additional member
+4,328
+6,031
Alaska
1
$15,535
$22,108
2
20,839
29,656
3
26,143
37,204
4
31,447
44,752
5
36,751
52,300
6
42,055
59,848
7
47,359
67,396
8
52,663
74,944
Add for each additional member
+5,304
+7,548
Hawaii
1
$14,313
$20,369
2
19,188
27,306
3
24,063
34,244
4
28,938
41,181
5
33,813
48,119
6
38,688
55,056
7
43,563
61,994
8
48,438
68,931
Add for each additional member
+4,875
+6,938
Source: Federal Register, vol. 70, no. 52, Mar. 18, 2005, p. 13162.
Congressional Research Service
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Cash and Noncash Benefits for Persons with Limited Income
Table 11. Lower Living Standard Income Level (LLSIL) for a Family of Four—
Effective July 22, 2005
(For use in programs under the Workforce Investment Act and the Work Opportunity Tax Credit)
Area
2005 adjusted LLSILa
70% of LLSILb
Northeast
Metropolitan
$33,280
$23,680
Non-Metropolitan
32,320
22,620
Metropolitan
30,620
21,430
Non-Metropolitan
28,810
20,170
Metropolitan
28,980
20,290
Non-Metropolitan
27,560
19,290
Metropolitan
33,160
23,220
Non-Metropolitan
32,020
22,410
Metropolitan
40,840
28,590
Non-Metropolitan
40,180
28,130
Metropolitan
41,890
29,330
Non-Metropolitan
42,900
30,030
Anchorage, AK
$40,840
$28,590
Atlanta, GA
28,770
20,140
Boston-Brockton-Nashua, MA/NH/ME
37,100
25,970
Chicago-Gary-Kenosha, IL/IN/WI
32,110
22,480
Cincinnati-Hamilton, OH/KY/IN
30,390
21,280
Cleveland-Akron, OH
31,580
22,110
Dallas-Ft Worth, TX
27,840
19,490
Denver-Boulder-Greeley, CO
32,050
22,440
Detroit-Ann Arbor-Flint, MI
30,000
21,000
Honolulu, HI
41,890
29,330
Houston-Galveston-Brazoria, TX
26,990
18,900
Kansas City, MO/KS
29,650
20,760
Los Angeles-Riverside-Orange County, CA
34,270
23,990
Milwaukee-Racine, WI
30,170
21,120
Minneapolis-St. Paul, MN
31,020
21,710
Midwest
South
West
Alaska
Hawaii/Guam
Metropolitan Statistical Area (MSA)
Congressional Research Service
25
Cash and Noncash Benefits for Persons with Limited Income
Area
2005 adjusted LLSILa
70% of LLSILb
New York-Northern New Jersey-Long Island
35,480
24,840
Philadelphia-Wilmington-Atlantic City, PA/DE/NJ
32,850
23,000
Pittsburgh, PA
36,190
25,330
St. Louis, MO-IL
29,510
20,660
San Diego, CA
37,310
26,120
San Francisco-Oakland-San Jose, CA
35,490
24,850
Seattle-Tacoma-Bremerton, WA
35,880
25,120
Washington-Baltimore, DC-MD-VA
35,600
24,920
Source: U.S. Department of Labor http://www.doleta.gov/llsil/.
Notes: For LLSILs for other family sizes, see the Federal Register entry noted above. The LLSIL is used for several
purposes under the Workforce Investment Act (WIA). WIA defines “low income individual” for eligibility
purposes in terms of the LLSIL or the poverty line. For purposes of state formula allotments, it defines the terms
“disadvantaged adult” or “disadvantaged youth” in terms of the LLSIL or the poverty line.
a.
To assess whether employment will lead to “self-sufficiency,” WIA sets 100% of the LLSIL as the minimum
pay needed.
b.
WIA provides that the terms “low-income” person and “disadvantaged adult” may be defined as a member
of a family that received total family income that, in relation to family size, does not exceed 70% of the
LLSIL. Further, the Internal Revenue Code provides that the term “economically disadvantaged” may be
defined as 70% of the LLSIL for purposes of the Work Opportunity Tax Credit (WOTC).
Medical Aid
1. Medicaid8
Funding Formula
The federal government shares in the cost of Medicaid services by means of a variable matching
formula. The formula is inversely related to a state’s per capita income and is adjusted annually.
The federal share of administrative costs generally is 50%, but can be as high as 100% for certain
items.
The federal share of a state’s medical vendor payments is called the federal medical assistance
percentage (FMAP). 9 The FMAP is higher for states with lower per capita incomes and lower for
states with higher per capita incomes. If a state’s per capita income is equal to the national
average per capita income, its FMAP would be 55%. The law establishes a minimum FMAP of
50% and a maximum of 83%10 (though the highest rate in FY2005 was 77.08% for Mississippi).
8
Regulations governing Medicaid are found in 42 CFR Parts 430-456 (Oct. 2005). This program is No. 93.778 in the
Catalog of Federal Domestic Assistance. It is codified at 42 U.S.C. 1396 et seq.
9
For a more detailed discussion of the FMAP, see CRS Report RL32950, Medicaid: The Federal Medical Assistance
Percentage (FMAP).
10
In FY2005, federal funds paid 50% of medical vendor payments in the 12 states with the highest per capita income
(continued...)
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Federal matching for the territories is set at 50%, but a dollar-amount ceiling also applies. The
statutory formula for determining the FMAP follows.
FMAP = 100% − state share
(with a minimum of 50% and a maximum of 83%)
State share = (state per capita income)2 x 45%
(national per capita income)2
The percentages are based on the average per capita income of each state and the United States
for the three most recent calendar years for which satisfactory data are available from the
Department of Commerce.
The law provides one exception to the FMAP for benefits. Family planning services (instruction
in contraceptive methods and family planning supplies) are federally matched at a 90% rate.
To provide fiscal relief to states, federal matching rates were changed temporarily by the Jobs and
Growth Tax Relief Reconciliation Act (P.L. 108-27), which altered the rates for certain
expenditures for the last two quarters of FY2003 and the first three quarters of FY2004. For these
five quarters, the federal matching rate for each state was held harmless for declines from the
prior fiscal year, and then was increased by 2.95 percentage points. A state was eligible for an
increase in its FMAP for any of the specified quarters only if eligibility under Medicaid in effect
for that quarter was no more restrictive than eligibility in effect on September 2, 2003. Federal
Medicaid outlays totaled $146.6 billion in FY2002 and $161.0 billion in FY2003. During
FY2002, the federal government financed about 57% of all Medicaid costs. During FY2003, the
federal government financed about 58% of all Medicaid costs.11 Estimated federal outlays for
Medicaid in FY2004 were $175.1 billion.
Eligibility Requirements12
The requirements of federal law, coupled with the decisions of individual states in structuring
their Medicaid programs, determine who is actually eligible for Medicaid in a given state. Some
groups are mandatory, meaning all states must cover them; others are optional. In general, federal
law places limitations on the categories of individuals who can be covered and establishes
specific eligibility rules for groups within those broad categories. Traditionally, Medicaid
eligibility was limited to the following categories: low-income families with dependent children
(...continued)
(California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New
York, Virginia, and Washington) and 70% or higher in the 10 states with the lowest per capita income (Alabama,
Arkansas, Idaho, Louisiana, Mississippi, Montana, New Mexico, Oklahoma, Utah, and West Virginia). Effective in
FY1998, a special provision of P.L. 105-33 raised the federal share of Medicaid costs in D.C. from 50% to 70%.
11
This increase in FY2003 is likely the result of the temporary increase in the federal medical assistance percentage
(FMAP) enacted in May 2003 (P.L. 108-27).
12
Effective on July 1, 1997 (earlier in most states), P.L. 104-193 ended Aid to Families with Dependent Children
(AFDC), a cash assistance program under which recipients were automatically eligible for Medicaid. The replacement
block grant program of Temporary Assistance for Needy Families (TANF) does not entitle all TANF recipients to
Medicaid coverage. However, those who meet the income, resource, and categorical eligibility criteria of the former
AFDC program, as in effect in their state on July 16, 1996 (and subsequently modified, if applicable), are entitled to
Medicaid. The description below summarizes Medicaid as it operated after AFDC was replaced by TANF.
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(in which one parent was absent, incapacitated, or unemployed), low-income persons with
disabilities, and low-income elderly. In addition, certain individuals with higher income,
especially those facing large costs for medical care, were eligible as “medically needy.”
Beginning in the 1980s, additional coverage groups were added to Medicaid for higher-income
children and pregnant women. Most recently, states were given the option to provide Medicaid to
other groups with specific characteristics, including certain women with breast or cervical cancer,
uninsured individuals with tuberculosis, and additional working individuals with disabilities.
More than 50 distinct population groups are identified in federal law.
Contributing to the complexity of the Medicaid program are financial criteria. Medicaid is a
means-tested entitlement program. To qualify, applicants’ income and resources13 must be within
certain limits, most of which are determined by states, again within federal statutory parameters.
States have flexibility in defining countable income and assets. Consequently, income and
resource standards vary considerably among states, and different standards apply to different
population groups within a state. In general, individuals in similar circumstances may be
automatically eligible for coverage in one state, may be required to assume a certain portion of
their medical expenses before they can obtain coverage in another state, and may not be eligible
at all in a third state.
Families, Pregnant Women, and Children
Medicaid-eligible families, pregnant women, and children fall into two basic groups: those
meeting AFDC standards as of July 16, 1996, and those qualifying under a series of targeted
Medicaid expansions that began in the 1980s.
AFDC-Related Groups
Medicaid eligibility for AFDC-related groups was affected significantly by both the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193),
which replaced the AFDC cash assistance program with the Temporary Assistance for Needy
Families (TANF) block grant program, and the Balanced Budget Act of 1997 (BBA 97, P.L. 10533).
Mandatory. Members of families that meet the eligibility requirements of the old AFDC programs
in effect in their states on July 16, 1996 must be covered under Medicaid. States may modify their
rules governing income and resource standards for such AFDC-related groups in three ways: (1)
income standards may be reduced below those in effect in 1996, but they cannot be lower than
those used on May 1, 1988; (2) income and resource standards may be increased for any period
after 1996, but by no more than the percentage increase in the Consumer Price Index (CPI) for the
same period; and (3) states may use less restrictive methods for counting income and resources
than those in effect on July 16, 1996.
States must provide Medicaid assistance for recipients of adoption assistance and foster care (who
are under age 18) under Title IV-E of the Social Security Act. Transitional or extended benefits
are available to families who lose Medicaid eligibility because of increased hours of employment,
13
Resources may include bank accounts and similar liquid assets, as well as real estate, automobiles, and other personal
property for which the value may not exceed specified limits. Certain resources, such as an individual’s home, are
excluded when determining eligibility.
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increased earnings, loss of a time-limited earned income disregard, or increased child or spousal
support payments.14 If the family loses Medicaid eligibility because of increased earnings or
hours of employment, Medicaid coverage is extended for six to 12 months.15 (During the second
six months, a premium can be imposed, the scope of benefits might be limited, or alternate
delivery systems might be used.) If the family loses Medicaid because of increased child or
spousal support, coverage is extended for four months. Children and pregnant women are exempt
from TANF work requirements and retain their Medicaid eligibility.
Optional. States are permitted to cover additional AFDC-related groups. States may provide
Medicaid to former foster care recipients ages 18, 19 and 20, and may limit such coverage to
those eligible for Title IV-E before turning 18. States may also extend Medicaid to children under
age 21 in families whose income and resources are within AFDC standards (as of July 16, 1996),
but who do not meet the definition of a dependent child (also known as Ribicoff children), and
may limit this coverage to “reasonable” subgroups.16 Finally, states may deny Medicaid benefits
to nonpregnant adults and heads of households who lose TANF benefits because of refusal to
work.
Poverty-Related Pregnant Women and Children
Beginning in the mid-1980s, Congress gradually extended Medicaid coverage to groups of
pregnant women and children who are defined in terms of family income and resources rather
than in terms of their ties to cash welfare programs.
Mandatory. States must cover pregnant women and children under age 6 with family incomes
below 133% of the federal poverty income guidelines. (A state may impose a resource standard
that is no more restrictive than that for SSI, in the case of pregnant women, or AFDC as of July
16, 1996, in the case of children.) Coverage for pregnant women is limited to services related to
the pregnancy or complications of the pregnancy through 60 days postpartum. Children receive
full Medicaid coverage.
14
For a more detailed discussion of transitional benefits, see CRS Report RL31698, Transitional Medical Assistance
(TMA) Under Medicaid.
15
The requirement for six to 12 months of transitional Medicaid, which originally applied to families who lost AFDC
eligibility because of work, was carried over in the 1996 TANF law. It has been extended beyond Sept. 30, 2002 by
several laws, most recently by the Deficit Reduction Act of 2005 (P.L. 109-171), which extended it through calendar
year 2006. If the provision authorizing 12-month TMA is not extended beyond Dec. 31, 2006, states will still be
required to provide four months of TMA to families that lose Medicaid eligibility due to an increase in earned income,
hours of employment, or child or spousal support.
16
These Ribicoff children, named for the former Senator who sponsored legislation authorizing this group, are
individuals under age 21 who do not meet the dependency requirement, often because they do not live with their
families. In the past, this eligibility pathway had been used for children residing in institutions or in state-based foster
care or adoption assistance programs. But today, most of those children can qualify under other poverty-level eligibility
pathways, since those pathways do not include a family dependency requirement. Ribicoff, as a result, has little
meaning for most children under age 19. For children who are 19 or 20 or are inpatients in psychiatric facilities, on the
other hand, Ribicoff may still be a valuable pathway to Medicaid. Older children cannot qualify under the other
poverty-level groups because those pathways define eligible children to be under age 19. Institutionalized children who
are in families with income that exceeds the poverty level ceilings also cannot qualify as poverty-level children because
their parents’ income is deemed to be available to children under those pathways. Under Ribicoff, on the other hand,
parental income is not considered to apply to children who do not reside in their parents’ homes.
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States are also required to cover all children under age 19 whose family income is below the
federal poverty level.
Optional. States may cover pregnant women and infants under age 1 with family incomes of up to
185% of the federal poverty level (FPL). In addition, through other provisions of Medicaid law,
states are permitted to cover additional pregnant women and children with incomes above
applicable federal mandatory minimum levels. Such key provisions include waivers of eligibility
rules (through Section 1115 of the Social Security Act), use of more liberal methods for
calculating income and resources for some categories of eligibles (through Section 1902(r)(2) of
the Social Security Act), as well as through Medicaid expansions under the State Children’s
Health Insurance Program (SCHIP; program No. 3 in this report). For example, under SCHIP,
most states now cover at least some groups of children under age 19 in families with income at or
above 200% of the federal poverty level.
Finally, states have the option of continuing Medicaid eligibility for current child beneficiaries for
up to 12 months without a redetermination of eligibility. States are also allowed to extend
Medicaid coverage to pregnant women and children under 19 years of age on the basis of
“presumptive” eligibility until formal determinations are completed.
Aged and Persons with Disabilities
In general, Medicaid provides coverage to certain groups of individuals receiving (or qualifying
for) cash assistance through the Supplemental Security Income (SSI) program. It also covers the
Medicare cost-sharing obligations for certain individuals. In addition, Medicaid covers certain
individuals needing institutional care or other types of long-term care services.
SSI-Related Groups
The SSI program was established in 1972, replacing previous federal-state cash assistance
programs for the aged, blind, and persons with disabilities. Income and resource standards are
defined in federal law. For 2005, individuals applying for SSI could not have countable monthly
income in excess of $579, and their countable resources could not exceed $2,000. Similar criteria
for couples were $869 in monthly income and $3,000 in resources. However, states have the
option of supplementing SSI payments (called state supplemental payments, or SSP) for aged
persons living independently, and using the resulting higher income levels as the applicable
financial standard for determining Medicaid eligibility.
Mandatory. States are generally required to cover SSI recipients under their Medicaid programs.
However, states may use more restrictive eligibility standards for Medicaid than those for SSI if
they were using those standards on January 1, 1972 (before the implementation of SSI), as
authorized under Section 209(b) of the Social Security Act. There were 11 such Section 209(b)
states in 2005.17 States using more restrictive income standards must allow applicants to “spend
down”—deduct incurred medical expenses from income before determining eligibility. For
example, if an applicant has a monthly income of $700 (not including any SSI or state
17
These 11 states are Connecticut, Hawaii, Illinois, Indiana, Minnesota, Missouri, New Hampshire, North Dakota,
Ohio, Oklahoma, and Virginia. Social Security Administration, “Medicaid and the SSI Program” (August 16, 2005),
Section SI 01715.010, Program Operations Manual System http://policy.ssa.gov/poms.nsf/lnx/0501715010.
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supplement payment) and the state’s maximum allowable income is $600, the applicant would
qualify for Medicaid after incurring $100 in medical expenses in that month.
States must continue Medicaid coverage for several defined groups of individuals who lose SSI or
SSP eligibility. The “qualified severely impaired” are persons with disabilities who return to work
and lose SSI eligibility because of earnings, but still have the condition that originally rendered
them disabled and who meet all nondisability criteria for SSI except income. Medicaid must be
continued for these persons if they need ongoing medical assistance to continue working and their
earnings are not sufficient to provide the equivalent of SSI, Medicaid, and attendant care benefits
for which they would qualify in the absence of earnings. States must also continue Medicaid
coverage for persons who were once eligible for both SSI and Social Security payments and who
lose SSI because of a cost-of-living adjustment (COLA) in their Social Security benefits. Similar
Medicaid continuations have been provided for certain other persons who lose SSI as a result of
eligibility for or increases in Social Security or veterans’ benefits. Finally, states must continue
Medicaid for certain SSI-related groups who received benefits in 1973, including “essential
persons” (persons who care for a person with a disability).
Optional. States are permitted to provide Medicaid to individuals who are not receiving SSI but
are receiving state-only supplementary cash payments. Effective in August 1997, under
provisions of the Balanced Budget Act of 1997 (BBA 97), states may make Medicaid available to
SSI beneficiaries with disabilities who have income up to 250% of the FPL. These individuals
may “buy into” Medicaid by paying a premium based on income as determined by the state. The
1999 Ticket to Work legislation (P.L. 106-170) further allows states to cover employed persons
with disabilities at higher income and resource levels (i.e., income over 250% of the FPL and
resources exceeding $2,000 for an individual or $3,000 for a couple). States may also cover
financially eligible working individuals whose medical condition has improved to the point that
they no longer meet the SSI definition of disability. Such individuals may have to buy into
Medicaid by paying premiums or other cost-sharing charges on a sliding fee scale based on
income, as established by the state. Finally, states have the option of extending Medicaid to
certain additional elderly persons or persons with disabilities. These include the elderly and
persons with disabilities whose income does not exceed 100% of the FPL and whose resources do
not exceed the SSI standard.
Qualified Medicare Beneficiaries and Related Groups
Certain low-income individuals who are aged or have disabilities as defined under SSI and who
are eligible for Medicare are also eligible to have some of their Medicare cost-sharing expenses
paid for by Medicaid. There are four categories of such persons:
•
Qualified Medicare Beneficiaries (QMB). Qualified Medicare beneficiaries are
aged or disabled Medicare beneficiaries with incomes no greater than 100% of
the FPL and assets no greater than $4,000 for an individual and $6,000 for a
couple. States are required to cover, under their Medicaid programs, the costs of
Medicare premiums, deductibles, and coinsurance for Medicare-covered benefits
for such persons. Other Medicaid covered services, such as nursing facility care,
prescription drugs, and primary and acute care services, are not covered for these
individuals unless they qualify for Medicaid through other eligibility pathways
(e.g., via SSI, medically needy, or the special income rule for institutionalized
persons described below).
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•
Specified Low-Income Medicare Beneficiaries (SLMB). Specified low-income
Medicare beneficiaries meet QMB criteria, except that their income is greater
than 100% of the FPL but does not exceed 120% of the FPL. Under this
Medicaid pathway, states are required to cover only the monthly Medicare Part B
premium. Other Medicaid services are not covered for these individuals unless
they qualify for Medicaid through other eligibility pathways.
•
Qualifying Individuals (QI-1). The QI-1 eligibility pathway18 applies to aged and
disabled Medicare beneficiaries whose income is between 120% and 135% of the
FPL. For these individuals, states are required to pay the monthly Medicare Part
B premium only until the federal allotment for this purpose is depleted. 19 These
individuals are not otherwise eligible for Medicaid.
•
Qualified Disabled and Working Individuals (QDWIs). States are required to pay
the Medicare Part A premiums for persons who were previously entitled to
Medicare on the basis of a disability, who lost their entitlement based on earnings
from work, but who continue to have a disabling condition. Such persons may
only qualify if their incomes are below 200% of the FPL, their resources are
below 200% of the SSI limit ($4,000), and they are not otherwise eligible for
Medicaid.
In December 2003, the President signed the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA 2003, P.L. 108-173). This act provides that, beginning in 2006,
Medicaid eligibles who are also eligible for Medicare will receive outpatient prescription drug
coverage through the new Medicare prescription drug benefit instead of through Medicaid. While
this act does not change Medicaid eligibility rules, it does affect the benefits that the Medicaid
program will be allowed to cover.20 Under MMA 2003, state Medicaid programs will no longer be
able to cover any drugs that are to be provided through the Medicare benefit, or pay the costsharing amounts for those drugs.
Persons Receiving Institutional or Other Long-Term Care and Related Groups
(all optional)
States may provide Medicaid to certain otherwise-ineligible groups of persons who are in nursing
facilities (NFs) or other institutions, or who would require institutional care if they were not
receiving alternative services at home or in the community.
States may establish a special income standard for institutionalized persons, not to exceed 300%
of the maximum SSI benefit that would be payable to a person living at home and with no other
resources ($1,737 per month in 2005). In states without a medically needy program (described
18
The program known as Qualifying Individuals-2 (QI-2) ended on Dec. 31, 2002.
In general, Medicaid payments are shared between the federal government and the states according to the matching
formula described above. However, expenditures under the QI-1 program are paid 100% by the federal government
(from the Part B trust fund) up to the state’s allocation level. A state is only required to cover the number of persons
that would bring its spending on these population groups in a year up to its allocation level. This temporary program,
originally slated to end Sept. 30, 2002, was most recently extended through Sept. 30, 2007, by P.L. 109-91.
20
Medicaid eligibility may be affected for individuals who now qualify as medically needy by “spending down” their
income on medical expenses. Those individuals may experience delayed Medicaid eligibility or no longer qualify at all
because Medicare Part D will pay some portion of the drug expenses that were formerly counted toward their spenddown amounts.
19
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below), this “300% rule” is an alternative way of providing NF coverage to persons with incomes
above SSI or State Supplementary Payment (SSP) levels.21
Both the medically needy and those becoming eligible under the “300% rule” must contribute
their available income to the costs of their care. Medicaid has distinct post-eligibility rules to
determine how much of a beneficiary’s income must be applied to the cost of care before
Medicaid makes its payment. Special rules exist for the treatment of income and resources of
married couples when one of the spouses requires nursing home care and the other remains in the
community. These rules are referred to as the “spousal impoverishment” protections of Medicaid
law, because they are intended to prevent the impoverishment of the spouse remaining in the
community.
A state may obtain a waiver under Section 1915(c) of the Social Security Act to provide home
and community-based services to a defined group of individuals who would otherwise require
institutional care. The waiver coverage may include persons who would be eligible under the
“300%” rule if they were in an institution, or those eligible through a medically needy program.
A state may also provide Medicaid to several other classes of persons who need the level of care
provided by an institution and would be eligible if they were in an institution. These include
certain children who are being cared for at home, persons of any age who are ventilatordependent, and persons receiving hospice benefits in lieu of other covered services.
The Medically Needy
In 2003, the Centers for Medicaid and Medicare Services (CMS) reported that 35 states and the
District of Columbia provided Medicaid to at least some groups of “medically needy” persons.22
These are persons who meet the nonfinancial standards for inclusion in one of the groups covered
by Medicaid, but who do not meet the income or resource requirements for such coverage. Under
medically needy programs, individuals can spend down to the medically needy standard set by
the state by incurring medical expenses, in the same way that SSI recipients in Section 209(b)
may spend down to Medicaid eligibility.
Under medically needy programs, states may set income standards at any level up to 133⅓% of
the standard used for the most closely related cash assistance program. For families with children,
the maximum applicable medically needy income standard would be up to one-third more than
that which was in effect for a similar family under the state’s former AFDC program. For
individuals who have a disability or are elderly, it would be up to one-third more than the SSI
income standard. States may limit the groups of individuals who receive medically needy
coverage. If the state provides any medically needy coverage, however, it must include all
21
Until OBRA-93, persons with incomes in excess of these limits could not qualify for Medicaid coverage for their
nursing home care, even if their income was insufficient to cover the costs of such care. OBRA-93 included provisions
that allow individuals to deposit excess income above the 300% limit into a trust, sometimes referred to as a “Miller
Trust,” and receive Medicaid coverage. The funds in the trust are recoverable by the state after the person’s death. This
arrangement, which is essentially a delayed spend-down, has reduced access barriers that may have been encountered
by persons in states that do not otherwise permit spend-down under Medicaid.
22
These include Alaska, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky,
Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Hampshire, New Jersey,
New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont,
Virginia, Washington, West Virginia, and Wisconsin.
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children under 18 who would qualify under one of the welfare-related groups, and all pregnant
women who would qualify under either a mandatory or optional group, if their income or
resources were lower.
Individuals Qualifying Under Demonstration Waivers
Demonstration waivers available under the authority of Section 1115 (of the Social Security Act)
enable states to experiment with new approaches for providing health care coverage that promote
the objectives of the Medicaid program. Section 1115 allows the Secretary of Health and Human
Services (HHS) to waive a number of Medicaid rules—including many of the federal rules
relating to Medicaid eligibility. The Health Insurance Flexibility and Accountability (HIFA)
Initiative, introduced by the Bush Administration in 2001, is an explicit effort to encourage states
to seek Section 1115 waivers to extend Medicaid and SCHIP to the uninsured, with a particular
emphasis on statewide approaches that maximize private health insurance coverage options and
target populations with incomes below 200% of the FPL. Some states have used such waivers to
enact broad-based and sometimes statewide health reforms, although demonstrations under
Section 1115 need not be statewide. A number of the demonstrations extend comprehensive
health insurance coverage to low-income children and families who would not otherwise be
eligible for Medicaid.
Aliens
Legal immigrants arriving in the United States after August 22, 1996 are ineligible for Medicaid
for their first five years in this country. Coverage of these persons after the five-year ban is a state
option. States are required to provide Medicaid to legal immigrants who resided in the country
and were receiving benefits on August 22, 1996 (and who continue to meet the criteria), and to
those residing in the country as of that date who become disabled in the future.
States are also required to provide coverage to (1) refugees for the first seven years after entry
into the United States, (2) asylees for the first seven years after asylum is granted, (3) individuals
whose deportation is being withheld by U.S. Citizenship and Immigration Services (formerly the
Immigration and Naturalization Service) for the first seven years after the deportation is first
withheld, (4) lawful permanent aliens after they have been credited with 40 quarters of coverage
under Social Security, and (5) immigrants who are honorably discharged U.S. military veterans or
active duty military personnel, and their spouses and unmarried dependent children who
otherwise meet the state’s financial eligibility criteria.
In addition, states are required to provide emergency Medicaid services to all legal and
undocumented non-citizens who meet the financial and categorical eligibility requirements for
Medicaid, without regard to time in this country.
Medicaid Purchase of COBRA Coverage
COBRA23 provides that employees or dependents who leave an employee health insurance group
in a firm with 20 or more employees must be offered an opportunity to continue buying insurance
through the group for 18 to 36 months (depending on the reason for leaving the group). The
23
COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272).
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employer may charge a premium of no more than 102% of the average plan cost (150% for
months 19 to 29 for certain persons with disabilities). State Medicaid programs may pay the
former employees’ premiums but only under the following circumstances:
•
The employee or family member worked for a firm with 75 or more employees;
•
The premium payment is “cost effective” (i.e., the premium paid for the
employer-based coverage is below the amount Medicaid would have otherwise
spent on Medicaid services for the individual);
•
The employee entitled to elect COBRA coverage is in a family with income that
does not exceed 100% of FPL; and
•
The individual or family’s resources do not exceed twice the SSI resource limit.
(The SSI resource limit is $2,000 for an individual and $3,000 for a couple.)
Benefits
States are required to offer the following services to most groups of recipients: inpatient hospital
services (excluding inpatient hospital services for mental disease); outpatient hospital care,
Federally Qualified Health Center (FQHC) services and, if permitted under state law, rural health
clinic (RHC) services; laboratory and X-ray services; certified pediatric and family nurse
practitioners; nursing facility services for those aged 21 and over; early and periodic screening,
diagnosis, and treatment for those under age 21 (EPSDT); physicians’ services; family planning
services and supplies; medical supplies and surgical services of a dentist; home health services for
those entitled to nursing facility care; nurse-midwife services; pregnancy-related services
(including treatment for conditions that may complicate pregnancy); and 60 days of postpartumrelated services. States must also assure transportation of any Medicaid-eligible individual to and
from providers of medical care.
Federal law includes two basic coverage requirements for the medically needy. First, if a state
provides medically needy coverage to any group, it must provide ambulatory services to children
under 18 and individuals entitled to institutional services, prenatal and delivery services for
pregnant women (as well as 60 days of postpartum care for those eligible for and receiving
pregnancy-related services), and home health services to individuals entitled to nursing facility
services. Second, if the state provides medically needy coverage for persons in institutions for
mental diseases or intermediate care facilities for the mentally retarded (ICFs/MR), it must offer
to all groups covered in its medically needy program all of the mandatory services required for
the categorically needy (except services provided by pediatric and family nurse practitioners), or
alternatively, any of seven categories of care and services listed in Medicaid law defining covered
benefits.
Finally, states may also choose to provide one or more optional services to categorically and
medically needy beneficiaries. These additional services include, for example, prescription drugs,
eyeglasses, other dental services, physical therapy, and inpatient psychiatric care for individuals
under age 21 or over 65.
States may limit the amount, duration and/or scope of care provided under any mandatory or
optional service category (such as limiting the number of days of covered hospital care or number
of physical therapy visits). Federal law permits states to impose nominal cost-sharing charges on
some Medicaid beneficiaries and for some services.
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In FY2002, the most recent year for which enrollment data are available, 51.5 million persons
were covered by Medicaid. While non-disabled children and adults under age 65 comprised the
majority of Medicaid enrollment, their costs were relatively small ($2,090 per adult and $1,397
per child) when compared with the per recipient cost of the elderly recipients ($13,313), and
recipients with disabilities ($12,394). The aged and persons with disabilities represented 23% of
Medicaid enrollment, but accounted for 68% of the program’s spending on services. Between
FY2002 and FY2004, total federal and state Medicaid spending increased by about 16%, from
$258.2 billion to $300.3 billion.
Note: For more information, see CRS Report RL32277, How Medicaid Works—Program Basics;
CRS Report RS21071, Medicaid Expenditures, FY2003 and FY2004; CRS Report RL33019,
Medicaid Eligibility for Adults and Children; CRS Report RL31413, Medicaid—Eligibility for the
Aged and Disabled; and CRS Report RL33202, Medicaid: A Primer.
2. Medical Care For Veterans Without ServiceConnected Disability
Funding Formula
Medical care from the Department of Veterans Affairs (VA) is funded by the federal government.
VA medical services are defined as discretionary in the federal budget. Appropriations requests
are guided by estimated patient demand and associated resource requirements. In FY2005,
Congress provided approximately $29.7 billion for veterans health care programs. VA is also
authorized to use proceeds of the Medical Care Collections Fund (MCCF)24 to provide care to
veterans. In FY2005, the amount of collections was estimated to be $1.98 billion.
In addition to care provided in VA facilities and under contract, VA provides per diem payments
to states for care of eligible veterans in veterans’ nursing homes. VA also provides medical care to
certain spouses and children of certain service-connected disabled veterans under the Civilian
Health and Medical Program (CHAMPVA).25
Eligibility Requirements26
Unlike other medical benefit entitlements such as Medicare or Medicaid, eligibility for medical
benefits from VA conveys varying degrees of rights. Although all veterans are eligible to receive
medical care from VA, under current law, no veteran is automatically “entitled” to VA health care,
as care is dependent upon the amount of funding available for health care.27 VA determines
24
The VA is authorized to bill some veterans and most health care insurers for nonservice-connected care provided to
veterans enrolled in the VA health care system to defray the cost of delivering medical services to veterans. The
Balanced Budget Act of 1997 (P.L. 105-33) gave VA the authority to retain these funds in the Medical Care
Collections Fund (MCCF).
25
For information on CHAMPVA see http://www.va.gov/hac/forbeneficiaries/champva/champva.asp.
26
Eligibility rules are set forth in 38 CFR Part 17.47 (2005). This program is No. 64.009 in the Catalog of Federal
Domestic Assistance.
27
See 38 U.S.C. §1710 (a) (1) (4) (the “shall” language in statute is “effective in any fiscal year only to the extent and
(continued...)
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eligibility primarily based on “veterans’ status” resulting from military experience. “Veterans’
status” is determined by active duty status in the military, naval, or air service and an honorable
discharge or release from active military service. After the VA establishes “veterans’ status,” VA
next places applicants into one of two categories.
The first category in general is composed of veterans with service-connected disabilities or with
lower incomes. These veterans are regarded by VA as “high priority” veterans, and they are
enrolled in Priority Groups 1-6. Veterans placed in the second group are veterans who don’t fall
into one of the first six priority groups. These veterans are primarily those with nonserviceconnected conditions and with income and net worth above the VA established means test
threshold, and in general these veterans are enrolled in Priority Group 7 or 8. Based on statutory
authority provided by the Veterans Health Care Eligibility Reform Act of 1996 (P.L. 104-262), the
Secretary of Veterans Affairs announced on January 17, 2003 that VA would temporarily suspend
the enrollment of Priority Group 8 veterans. Those who enrolled prior to January 17, 2003 in VA’s
health care system were not to be affected by this suspension. VA claims that, despite its funding
increases, it cannot provide all enrolled veterans with timely access to medical services because
of the tremendous increase in the number of veterans seeking care from VA.28
Under current law, most veterans have to enroll to receive health care from VA. In some cases,
VA provides care to non-enrolled veterans in the following classes: veterans who need treatment
for a VA rated service-connected disability; veterans who are VA rated as 50% or more serviceconnected disabled; and veterans who were released from active duty within the previous 12
months for a disability incurred or aggravated in the line of duty.
The largest category of veterans provided free medical care by VA consists of persons who
qualify for that care because their annual net income and net worth are below an established VA
Means Test Threshold (in 2005: single person, $25,842; with one dependent, $31,013; for each
additional dependent, $1,734), or veterans whose incomes in the previous calendar year were no
higher than the pension of a veteran in need of regular aid and attendance (in 2004: single person,
$16,955; with one dependent, $20,099; for each additional dependent, $1,734). These veterans are
enrolled in Priority Group 5. A veteran applying for care under the low-income eligibility test is
advised that reported income is subject to verification by matching the amount shown on the
application with income reported to the Internal Revenue Service (IRS). Once eligible under the
income rules, a veteran remains eligible until determined upon (annual) reevaluation to no longer
meet the income standard.
Benefit Levels
VA offers a standardized medical benefits package that includes a full range of outpatient and
inpatient services with an emphasis on preventive and primary care. As defined in regulations, VA
medical benefits include, among other things, preventive services, including immunizations,
screening tests, and health education and training classes; primary health care diagnosis and
treatment, prescription drugs, comprehensive rehabilitative services, mental health services,
(...continued)
in the amount provided in advance appropriations Acts for such purposes”).
28
See U.S. Department of Veterans Affairs, “Annual Enrollment Level Decision,” 68 Federal Register 2669-2673 (Jan.
17, 2003).
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including professional counseling, home health care, respite (inpatient), hospice, and palliative
care; and emergency care. Some veterans are also eligible to receive long-term care, including
nursing home care, domiciliary care, adult day care, and limited dental care. In FY2004, there
were 7.4 million enrolled veterans, and 4.7 million unique veteran patients received care from
VA. Of these, 2.5 million enrolled veterans and 1.6 million unique veteran patients were in
Priority Group 5. That same fiscal year, VA treated 760,519 inpatients, 93,271 veterans in nursing
home care units or in community nursing home facilities, and 25,523 veterans in home- and
community-based facilities. The VHA’s outpatient clinics registered more than 49 million visits
by veterans in FY2004.
During FY2004, the Veterans Health Administration (VHA) operated 157 hospitals, 134 nursing
homes, 42 residential rehabilitation treatment centers; 862 ambulatory care and community-based
outpatient clinics; and an extensive pharmaceutical supply apparatus. Veterans’ medical care
appropriations were $26.8 billion in FY2004 and $29.7 billion in FY2005.
Note: For more information, see CRS Report RL32975, Veterans’ Medical Care: FY2006
Appropriations.
3. State Children’s Health Insurance Program
(SCHIP)
Funding Formula
The Balanced Budget Act of 1997 (BBA 97, P.L. 105-33) established the State Children’s Health
Insurance Program (SCHIP) under Title XXI of the Social Security Act. 29 The program offers
federal matching funds for states and territories to provide health insurance to targeted lowincome children. In the original law, Congress appropriated $39.7 billion in SCHIP federal
matching grants for 10 years, FY1998 through FY2007.30 The total annual allotment for each of
FY1998 through FY2001 was a little more than $4.2 billion. This annual total dropped to a little
under $3.2 billion in FY2002 through FY2004. Then the annual allotment rose to about $4.1
billion for FY2005 and FY2006, with a further increase to roughly $5.0 billion projected for
FY2007.
Allotment of funds among the states is determined by a formula set in law. This formula is based
on a combination of the number of low-income children and low-income uninsured children in
the state, and it includes a cost factor that represents average health service industry wages in the
state compared to the national average. All states have submitted SCHIP program plans to the
Centers for Medicare and Medicaid Services (CMS).
29
The program number for SCHIP in the Catalog of Federal Domestic Assistance is 93.767. It is codified at 42 U.S.C.
1397aa et seq. The final rule governing SCHIP was published on January 11, 2001 (42 CFR Parts 431, 433, 435, inter
alia.) and was revised by an interim final rule published June 25, 2001 (42 CFR Parts 431, 433, inter alia.), which took
effect on August 24, 2001.
30
From the original appropriated amounts specified in BBA 97, the law set aside 0.25% of SCHIP funds for five
territories (Puerto Rico, Guam, the Virgin Islands, American Samoa, and the Northern Mariana Islands). Later, funds
were added to the total annual appropriation and earmarked for the territories for each year beginning in FY1999. For
FY1998 through FY2002 only, $60 million annually was set aside for special diabetes grants.
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States have three fiscal years in which to draw down a given year’s funding. Under SCHIP law as
enacted in 1997, allotments not spent by the end of the applicable three-year period will be
redistributed—by a method to be determined by the Secretary of Health and Human Services
(HHS)—to states that have fully spent their original allotments for that year. Redistributed funds
not spent by the end of the fiscal year in which they are reallocated will officially expire. The
rules regarding reallocation vary by fiscal year. In the first reallocation legislation for FY1998
and FY1999 (P.L. 106-554), redistribution states (12 in FY1998 and 13 in FY1999) were given
access to unspent funds from other states equal to their excess spending above their original
allotments during the applicable three-year period. After a set-aside of 1.05% of the total unspent
funds for territories that fully exhausted their original allotments, the remaining unused funds
were divided among the retention states in proportion to their contribution to the total pool of
unspent funds. In contrast, under the second reallocation legislation for FY2000 and FY2001
(P.L. 108-74), a different rule was used. A set-aside of 1.05% of the total unspent funds was made
for territories that fully exhausted their original allotments. Then, retention states kept one-half of
their unused funds. The remaining unspent funds were then distributed among redistribution
states (14 for FY2000 and 19 for FY2001) in proportion to their contribution to the total pool of
excess spending.31
The final rule for reallocation of unspent FY2002 funds was published in the September 29, 2005
Federal Register.32 Because no law was enacted specifying otherwise, the reallocation process
followed BBA 97 requirements. Under this law, at the end of the applicable three-year period,
unspent allotments are subject to redistribution among only those states that fully expend their
allotments by the three-year deadline, by a method to be determined by the Secretary of Health
and Human Services. States that were projected to exhaust all of their available federal SCHIP
accounts in FY2005, based on their August FY2005 estimated expenditures, received access to
FY2002 redistribution money equal to that estimated shortfall. The five “shortfall states” were
Arizona, Minnesota, Mississippi, New Jersey, and Rhode Island. The remaining balance of
unspent FY2002 funds was then divided among a total of 28 redistribution states, including the
five shortfall states, based on each such state’s percentage of the total excess spending above the
FY2002 allotments during the three-year period of availability of these funds.33 Also according to
BBA 97, this reallocation pot was to expire at the end of one year, in this case, at the end of
FY2005.
Access to reallocated funds (i.e., redistributed and retained funds from prior years) has added
another layer of complexity to SCHIP financing. During FY2005, for example, states could
access reallocated FY2001 and FY2002 funds, plus original allotments from FY2003, FY2004,
and FY2005. Generally, when multiple accounts are available simultaneously, expenditures are
applied against reallocated and original allotments in chronological order from earliest to most
31
Finally, P.L. 108-74 also permits certain states to spend their available balances (i.e., up to a maximum of the lesser
of the following two amounts: (1) 20% of the state’s available FY1998-through-FY2001 original SCHIP allotments,
and (2) the state’s balance (calculated quarterly) of any available FY1998 to FY2001 federal SCHIP funds (original
allotments or reallocated funds from FY1998 through FY2001) for services delivered to Medicaid beneficiaries under
age 19 who are not otherwise eligible for SCHIP and have family income that exceeds 150% of the federal poverty
guideline. Subsequently, P.L. 108-127 modified the definition of a state that qualifies to make such expenditures.
32
“State Children’s Health Insurance Program (SCHIP); Redistribution of Unexpended SCHIP Funds From the
Appropriation for Fiscal Year 2002,” Federal Register, vol. 70, No. 188, Sept. 29, 2005, pp. 56901-56909.
33
All five territories also exceeded their FY2002 original allotments by the three-year deadline. As with prior
redistributions, 1.05% of all unspent FY2002 funds was set aside for the territories. Each received an amount equal to
its original allotment for FY2002 divided by the sum of FY2002 allotments among the territories.
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recent. However, in regulations, CMS has allowed redistribution states only (i.e., states with
excess spending that qualified them for redistribution of unspent funds from other states) the
option of defining the order for applying expenditures against available accounts. That is, to
optimize the use of funds, such states were given the flexibility to decide whether to use
redistributed funds before or after other available funds/accounts. Once a specific order is chosen
for a given set of open accounts, such states are not allowed to change that order until a new
redistribution account is added to the set.
Like Medicaid, SCHIP is a federal-state matching program. For each dollar of state spending, the
federal government makes a matching payment, up to the state’s allotment. The state’s share of
program spending is equal to 100% minus the enhanced federal medical assistance percentage
(the enhanced FMAP). The enhanced FMAP is equal to the state’s Medicaid FMAP (for the
regular FMAP formula, see program No. 1 of this report), increased by the number of percentage
points that is equal to 30% multiplied by the number of percentage points by which the FMAP is
less than 100%.34 No more than 10% of the federal funds that a state draws down for SCHIP
benefit expenditures can be used for administrative expenses, which include activities such as
data collection and reporting, as well as outreach and education.
Eligibility Requirements
Each state defines the group of targeted low-income children who may enroll in SCHIP. The law
allows states to use the following factors in determining eligibility: geography, age, income and
resources, residency, disability status, access to other health insurance, and duration of eligibility
for SCHIP. In general, funds cannot be used for children who are eligible for the state’s Medicaid
program or for children covered by a group health plan or other insurance.
Under SCHIP, states may cover children in families with incomes that are either (1) above the
state’s applicable Medicaid eligibility standard under the rules in effect in the state on March 31,
1997, but less than 200% of the federal poverty level (FPL),35 or (2) in states with Medicaid
income levels for children already at or above 200% of FPL, within 50 percentage points over the
state’s Medicaid income eligibility limit for children. Many states cover at least some groups of
children in families with income at or above 200% FPL.
In addition, states that want to make changes to their SCHIP programs that go beyond what the
law will allow may do so through what is called a Section 1115 waiver (named for the section of
the Social Security Act that defines the circumstances under which such waivers may be granted).
The Secretary of Health and Human Services may waive certain statutory requirements for
conducting research and demonstration projects under SCHIP that allow states to adapt their
programs to specific needs. On August 4, 2001, the Bush Administration announced the Health
34
For example, if a state has a Medicaid FMAP of 60%, under Medicaid
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