SECTION 15. OTHER PROGRAMS
CONTENTS
Overview
Food Stamp Program
Administration, Program Variations, and Funding
Eligibility
Benefits
Quality Control (QC)
Interaction with Cash Assistance Programs
Recipiency Rates
Legislative History
Medicaid
Eligibility
Categorically Needy
Aged and Disabled Persons
The Medically Needy
Medicaid and the Poor
Services
Financing
Reimbursement Policy
Administration
Medicaid and Managed Care
Legislative History
Program Data
Federal Housing Assistance
Types of Assistance
Trends in Commitments and Payments
School Lunch and Breakfast Programs
Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
Job Training Partnership Act
Head Start
Low-Income Home Energy Assistance Program (LIHEAP)
Background
Program Components
Allotments to States
Eligibility and Types of Assistance
Planning and Administration
Veterans Benefits and Services
Workers' Compensation
Overview Through 1993
Recent Developments in Employers' Costs and Benefit Payments
References
OVERVIEW
A wide variety of Federal programs outside the jurisdiction
of the Committee on Ways and Means provide benefits to
individuals and families that also receive assistance from
programs within the Committee's jurisdiction (see appendix K).
This section describes several such programs: food stamps;
Medicaid; housing assistance; School Lunch and Breakfast
Programs; the Special Supplemental Food Program for Women,
Infants, and Children (WIC); the Job Training Partnership Act;
Head Start; the Low-Income Home Energy Assistance Program
(LIHEAP); veterans benefits and services; and workers'
compensation.
Most families receiving Aid to Families with Dependent
Children \1\ (AFDC) or Supplemental Security Income (SSI) would
have incomes low enough to qualify them--or particular members
of their families--for assistance under these programs. Unlike
the principal assistance programs under the jurisdiction of the
Committee on Ways and Means, participation in Head Start,
LIHEAP, and other programs is limited by appropriations. Income
received from AFDC is counted in determining eligibility and
benefit levels for these programs. However, because these
programs provide in-kind rather than cash assistance, benefits
are not counted in determining eligibility for AFDC.
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\1\ AFDC was replaced by the Temporary Assistance for Needy
Families Program by Public Law 104-193 in 1996 (see section 7).
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Tables 15-1 and 15-2 describe the overlap in recipients
between programs within the jurisdiction of the Committee on
Ways and Means and other major Federal assistance programs.
Table 15-1 illustrates that 87.2 percent of AFDC recipient
households also received food stamps during the first quarter
of 1995; 24.7 percent received WIC; 97.2 percent received
Medicaid; 63.1 percent received free or reduced-price school
meals; and 31.1 percent received housing assistance.
Table 15-2 presents the percentage of recipients of other
means-tested programs who are participating in programs under
Ways and Means jurisdiction. For example, 48.9 percent of food
stamp households received AFDC benefits at some time during the
first quarter of 1995; 27.6 percent received SSI; 25.6 percent
received Social Security; 2.5 percent received unemployment
benefits; and 22.5 percent received Medicare.
Table 15-3 shows the percentage of households receiving
AFDC or SSI and also receiving assistance from other programs
for selected time periods. The figures at the bottom of the
AFDC and SSI portions of the table show that the number of
households receiving AFDC increased rapidly between 1990 and
1994 and then declined somewhat in 1995. The AFDC rolls
increased by nearly one-third over the entire period. The
number of households receiving SSI declined slightly in 1990
and 1993, but otherwise increased throughout the period between
1984 and 1995. The rolls increased by more than 50 percent over
this period.
TABLE 15-1.--PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS
RECEIVING ASSISTANCE FROM OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS, 1995
----------------------------------------------------------------------------------------------------------------
Ways and Means assistance program
-----------------------------------------------------
Other assistance program Social Unemployment
AFDC SSI Security compensation Medicare
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Food stamps............................................... 87.2 50.0 7.7 9.1 7.4
WIC....................................................... 24.7 5.6 1.0 4.4 0.6
Medicaid.................................................. 97.2 100.0 14.0 16.2 14.3
Free or reduced-price school meals........................ 63.1 25.2 4.0 16.5 2.6
Public or subsidized rental housing....................... 31.1 24.1 6.8 4.1 7.2
VA compensation or pensions............................... 0.8 3.6 5.3 1.7 5.6
Number of households receiving benefits (in thousands) 4,652 4,580 27,654 2,246 25,271
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Note.--Table shows number of households in the first quarter of 1995. Table reads that 87.2 percent of AFDC
households also receive food stamps. SSI recipients living in California receive a higher SSI payment in lieu
of food stamps, and thus are not included in the food stamp percentages.
Source: U.S. Bureau of the Census.
TABLE 15-2.--PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER
PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS, 1995
----------------------------------------------------------------------------------------------------------------
Other assistance program
-------------------------------------------------------------
Free or Public or
Ways and Means assistance program Food reduced subsidized VA
stamps WIC school rental Medicaid compensation
meals housing or pensions
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AFDC.............................................. 48.9 41.7 30.3 28.7 35.6 1.6
SSI............................................... 27.6 9.3 11.9 22.0 36.1 6.7
Social Security................................... 25.6 9.9 11.4 37.6 30.6 59.3
Unemployment compensation......................... 2.5 3.6 3.8 1.8 2.9 1.6
Medicare.......................................... 22.5 5.8 6.8 36.2 28.4 57.7
Number of households receiving benefits (in
thousands)................................... 8,298 2,757 9,681 5,031 12,685 2,465
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Note.--Table shows households in the first quarter of 1995. Table reads that 48.9 percent of food stamp
recipient households receive AFDC. SSI recipients living in California receive a higher SSI payment in lieu of
food stamps, and thus are not included in the food stamp percentages.
Source: U.S. Bureau of the Census.
The percentage of AFDC and SSI households receiving other
benefits fluctuated somewhat over the period, but the general
trend was toward increased coverage for all benefits except VA
compensation or pensions. The percentage of AFDC households
receiving food stamps, for example, increased from 81 percent
in 1984 to 87 percent in 1995; receipt of Medicaid over the
same period increased from 93 to 97 percent of households.
Similarly, the percentage of SSI households receiving food
stamps increased from 46 to 50 percent while Medicaid coverage
held at or very near 100 percent over the period. The
percentage of AFDC and SSI households receiving WIC, school
meals, and housing also increased over the period 1984-95.
TABLE 15-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS FOR
SELECTED TIME PERIODS
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Year
Assistance program -------------------------------------------------------
1984 1987 1990 1992 1993 1994 1995
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AFDC:
Food stamps......................................... 81.4 81.7 82.7 86.2 88.9 88.3 87.2
WIC................................................. 15.3 18.6 18.7 21.5 18.5 21.4 24.7
Free or reduced-price school meals.................. 49.2 55.6 52.7 55.5 56.9 57.5 63.1
Public or subsidized rental housing................. 23.0 19.4 34.7 29.5 33.1 30.3 31.1
Medicaid............................................ 93.2 95.5 97.6 96.2 97.6 96.4 97.2
VA compensation or pensions......................... 2.8 1.9 1.3 1.9 1.1 1.1 0.8
Number of households receiving benefits (in
thousands)..................................... 3,585 3,527 3,434 4,057 4,831 4,906 4,652
SSI:
Food stamps......................................... 46.5 39.7 41.3 46.2 48.0 50.1 50.0
WIC................................................. 2.5 2.5 3.0 4.3 3.7 5.4 5.6
Free or reduced-price school meals.................. 12.7 11.9 15.3 18.2 21.3 23.8 25.2
Public or subsidized rental housing................. 21.6 20.0 21.4 23.8 23.9 24.9 24.1
Medicaid............................................ 100.0 99.6 99.7 99.8 99.5 100.0 100.0
VA compensation or pensions......................... 4.7 7.7 5.7 4.0 4.5 3.9 3.6
Number of households receiving benefits (in
thousands)..................................... 3,008 3,341 3,037 3,957 3,861 4,223 4,580
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Note.--SSI recipients living in California receive a higher SSI payment in lieu of food stamps, and thus are not
included in the food stamp percentages.
Source: U.S. Bureau of the Census.
FOOD STAMP PROGRAM
Food stamps are designed primarily to increase the food
purchasing power of eligible low-income households to a point
where they can buy a nutritionally adequate low-cost diet.
Participating households are expected to be able to devote 30
percent of their counted monthly cash income to food
purchases.\2\ Food stamp benefits then make up the difference
between the household's expected contribution to its food costs
and an amount judged to be sufficient to buy an adequate low-
cost diet. This amount, the maximum food stamp benefit, is set
at the level of the U.S. Department of Agriculture's lowest
cost food plan (the Thrifty Food Plan), varied by household
size, and adjusted annually for inflation. Thus, a
participating household with no counted cash income receives
the maximum monthly allotment for its household size while a
household with some counted income receives a lesser allotment,
normally reduced from the maximum at the rate of 30 cents for
each dollar of counted income.
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\2\ Because not all of a household's income is actually counted
when determining its food stamp benefits, the program, in effect,
assumes that most participants are able to spend about 20-25 percent of
their total cash monthly income on food.
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Benefits are available to most households that meet
Federal eligibility tests for limited monthly income and liquid
assets. But household members must fulfill requirements related
to work effort and, in general, must be U.S. citizens.
Recipients in the two primary cash welfare programs (TANF and
SSI) generally are automatically eligible for food stamps, as
are recipients of State general assistance payments, if the
household is composed entirely of TANF, SSI, or general
assistance beneficiaries.\3\
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\3\ Except for (1) SSI recipients in California, where a State-
financed adjustment to SSI benefits has replaced food stamp assistance;
and (2) general assistance programs that do not meet minimum Federal
standards.
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Administration, Program Variations, and Funding
The regular Food Stamp Program operates in all 50 States,
the District of Columbia, Guam, and the Virgin Islands. The
Federal Government is responsible for most of the rules that
govern the program, and, with limited variations for Alaska,
Hawaii, and the territories, these rules are nationally
uniform. However, major 1996 revisions to the Food Stamp Act
grant States a number of significant options to vary from
Federal administrative and benefit calculation rules,
especially for those who also are recipients of their State's
cash welfare programs, and a number of waivers from regular
rules and procedures have been (and continue to be) granted.
Sales taxes on food stamp purchases may not be charged, and
food stamp benefits do not affect other assistance available to
low-income households, nor are they taxed as income.
Alternative programs are offered in Puerto Rico, the
Northern Mariana Islands, and American Samoa, and program
variations occur in a number of demonstration projects and in
those jurisdictions that have elected to exercise the limited
number of program options allowed.
Funding is overwhelmingly Federal, although the States and
other jurisdictions have financial responsibility for
significant administrative costs, as well as liability for
erroneous benefit determinations (as assessed under the food
stamp ``quality control'' system, discussed later).
Federal administrative responsibilities
At the Federal level, the program is administered by the
Agriculture Department's Food and Consumer Service (FCS). The
FCS gives direction to welfare agencies through Federal
regulations that define eligibility requirements, benefit
levels, and administrative rules. It is also responsible for
arranging for printing food stamp coupons and distributing them
to welfare agencies, for overseeing State programs for the
electronic issuance of food stamp benefits, and for approving
and overseeing participation by retail food stores and other
outlets that may accept food stamps. Other Federal agencies
that have administrative roles to play include: the Federal
Reserve System (through which food stamp benefits are redeemed
for cash, and which has some jurisdiction over ``electronic
benefit transfer'' methods for issuing food stamp benefits),
the Social Security Administration (responsible for providing
the Social Security numbers recipients must have, for providing
limited application ``intake'' services, and for providing
information to verify recipients' income), the Internal Revenue
Service (providing assistance in verifying recipients' income
and assets), the Immigration and Naturalization Service
(helping welfare offices confirm alien applicants' status), and
the Secret Service and the Agriculture Department's Inspector
General (responsible for counterfeiting and trafficking
investigations).
State and local administrative responsibilities
States, the District of Columbia, Guam, and the Virgin
Islands, through their local welfare offices, have primary
responsibility for the day-to-day administration of the Food
Stamp Program. They determine eligibility, calculate benefits,
and issue food stamp allotments (using coupons or electronic
benefit transfers) following Federal rules. They also have a
significant voice in carrying out employment and training
programs and in determining some administrative features of the
program (e.g., the extent to which verification of household
circumstances is pursued, the length of eligibility
certification periods, the structure of electronic benefit
transfer systems). Most often, the Food Stamp Program is
operated through the same welfare agency and staff that runs
the Federal/State TANF and Medicaid Programs.
Puerto Rico, the Northern Mariana Islands, and American Samoa
In addition to the regular Food Stamp Program, the Food
Stamp Act directs funding for a Nutrition Assistance Program in
the Commonwealth of Puerto Rico and another in American Samoa.
Separate legislation authorizes a variant of the Food Stamp
Program in the Commonwealth of the Northern Mariana Islands.
Since July 1982, Puerto Rico has operated a Nutrition
Assistance Program of its own design, funded by an annual
Federal ``block grant.'' \4\ The Commonwealth's Nutrition
Assistance Program differs from the regular Food Stamp Program
primarily in that: (1) funding is limited to an annual amount
specified by law \5\; (2) the Food Stamp Act allows the
Commonwealth a great deal of flexibility in program design, as
opposed to the regular program's extensive Federal rules (e.g.,
benefits are paid in cash (checks) rather than food stamp
coupons); (3) income and liquid assets eligibility limits are
about half those used in the regular Food Stamp Program; (4)
maximum benefit levels are about one-quarter less than in the
48 contiguous States and the District of Columbia; and (5)
different rules are used in counting income for eligibility and
benefit purposes. In fiscal year 1996, Puerto Rico's Nutrition
Assistance Program aided approximately 1.3 million persons each
month with monthly benefits averaging $67 a person ($186 a
household).
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\4\ Prior to July 1982, the regular Food Stamp Program operated in
Puerto Rico, although with slightly different eligibility and benefit
rules.
\5\ For fiscal years 1997 and 1998, $1.174 billion and $1.204
billion are earmarked. The block grant funds the full cost of benefits
and half the cost of administration.
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Under the terms of the 1976 Covenant with the Commonwealth
of the Northern Mariana Islands and implementing legislation
(Public Law 96-597), a variant of the Food Stamp Program was
negotiated with the Commonwealth and began operations in July
1982. The program in the Northern Marianas differs primarily in
that: (1) it is funded entirely by Federal money, up to a
maximum grant of $5.1 million a year; (2) a portion of each
household's food stamp benefit must be used to purchase locally
produced food; (3) maximum allotments are about 20 percent
higher than in the 48 contiguous States and the District of
Columbia; and (4) income eligibility limits are about half
those in the regular program. As of the end of fiscal year
1996, the Northern Marianas' program assisted almost 4,000
people each month with monthly benefits averaging $75 a person
(also see chapter 12).
As with the Northern Marianas, American Samoa operates a
variant of the regular Food Stamp Program. Under the Secretary
of Agriculture's authority to extend Agriculture Department
programs to American Samoa (Public Law 96-597) and a 1996
amendment to the Food Stamp Act made by the Federal Agriculture
Improvement and Reform Act (Public Law 104-127), American Samoa
receives an annual grant of up to $5.3 million to operate a
Food Stamp Program limited to low-income elderly and disabled
persons. As of the end of fiscal year 1996, the program aided
about 3,000 persons a month with average monthly benefits of
just over $100 a person (also see chapter 12).
Program options
The Food Stamp Act authorizes demonstration projects to
test program variations that might improve operations. At
present, three major types of demonstration projects are
underway: (1) a limited number of projects that ``cash out''
food stamp benefits (these projects cash out food stamps for
the elderly and SSI recipients, very poor households that are
eligible for expedited service, and some households that are
part of State welfare reform efforts); (2) welfare reform
demonstrations in which food stamp rules are changed to support
TANF reform efforts (e.g., food stamps are used as a wage
supplement or cashed out; food stamps are consolidated with
TANF benefits; food stamp income and asset rules are changed to
encourage employment); and (3) a project granting quarterly
(instead of monthly) benefit payments to SSI recipients
eligible for very small benefits.
In addition to demonstration projects, States are allowed
to implement some optional aspects of the Food Stamp Program.
States may require ``monthly reporting'' and ``retrospective
budgeting'' for parts of their food stamp caseload. They may
issue benefits (at their own cost) to ineligible noncitizens
and those ineligible under the new work rule for able-bodied
adults without children (discussed later). With 50-percent
Federal cost sharing, they can operate ``outreach'' programs to
inform low-income persons about food stamps and support
nutrition education efforts. They may choose to issue food
stamp benefits through electronic benefit transfer systems.
They may choose to operate a ``simplified'' program under which
they can use many of their TANF rules and procedures when
determining food stamp benefits for TANF recipients. They
largely determine the length of eligibility certification
periods. They may sanction food stamp recipients failing to
meet other public asssistance program rules or failing to
cooperate in child support enforcement. They may, to a certain
extent, waive the application of the new work rule for able-
bodied adults without dependents (discussed later); and they
may choose to disqualify an entire household if the head of
household fails to fulfill work-related requirements. They may
include the cash value of food stamp benefits when using
welfare to subsidize some recipients' wages and can pay food
stamp benefits in cash to other working households getting off
cash welfare. Finally, States and localities may opt to run
``workfare'' programs, and States determine the type(s) of
employment or training programs in which recipients must
participate.
Funding
The Food Stamp Act provides 100 percent Federal funding of
food stamp benefits, except where States choose to ``buy into''
the program and pay for issuing food stamp benefits to
ineligible noncitizens or those made ineligible by the new work
rule for able-bodied adults without dependents (discussed
later). The Federal Government also is responsible for its own
administrative costs: overseeing program operations (including
oversight of participating food establishments), printing and
distributing food stamp coupons to welfare agencies, redeeming
food stamp benefits through the Federal Reserve, and paying the
Social Security Administration for certain intake services.
In most instances, the Federal Government provides half
the cost of State welfare agency administration.\6\ However,
the 50-percent Federal share can be increased to as much as 60
percent if the State has a very low rate of erroneous benefit
determinations. In addition, the Federal Government shares the
cost of carrying out employment and training programs for food
stamp recipients: (1) each State receives a Federal grant for
basic operating costs (a formula share of $79 million in fiscal
year 1997, rising to $212 in fiscal year 1998, and slightly
larger amounts in later years); and (2) additional operating
costs, as well as expenses for support services to participants
(e.g., transportation, child care) are eligible for a 50-
percent Federal match.\7\ Finally, States are allowed to retain
a portion of improperly issued benefits they recover (other
than those caused by welfare agency error): 35 percent of
recoveries in fraud cases and 20 percent in other
circumstances. The growth in Federal and State Food Stamp Act
spending since 1979 is shown in table 15-4.
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\6\ Until April 1994, the cost of certain activities was matched at
more than the 50-percent rate: costs associated with the development of
computer capability and fraud control activities were eligible for 63
and 75 percent Federal sharing, respectively; costs for implementing
the Systematic Alien Verification for Entitlements (SAVE) Program were
fully reimbursed by the Federal Government.
\7\ The overwhelming majority (80 percent) of the formula grant
funds must be spent on services to those covered by a new work
requirement for able-bodied adults without dependents (see later
discussion of work requirements).
TABLE 15-4.--RECENT FOOD STAMP ACT EXPENDITURES
[In millions of dollars]
------------------------------------------------------------------------
Administration \2\
--------------------
Fiscal year Benefits \1\ State Total
(Federal) Federal and
local
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1979......................... $6,480 $515 $388 $7,383
1980......................... 8,685 503 375 9,563
1981......................... 10,630 678 504 11,812
1982......................... 10,408 709 557 11,674
1983......................... 11,955 778 612 13,345
1984......................... 11,499 971 805 13,275
1985......................... 11,556 1,043 871 13,470
1986......................... 11,415 1,113 935 13,463
1987......................... 11,344 1,195 996 13,535
1988......................... 11,999 1,290 1,080 14,369
1989......................... 12,483 1,332 1,101 14,916
1990......................... 15,090 1,422 1,174 17,686
1991......................... 18,249 1,516 1,247 21,012
1992......................... 21,883 1,656 1,375 24,914
1993......................... 23,033 1,716 1,572 26,321
1994......................... 23,736 1,789 1,643 27,168
1995......................... 23,759 1,917 1,748 27,424
1996......................... 23,510 1,984 1,842 27,336
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\1\ All benefit costs associated with the Food Stamp Program and Puerto
Rico's block grant are included. The benefit amounts shown in the
table reflect small downward adjustments for overpayments collected
from recipients and, beginning in 1989, issued but unredeemed
benefits. Over time, the figures reflect both changes in benefit
levels and numbers of recipients.
\2\ All Federal administrative costs associated with the Food Stamp
Program and Puerto Rico's block grant are included: Federal matching
for the various administrative and employment and training expenses of
States and other jurisdictions, and direct Federal administrative
costs. Figures for Federal administrative costs beginning with fiscal
year 1989 include only those paid out of food stamp appropriation and
the food stamp portion of the general appropriation for food program
administration. Figures for earlier years include estimates of food
stamp related Federal administrative expenses paid out of other
Agriculture Department accounts. State and local costs are estimated
based on the known Federal shares and represent an estimate of all
administrative expenses of participating States and other
jurisdictions (including Puerto Rico).
Source: U.S Department of Agriculture budget justification materials
for fiscal years 1981-98. Compiled by the Congressional Research
Service.
Eligibility
The Food Stamp Program has financial, employment/training-
related, and ``categorical'' tests for eligibility. Its
financial tests require that most of those eligible have
monthly income and liquid assets below limits set by food stamp
law. Under the employment/training-related tests, certain
household members must register for work, accept suitable job
offers, and fulfill work or training requirements (such as
looking or training for a job) established by State welfare
agencies. And, under a new work requirement established in 1996
law, food stamp eligibility for able-bodied adults without
dependents is limited to 3-6 months in any 36-month period
unless they are working at least half time or in a work or
training activity. Categorical eligibility rules make some
automatically eligible for food stamps (many TANF, SSI, and
general assistance recipients), and categorically deny
eligibility to others (e.g., strikers and most noncitizens,
postsecondary students, and people living in institutional
settings). Applications cannot be denied because of the length
of a household's residence in a welfare agency's jurisdiction
or because the household has no fixed mailing address or does
not reside in a permanent dwelling.
The food stamp household
The basic food stamp beneficiary unit is the
``household.'' A food stamp household can be either a person
living alone or a group of individuals living together; there
is no requirement for cooking facilities. The food stamp
household is unrelated to recipient units in other welfare
programs (e.g., TANF families with dependent children, elderly
or disabled individuals or couples in the SSI Program).
Generally speaking, individuals living together constitute
a single food stamp household if they customarily purchase food
and prepare meals in common. Members of the same household must
apply together, and their income, expenses, and assets normally
are aggregated in determining food stamp eligibility and
benefits. However, persons who live together can sometimes be
considered separate ``households'' for food stamp purposes,
related coresidents generally are required to apply together,
and special rules apply to those living in institutional
settings. Most often, persons living together receive larger
aggregate benefits if they are treated as more than one food
stamp household.
Persons who live together, but purchase food and prepare
meals separately, may apply for food stamps separately, except
for: (1) spouses; (2) parents and their children (21 years or
younger), and (3) minors 18 years or younger (excluding foster
children, who may be treated separately) who live under the
parental control of a caretaker. In addition, persons 60 years
or older who live with others and cannot purchase food and
prepare meals separately because of a substantial disability
may apply separately from their coresidents as long as their
coresidents' income is below prescribed limits.
Although those living in institutional settings generally
are barred from food stamps, individuals in certain types of
group living arrangements may be eligible and are automatically
treated as separate households, regardless of how food is
purchased and meals are prepared. These arrangements must be
approved by State or local agencies and include: residential
drug addict or alcoholic treatment programs, small group homes
for the disabled, shelters for battered women and children, and
shelters for the homeless.
Thus, different food stamp households can live together,
food stamp recipients can reside with nonrecipients, and food
stamp households themselves may be ``mixed'' (include
recipients and nonrecipients of other welfare benefits).
Income eligibility
Except for households composed entirely of TANF, SSI, or
general assistance recipients (who generally are automatically
eligible for food stamps), monthly cash income is the primary
food stamp eligibility determinant.\8\ In establishing
eligibility for households without an elderly or disabled
member,\9\ the Food Stamp Program uses both the household's
basic (or ``gross'') monthly income and its counted (or
``net'') monthly income. When judging eligibility for
households with elderly or disabled members, only the
household's counted monthly income is considered; in effect,
this procedure applies a more liberal income test to elderly
and disabled households.
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\8\ Although they do not have to meet food stamp income and assets
tests, TANF, SSI, and general assistance households must still have
their income calculated under food stamp rules to determine their food
stamp benefits.
\9\ In the Food Stamp Program, ``elderly'' persons are those 60
years or older. The ``disabled'' generally are beneficiaries of
governmental disability-based payments (e.g., Social Security or SSI
disability recipients, disabled veterans, certain disability retirement
annuitants, and recipients of disability-based Medicaid or general
assistance).
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Basic (or gross) monthly income includes all of a
household's cash income except the following ``exclusions''
(disregards): (1) most payments made to third parties (rather
than directly to the household); (2) unanticipated, irregular,
or infrequent income, up to $30 a quarter; (3) loans (deferred
repayment student loans are treated as student aid, see below);
(4) income received for the care of someone outside the
household; (5) nonrecurring lump-sum payments such as income
tax refunds and retroactive lump-sum Social Security payments
(these are instead counted as liquid assets); (6) Federal
energy assistance; (7) expense reimbursements that are not a
``gain or benefit'' to the household; (8) income earned by
schoolchildren 17 or younger; (9) the cost of producing self-
employment income; (10) Federal postsecondary student aid
(e.g., Pell grants, student loans); (11) advance payments of
Federal earned income credits; (12) ``on-the-job'' training
earnings of dependent children under 19 in Job Training
Partnership Act (JTPA) Programs, as well as JTPA monthly
``allowances''; (13) income set aside by disabled SSI
recipients under an approved ``plan to achieve self-
sufficiency'' (PASS); and (14) payments required to be
disregarded by provisions of Federal law outside the Food Stamp
Act (e.g., various payments under laws relating to Indians,
payments under the Older Americans Act Employment Program for
the Elderly).
Counted (or net) monthly income is computed by subtracting
certain ``deductions'' from a household's basic (or gross)
monthly income. This procedure is based on the recognition that
not all of a household's income is equally available for food
purchases. Thus, a standard portion of income, plus amounts
representing work expenses or excessively high nonfood living
expenses, are disregarded.
For households without an elderly or disabled member,
counted monthly income equals their gross monthly income less
the following deductions:
--A standard deduction set at $134 a month, regardless of
household size; different standard deductions are used
for Alaska ($229), Hawaii ($189), Guam ($269), and the
Virgin Islands ($118).
--Any amounts paid as legally obligated child support;
--Twenty percent of any earned income, in recognition of
taxes and work expenses;
--Out-of-pocket dependent care expenses, when related to work
or training, up to $175 a month per dependent, $200 a
month for children under age 2;
--Shelter expenses that exceed 50 percent of counted income
after all other deductions, up to a periodically
adjusted ceiling now standing at $250 a month.
Different ceilings prevail in Alaska, Hawaii, Guam, and
the Virgin Islands: $434, $357, $304, and $184,
respectively.
For households with an elderly or disabled member, counted
monthly income equals gross monthly income less the following
deductions:
--The same standard, child support, earned income, and
dependent care deductions noted above;
--Any shelter expenses, to the extent they exceed 50 percent
of counted income after all other deductions, with no
limit; and
--Any out-of-pocket medical expenses (other than those for
special diets) that are incurred by an elderly or
disabled household member, to the extent they exceed a
``threshold'' of $35 a month.
Except for those households comprised entirely of TANF,
SSI, or general assistance recipients, in which case food stamp
eligibility generally is automatic, all households must have
net monthly income that does not exceed the Federal poverty
guidelines, as adjusted for inflation each October. Households
without an elderly or disabled member also must have gross
monthly income that does not exceed 130 percent of the
inflation-adjusted Federal poverty guidelines. Both these
income eligibility limits are uniform for the 48 contiguous
States, the District of Columbia, Guam, and the Virgin Islands;
somewhat higher limits (based on higher poverty guidelines) are
applied in Alaska and Hawaii. The net and gross eligibility
limits on income are summarized in table 15-5.
Allowable assets
Except for households automatically eligible for food
stamps because they are composed entirely of TANF, SSI, or
general assistance recipients, eligible households must have
counted or liquid assets that do not exceed federally
prescribed limits. Households without an elderly member cannot
have counted liquid assets above $2,000. Households with an
elderly member cannot have counted liquid assets above $3,000.
TABLE 15-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY
LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 1998
------------------------------------------------------------------------
48 States, the
District of
Household size Columbia, and Alaska Hawaii
the
territories
------------------------------------------------------------------------
Counted (net) monthly income
eligibility limits \1\:
1 person...................... $658 $823 $756
2 persons..................... 885 1,106 1,017
3 persons..................... 1,111 1,390 1,278
4 persons..................... 1,338 1,673 1,539
5 persons..................... 1,565 1,956 1,800
6 persons..................... 1,791 2,240 2,060
7 persons..................... 2,018 2,523 2,321
8 persons..................... 2,245 2,806 2,582
Each additional person........ +227 +284 +261
Basic (gross) monthly income
eligibility limits \2\:
1 person...................... 855 1,070 983
2 persons..................... 1,150 1,438 1,322
3 persons..................... 1,445 1,806 1,661
4 persons..................... 1,739 2,175 2,000
5 persons..................... 2,034 2,543 2,339
6 persons..................... 2,329 2,911 2,678
7 persons..................... 2,623 3,280 3,018
8 persons.................... 2,918 3,648 3,357
Each additional person....... +295 +369 +340
------------------------------------------------------------------------
\1\ Set at the applicable Federal poverty guidelines, updated for
inflation through calendar 1996.
\2\ Set at 130 percent of the applicable Federal poverty guidelines,
updated for inflation through calendar 1996.
Source: U.S. Department of Agriculture, Food and Consumer Service.
Counted liquid assets include cash on hand, checking and
savings accounts, savings certificates, stocks and bonds,
individual retirement accounts (IRAs) and ``Keogh'' plans (less
any early withdrawal penalties), and nonrecurring lump-sum
payments such as insurance settlements. Certain ``less liquid''
assets are also counted: a portion of the value of vehicles
(generally, the fair market value in excess of $4,650) and the
equity value of property not producing income consistent with
its value (e.g., recreational property).
Counted assets do not include the value of the household's
residence (home and surrounding property), business assets,
personal property (household goods and personal effects), lump-
sum earned income tax credit payments, burial plots, the cash
value of life insurance policies and pension plans (other than
Keogh plans and IRAs), and certain other resources whose value
is not accessible to the household or are required to be
disregarded by other Federal laws.
Work-related requirements
Unless exempt, most able-bodied adults must (to gain or
retain eligibility) (1) register for work (typically with the
welfare agency or a State employment service office), (2)
accept a suitable job if offered one, (3) fulfill any work, job
search, or training requirements established by administering
welfare agencies, (4) provide the administering welfare agency
with sufficient information to allow a determination with
respect to their job availability, and (5) not voluntarily quit
a job without good cause or reduce work effort below 30 hours a
week. If the household head fails to fulfill any of these
requirements, the entire household may, at State option, be
disqualified for up to 180 days. Individual disqualification
periods differ according to whether the violation is the first,
second, or third; minimum periods (which may be increased by
the State welfare agency) range from 1 to 6 months.
Those who are exempt by law from these basic work
requirements include: persons physically or mentally unfit for
work, those under age 16 or over age 59, and individuals
between 16 and 18 if they are not head of household or are
attending school or a training program; persons working at
least 30 hours a week or earning the minimum wage equivalent;
persons caring for dependents who are disabled or under age 6,
and those caring for children between ages 6 and 12 if adequate
child care is not available (this second exemption is limited
to allowing these persons to refuse a job offer if care is not
available); individuals already subject to and complying with
another assistance program's work, training, or job search
requirements; otherwise eligible postsecondary students; and
residents of drug addiction and alcoholic treatment programs.
Those not exempted by one of the above-listed rules must,
at least, register for work and accept suitable job offers.
However, their State welfare agency may require them to fulfill
some type of work, job search, or training obligation. Welfare
agencies must operate an employment and training program of
their own design for work registrants whom they designate.
Welfare agencies may require all work registrants to
participate in one or more components of their program, or
limit participation by further exempting additional categories
and individuals for whom participation is judged impracticable
or not cost effective. Program components can include any or
all of the following activities: supervised job search or
training for job search, workfare, work experience or training
programs, education programs to improve basic skills, or any
other employment or training activity approved by the
Agriculture Department. However, at least 80 percent of
unmatched Federal money provided for States' employment and
training programs must be spent on services to those covered by
the new work rule for able-bodied adults without dependents
(see below).
In fiscal year 1996, there were some 5.5 million work
registrants, of whom 40 percent were exempted from employment
and training program participation requirements. Of the
remainder, about 1.5 million persons participated in some
employment activity and almost 600,000 received ``notices of
adverse action'' because they failed to meet participation
requirements. The overwhelming majority of those fulfilling an
employment activity requirement participated in work or job
search or job search training (as opposed to education or other
training).
Recipients who take part in an employment or training
activity beyond work registration cannot be required to work
more than the minimum wage equivalent of their household's
benefit, and total hours of participation (including both work
and any other required activity) cannot exceed 120 hours a
month. Welfare agencies also must provide participants support
for costs directly related to participation (e.g.,
transportation and child care). Agencies may limit this support
to $25 per participant per month for all support costs other
than dependent care, and to local market rates for necessary
dependent care.
In addition to the above-noted work-related requirements
(e.g., work registration, participation in an employment and
training program if called on, a ban on voluntarily quitting a
job), the 1996 welfare reform law (the Personal Responsibility
and Work Opportunity Reconciliation Act) added a new work
requirement for most able-bodied adults (between 18 and 50)
without dependents. They are ineligible for food stamps if,
during the prior 36 months, they received food stamps for 3
months while not working at least 20 hours a week or
participating in an approved work/training activity (including
workfare). Those disqualified under this rule are able to
reenter the Food Stamp Program if, during a 30-day period, they
work 80 hours or more or participate in a work/training
activity. If they then become unemployed or leave work/
training, they are eligible for an additional 3-month period on
food stamps without working at least 20 hours a week or
participating in a work/training activity. But they are allowed
only one of these added 3-month eligibility periods in any 36
months for a potential total of 6 months on food stamps in any
36 months without half-time work or enrollment in a work/
training program.
At State request, this rule can be waived for areas with
very high unemployment (over 10 percent) or lack of available
jobs. Moreover, States may, on their own initiative, exempt up
to 15 percent of those covered under the new work rule.
Categorical eligibility rules and other limitations
Some rules deny food stamp eligibility for reasons other
than financial need or compliance with work-related
requirements. Most noncitizens are barred (other than refugees
and asylees for a limited period of time, veterans, and those
with a substantial history of work covered under the Social
Security system). Households with members on strike are denied
benefits unless eligible prior to the strike. With some
exceptions, postsecondary students (in school half time or
more) who are fit for work and between ages 18 and 50 are
ineligible. Persons living in institutional settings are denied
eligibility, except those in special SSI-approved small group
homes for the disabled, persons living in drug addiction or
alcohol treatment programs, and persons in shelters for
battered women and children or shelters for the homeless.
Boarders cannot receive food stamps unless they apply together
with the household in which they are boarding. Those who
transfer assets for the purpose of qualifying for food stamps
are barred. Persons who fail to provide Social Security numbers
or cooperate in providing information needed to verify
eligibility or benefit determinations are ineligible. Food
stamps are denied those who intentionally violate program
rules, for specific time periods ranging from 1 year (on a
first violation) to permanently (on a third violation or other
serious infraction); and States may impose food stamp
disqualification when an individual is disqualified from
another public assistance program. Automatic disqualification
is required for those applying in multiple jurisdictions,
fleeing arrest, or convicted of a drug-related felony. And
States may disqualify individuals not cooperating with child
support enforcement authorities or in arrears on their child
support obligations.
Benefits
Food stamp benefits are a function of a household's size,
its net monthly income, and maximum monthly benefit levels (in
some cases, adjusted for geographic location). An eligible
household's net income is determined (i.e., deductions are
subtracted from gross income), its maximum benefit level is
established, and a benefit is calculated by subtracting its
expected contribution (30 percent of its counted net income)
from its maximum allotment. Thus, a 3-person household with
$400 in counted net income (after deductions) would receive a
monthly allotment of $201 (the maximum 3-person benefit in the
48 States, $321, less 30 percent of net income, $120).
Allotments are not taxable and food stamp purchases may
not be charged sales taxes. Receipt of food stamps does not
affect eligibility for or benefits provided by other welfare
programs, although some programs use food stamp participation
as a ``trigger'' for eligibility and others take into account
the general availability of food stamps in deciding what level
of benefits to provide. In fiscal year 1996, monthly benefits
averaged $73 a person and about $183 a household.
Maximum monthly allotments
Maximum monthly food stamp allotments are tied to the cost
of purchasing a nutritionally adequate low-cost diet, as
measured by the Agriculture Department's Thrifty Food Plan
(TFP). Maximum allotments are set at: the monthly cost of the
TFP for a four-person family consisting of a couple between
ages 20 and 50 and two school-age children, adjusted for family
size (using a formula reflecting economies of scale developed
by the Human Nutrition Information Service), and rounded down
to the nearest whole dollar. Allotments are adjusted for food
price inflation annually, each October, to reflect the cost of
the TFP in the immediately previous June.
Maximum allotments are standard in the 48 contiguous
States and the District of Columbia; they are higher,
reflecting substantially different food costs, in Alaska,
Hawaii, Guam, and the Virgin Islands (table 15-6).
Minimum and prorated benefits
Eligible one- and two-person households are guaranteed a
minimum monthly food stamp allotment of $10. Minimum monthly
benefits for other household sizes vary from year to year,
depending on the relationship between changes in the income
eligibility limits and the adjustments to the cost of the TFP.
In a few cases, benefits can be reduced to zero before income
eligibility limits are exceeded. At present, minimum monthly
allotments for households of three or more persons range from
$2 to over $80.
In addition, a household's calculated monthly allotment
can be prorated (reduced) for 1 month. On application, a
household's first month's benefit is reduced to reflect the
date of application. If a previously participating household
does not meet eligibility recertification requirements in a
timely fashion, but does become certified for eligibility
subsequently, benefits for the first month of its new
certification period normally are prorated to reflect the date
when recertification requirements were met.
TABLE 15-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 1998
----------------------------------------------------------------------------------------------------------------
48
States
and the Virgin
Household size District Alaska \1\ Hawaii Guam Islands
of
Columbia
----------------------------------------------------------------------------------------------------------------
1 person....................................................... $122 $154 $197 $180 $157
2 persons...................................................... 224 283 361 331 288
3 persons...................................................... 321 405 517 474 413
4 persons...................................................... 408 514 657 602 525
5 persons...................................................... 485 611 780 715 623
6 persons...................................................... 582 733 936 858 748
7 persons...................................................... 643 810 1,035 948 827
8 persons...................................................... 735 926 1,183 1,083 945
Each additional person........................................ +92 +116 +148 +135 +118
----------------------------------------------------------------------------------------------------------------
\1\ Maximum monthly allotments for designated urban areas of Alaska. Two separate higher allotment levels are
applied in remote rural areas of Alaska. They are 28 and 55 percent higher than the urban allotments shown
here.
Source: U.S. Department of Agriculture.
Application, processing, and issuing food stamps
Food stamp benefits normally are issued monthly. The local
welfare agency must either deny eligibility or make food stamps
available within 30 days of initial application and must
provide food stamps without interruption if an eligible
household reapplies and fulfills recertification requirements
in a timely manner. Households in immediate need because of
little or no income and very limited cash assets, as well as
the homeless and those with extraordinarily high shelter
expenses, must be given expedited service (provision of
benefits within 7 days of initial application).
Food stamp issuance is a welfare agency responsibility,
and issuance practices differ among welfare agencies. Most food
stamp coupons are issued by: (1) providing (usually mailing)
recipients an authorization-to-participate (ATP) card that is
then turned in at a local issuance point (e.g., a bank or post
office) when picking up their monthly allotment; or (2) mailing
food stamp coupon allotments directly to recipients. However,
in a growing number of States, electronic benefit transfer
(EBT) systems are used. EBT systems replace coupons with an
ATM-like card used to make food purchases at the point of sale
by deducting the purchase amount from the recipient's food
stamp benefit account. EBT issuance is used (either statewide
or in part of the State) in over a dozen States (reaching more
than 20 percent of food stamp recipients). All remaining States
are well along in the process of converting to EBT issuance.
Using food stamps
Food stamp benefits are usually issued in the form of
booklets of coupons. The smallest coupon denomination is $1; if
change of less than $1 is due on a food stamp purchase, it is
returned in cash. Typically, participating households use their
food stamps in approved grocery stores to buy food items for
home preparation and consumption; food stamp purchases are not
taxable. However, the actual list of approved uses for food
stamps is more extensive, and includes: (1) food for home
preparation and consumption, not including alcohol, tobacco, or
hot foods intended for immediate consumption; (2) seeds and
plants for use in gardens to produce food for personal
consumption; (3) in the case of the elderly and SSI recipients
and their spouses, meals prepared and served through approved
communal dining programs; (4) in the case of the elderly and
those who are disabled to an extent that they cannot prepare
all of their meals, home-delivered meals provided by programs
for the homebound; (5) meals prepared and served to residents
of drug addiction and alcoholic treatment programs, small group
homes for the disabled, shelters for battered women and
children, and shelters or other establishments serving the
homeless; and (6) where the household lives in certain remote
areas of Alaska, equipment for procuring food by hunting and
fishing (e.g., nets, hooks, fishing rods, and knives). As noted
earlier, food stamp benefits also can be used through EBT
cards. In this case, the card is swiped through an approved
retailer's point-of-sale device, automatically debiting the
recipient's food stamp account and crediting the retailer's
bank account; unlike coupon transactions, recipients receive no
cash change.
Quality Control (QC)
Since the early 1970s, the Food Stamp Program, like other
welfare programs, has had a quality control system to monitor
the degree to which erroneous eligibility and benefit
determinations are made by State welfare agencies. The system
was established by regulation in the 1970s as an administrative
tool to enable welfare officials to identify problems and take
corrective actions. Today, by legislative directive, the QC
system also is used to calculate and impose fiscal sanctions on
States that have very high rates of erroneous benefit and
eligibility decisions.
Under the quality control system, welfare agencies, with
Federal oversight, continuously sample their active food stamp
caseloads, as well as their decisions to deny or end benefits.
The agencies perform indepth investigations of the eligibility
and benefit status of the randomly chosen cases looking for
errors in applying Federal rules and otherwise erroneous
benefit and eligibility outcomes. Over 90,000 cases are
reviewed each year, and each State's sample is designed to
provide a statistically valid picture of erroneous decisions
and, in most instances, their dollar value in benefits. The
resulting error rate information is used by program managers to
chart needed changes in administrative practices, and by the
Federal Government to assess fiscal sanctions on States with
error rates above certain tolerance levels. This information
also is used to reward States with error rates below a separate
lower tolerance level, and to review welfare agency plans for
action to correct procedures to control errors. Both error rate
findings and any assessed sanctions are subject to appeal
through administrative law judges and the Federal courts.
Sanctions may be reduced or waived if the State shows good
cause or if it is determined that the sanction amounts should
be invested in improved State administration. Interest may be
charged on outstanding sanction liabilities if the
administrative appeals process takes more than 1 year.
Quality control reviews generate annual estimates of the
proportion of cases in which administrators or recipients make
an ``error'' and the dollar value of those errors. Caseload and
dollar error rates are calculated for overpayments (including
incorrect payments to eligible and ineligible households) and
underpayments. The accuracy of welfare agency decisions denying
or terminating assistance also is measured, with an error rate
reflecting the proportion of denials and terminations that were
improper; no dollar value is calculated. The national weighted
average for the dollar value of overpayments was estimated at
6.9 percent in fiscal year 1996 (table 15-7). This was just
under the all-time low of 7 percent in 1991. Error rates for
underpayments have been relatively unchanged over time. In
fiscal year 1996, the national weighted average underpayment
dollar error rate was estimated at 2.3 percent. Finally, the
rate of denials and terminations found improper in the most
recent estimate (1994) was 3.8 percent.
TABLE 15-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1996
[Percent of benefits paid or not paid in error]
------------------------------------------------------------------------
Overpayment Underpayment Combined
State error rate error rate error rate
------------------------------------------------------------------------
Alabama......................... 4.87 0.93 5.80
Alaska.......................... 5.22 2.27 7.50
Arizona......................... 6.99 1.45 8.44
Arkansas........................ 3.64 0.90 4.54
California..................... 5.65 3.73 9.32
Colorado........................ 6.04 1.70 7.74
Connecticut.................... 8.92 1.74 10.65
Delaware........................ 6.90 1.79 8.68
District of Columbia............ 4.72 2.05 6.77
Florida......................... 7.43 2.27 9.70
Georgia......................... 7.20 3.06 10.26
Guam............................ 7.11 2.51 9.62
Hawaii.......................... 2.46 1.53 3.99
Idaho.......................... 3.89 2.39 6.28
Illinois....................... 10.24 2.19 12.43
Indiana........................ 7.07 2.61 9.68
Iowa........................... 9.40 2.80 12.20
Kansas......................... 5.60 1.89 7.49
Kentucky........................ 3.70 1.63 5.33
Louisiana...................... 4.48 1.49 5.97
Maine.......................... 5.98 1.39 7.37
Maryland....................... 8.83 2.43 11.26
Massachusetts................... 3.40 1.29 4.69
Michigan....................... 9.56 1.67 11.23
Minnesota...................... 5.51 1.44 6.95
Mississippi.................... 8.21 1.80 10.01
Missouri....................... 9.91 3.47 13.38
Montana........................ 5.85 2.88 8.73
Nebraska........................ 6.76 3.78 10.54
Nevada......................... 7.79 2.84 10.63
New Hampshire.................. 7.19 2.17 9.37
New Jersey..................... 6.22 2.48 8.70
New Mexico..................... 5.94 2.02 7.96
New York........................ 6.11 2.77 8.88
North Carolina................. 7.73 2.27 10.00
North Dakota................... 4.44 1.66 6.10
Ohio........................... 9.31 3.32 12.63
Oklahoma....................... 7.16 3.03 10.19
Oregon......................... 9.03 2.14 11.17
Pennsylvania.................... 6.99 2.22 9.21
Rhode Island.................... 4.83 1.83 6.66
South Carolina................. 4.32 2.00 6.32
South Dakota................... 2.40 1.11 3.50
Tennessee....................... 7.14 1.84 8.99
Texas........................... 5.50 0.95 6.45
Utah........................... 7.23 2.40 9.63
Vermont........................ 9.28 1.59 10.87
Virginia........................ 10.92 3.03 13.95
Virgin Islands................. 6.92 1.84 8.76
Washington...................... 9.50 1.83 11.34
West Virginia.................. 9.05 3.35 12.40
Wisconsin...................... 9.27 2.13 11.40
Wyoming........................ 5.34 2.04 7.37
---------------------------------------
U.S. average................ 6.92 2.31 9.22
------------------------------------------------------------------------
Note.--Underpayment and overpayment rates may not add to combined rates
due to rounding.
Source: Food and Consumer Service (1997).
The dollar error rates reported through the food stamp
quality control system are used as the basis for assessing the
financial liability of States for overpaid and underpaid
benefits. Although over $1 billion in sanctions have been
assessed since the early 1980s, less than $10 million has been
collected. The appeals process has delayed collection, and
sanctions have been forgiven or waived both by Congress and the
administration. In amending the rules governing sanctions in
1988 and 1990, Congress forgave accumulated sanctions, and, in
late 1992, the administration waived sanctions by allowing
States to invest the amounts in improved administration.
Permission for States to invest sanction amounts in improved
program administration has now become the rule, and States
regularly apply and agree to invest sanction amounts under
Federal guidelines rather than pay the Federal Government.
Rules governing fiscal sanctions have changed a number of
times. Under the most recent revision (1993), sanctions are
assessed States with combined (overpayment and underpayment)
dollar error rates above the national weighted average combined
error rate for the year in question (9.2 percent in 1996). Each
State's sanction amount is determined by using a ``sliding
scale'' so that its penalty assessment equals an amount
reflecting the degree to which the State's combined error rate
exceeds the national average (the ``tolerance level''). For
example, if the tolerance level is 10 percent and a State's
error rate is 12 percent, the State would be assessed a
sanction of 0.4 percent of benefits paid in the State that year
(the State's error rate is 2 percentage points, or 20 percent,
above the tolerance level, and it is assessed a sanction
representing 20 percent of the amount by which it exceeds the
tolerance level; 2 percentage points 0.2 = 0.4). A
State with a combined error rate of 14 percent would owe a
penalty of 1.6 percent of benefits, or 40 percent of the amount
by which it exceeds the 10-percent tolerance level (4
percentage points 0.4 = 1.6). Thus, the degree to
which a State is assessed sanctions increases as its error rate
rises, rather than having sanctions assessed equally on each
dollar above the tolerance level. In fiscal year 1996, 24
States and Guam had combined error rates above the 9.2 percent
tolerance level and were assessed some $60 million.
States also can receive increased Federal funding for
administration if their error rates are below a second, much
lower threshold. States with a combined error rate below 6
percent are entitled to a larger-than-normal Federal share of
their administrative costs. The regular 50-percent Federal
match is, depending on the degree to which the State's error
rate is below 6 percent, raised to a maximum of 60 percent, as
long as the State's rate of improper denials and terminations
is below the national average. This ``enhanced'' administrative
funding has typically totaled $10-$20 million a year; in fiscal
year 1996, six States had combined error rates below 6 percent
and received $15 million in enhanced funding.
Finally, the quality control system identifies the various
sources of error and requires that States develop and carry out
corrective action plans to improve payment accuracy. These
reviews generally show that the primary responsibility for
overpayment errors is almost evenly split between welfare
agencies and clients. The most common errors are related to
establishing food stamp expense deductions and households'
income.
Intentional program violations (e.g., fraud) can occur in
a number of ways; the most common are intentionally
misrepresenting household circumstances in order to obtain food
stamps or increase benefits and trafficking in food stamp
coupons. About one-quarter of the dollar value of erroneous
benefit and eligibility determinations identified through
quality control reviews are fraudulent--under 2 percent of all
benefits issued in 1996. The most recent Agriculture Department
study on the extent of food stamp coupon trafficking estimated
it at some $800 million in 1993--3.7 percent of all benefits
issued that year.
Interaction With Cash Assistance Programs
The Food Stamp Program is intertwined with cash assistance
in two ways: it is administratively linked to cash welfare aid
at the State and local levels, and its recipient population is
made up largely of recipients of other government benefits.
At the State and local levels, the Food Stamp Program is
administered by the same welfare offices and personnel that
administer cash assistance such as TANF and general assistance.
Joint food stamp and cash welfare application and interview
procedures are the general rule. This coadministration does not
apply for most elderly or disabled persons, whose cash
assistance from the Supplemental Security Income Program (SSI)
is administered through Social Security Administration offices,
although these offices do provide limited intake services for
the Food Stamp Program.
For most persons participating in the Food Stamp Program,
food stamp aid represents a second or third form of government
payment. Fewer than 20 percent of food stamp households rely
solely on nongovernmental sources for their cash income,
although over 25 percent have some income from these sources
(e.g., earnings, private retirement income). According to
quality control data, the AFDC Program (the predecessor to
TANF) contributed to the income of nearly 40 percent of food
stamp households, and for almost all of them AFDC is their only
cash income. SSI benefits go to some 23 percent of food stamp
households, and almost one-third of these have no other income.
About 20 percent of food stamp households receive Social
Security or veterans benefits; over 10 percent are paid general
assistance, unemployment insurance, or workers' compensation
benefits.
Recipiency Rates
Table 15-8 shows food stamp participation rates from 1975
to 1996 using three different measures. Food stamp enrollment
has fluctuated widely over the last 20 years, reaching its peak
in fiscal year 1994; in that year, it averaged 27.5 million
persons a month, with an all-time high of 28 million in the
spring of 1994 (not including 1.4 million persons receiving aid
in Puerto Rico).
A recent (October 1994) report from the U.S. Department of
Agriculture provides a more refined analysis of participation
rates and the extent to which the program is serving its target
population. The report estimates that 74 percent of persons
eligible participated (69 percent of eligible households).
These participants received 82 percent of benefits payable if
all eligibles had been enrolled. However, subgroups of the
food-stamp-eligible population participated at very diferent
rates: (1) most eligible children were enrolled (86 percent);
(2) only one-third of eligible elderly persons participated,
and the majority of those not participating lived alone; (3)
virtually all eligible single-parent households were enrolled,
while only 78 percent of eligible households with children and
two or more adults participated; (4) eligible households headed
by African-Americans participated at a greater rate (92
percent) than households headed by Hispanics (61 percent) or
white non-Hispanics (59 percent); and (5) virtually all
eligible households with income below half the Federal poverty
guidelines were enrolled, but the participation rate fell for
eligible households with larger incomes (e.g., the
participation rate for those with income between half the
poverty guidelines and the guidelines themselves was 76
percent). Finally, another (December 1995) report from the
Agriculture Department notes that about half of the major
increase in food stamp enrollment from 1988 to 1993 (a rise of
over 40 percent) was a result of a higher participation rate
among eligibles--as opposed to an increased number of eligible
persons.
TABLE 15-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-96
----------------------------------------------------------------------------------------------------------------
Food stamp participation as a percent
Number of of--
food stamp ----------------------------------------
Year participants Pretransfer
(in Total Poor poor
millions) population \1\ population population
----------------------------------------------------------------------------------------------------------------
1975..................................................... 16.3 7.6 63.0 NA
1976..................................................... 17.0 7.9 68.1 NA
1977..................................................... 15.6 7.2 63.1 NA
1978..................................................... 14.4 6.5 58.8 NA
1979..................................................... 15.9 7.1 61.0 57.1
1980..................................................... 19.2 8.4 65.6 60.7
1981..................................................... 20.6 9.0 64.7 60.8
1982..................................................... 20.4 8.8 59.3 56.3
1983..................................................... 21.6 9.2 61.2 58.5
1984..................................................... 20.9 8.8 62.0 58.5
1985..................................................... 19.9 8.3 60.2 56.6
1986..................................................... 19.4 8.0 59.9 56.2
1987..................................................... 19.1 7.8 59.1 55.6
1988..................................................... 18.7 7.6 58.9 55.2
1989..................................................... 18.8 7.6 59.6 55.6
1990..................................................... 20.0 8.0 59.6 55.7
1991..................................................... 22.6 9.0 63.3 59.3
1992..................................................... 25.4 10.0 68.9 64.0
1993..................................................... 27.0 10.4 68.7 NA
1994..................................................... 27.5 10.5 72.1 NA
1995..................................................... 26.6 10.1 73.0 NA
1996..................................................... 25.5 9.6 69.8 NA
----------------------------------------------------------------------------------------------------------------
\1\ Calculated as a percent of total U.S. resident population at the end of the fiscal year. Total U.S. resident
population was 266.22 million persons at the end of fiscal year 1996.
NA--Not available.
Note.--Participants in Puerto Rico are not included in this table.
Source: U.S. Bureau of the Census.
Table 15-9 shows the average monthly number of people (in
thousands) who received food stamp benefits in each State, the
District of Columbia, and the participating Commonwealths and
territories for selected years between 1975 (when the Food
Stamp Program became nationally available) and 1996. There has
been a general increase in food stamp participants since 1975,
with enrollment peaking in 1994. The number of recipients has
declined significantly since its height in the spring of 1994.
Legislative History
In the early 1980s, Congress enacted major revisions to
the Food Stamp Program to hold down costs and tighten
administrative rules. The Omnibus Budget Reconciliation Act of
1981, the Agriculture and Food Act of 1981, and the Omnibus
Budget Reconciliation Act of 1982 all contained amendments that
the Congressional Budget Office has estimated held food stamp
spending for fiscal years 1982 through 1985 nearly $7 billion
(13 percent) below what would have been spent under pre-1981
law. These laws delayed various inflation indexing adjustments,
reduced the maximum benefit guarantee by 1 percent (restored in
1984), established income eligibility ceilings at 130 percent
of the Federal poverty levels, initiated prorating of first-
month benefits, replaced the Food Stamp Program in Puerto Rico
with a nutrition assistance block grant, reduced benefits for
those with earnings and high shelter expenses, ended
eligibility for most postsecondary students and strikers, and
raised fiscal penalties for States with high rates of erroneous
benefit and eligibility determinations.
In 1985, the Food Security Act (Public Law 99-198)
reauthorized food stamp appropriations through fiscal year 1990
and reversed the earlier trend, significantly liberalizing food
stamp rules. Major new initiatives included: a requirement for
States to implement employment and training programs for food
stamp recipients, automatic food stamp eligibility for AFDC and
SSI recipients, and a prohibition on collection of sales taxes
on food stamp purchases. Benefits were raised for some disabled
and those with earnings, high shelter costs, and dependent care
costs. Puerto Rico's nutrition assistance block grant was
increased. Eligibility standards were liberalized, primarily by
increasing and easing limits on assets. This was followed by
several laws in 1986 and 1987 that opened up access to and
increased benefits for the homeless, liberalized treatment of
student aid, energy assistance, and income received from
employment programs for the elderly and charitable
organizations, further added to benefits for those with high
shelter costs, and allowed Washington State to operate a
special AFDC/food stamp demonstration project (followed by
similar authorization for Minnesota in 1989).
TABLE 15-9.--FOOD STAMP RECIPIENTS BY STATE, SELECTED FISCAL YEARS 1975-96
[Thousands of persons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
State 1975 \1\ 1979 \2\ 1985 \3\ 1990 \3\ 1991 \3\ 1992 \3\ 1993 \3\ 1994 \3\ 1995 \3\ 1996 \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama............................................. 393 525 588 449 504 550 560 551 525 509
Alaska.............................................. 12 25 22 25 30 38 43 46 45 46
Arizona............................................. 166 129 206 317 388 457 489 512 480 427
Arkansas............................................ 268 277 253 235 258 277 285 283 272 274
California.......................................... 1,517 1,334 1,615 1,936 2,212 2,558 2,866 3,155 3,175 3,143
Colorado............................................ 162 145 170 221 241 260 273 268 252 244
Connecticut......................................... 189 155 145 133 171 202 215 223 227 223
Delaware............................................ 39 45 40 33 41 51 58 59 57 58
District of Columbia................................ 112 100 72 62 72 82 87 91 94 93
Florida............................................. 767 828 630 781 1,021 1,404 1,500 1,474 1,395 1,371
Georgia............................................. 569 559 567 536 648 751 807 830 816 793
Hawaii.............................................. 84 96 99 77 83 94 103 115 125 130
Idaho............................................... 39 47 59 59 65 72 79 82 80 80
Illinois............................................ 948 837 1,110 1,013 1,096 1,156 1,178 1,189 1,151 1,105
Indiana............................................. 255 275 406 311 375 448 497 521 470 390
Iowa................................................ 118 117 203 170 180 192 196 196 184 177
Kansas.............................................. 63 73 119 142 156 175 188 192 184 172
Kentucky............................................ 449 405 560 458 496 529 530 522 520 478
Louisiana........................................... 502 523 644 727 742 779 779 756 711 670
Maine............................................... 151 121 114 94 116 133 138 136 132 131
Maryland............................................ 273 299 291 254 304 343 375 387 399 375
Massachusetts....................................... 560 429 337 347 397 429 443 442 410 374
Michigan............................................ 685 706 985 917 978 994 1,022 1,031 971 935
Minnesota........................................... 191 143 228 263 286 309 317 316 308 295
Mississippi......................................... 390 452 495 499 520 536 537 511 480 457
Missouri............................................ 299 280 362 431 490 549 591 593 576 554
Montana............................................. 38 33 58 57 61 66 70 71 71 71
Nebraska............................................ 50 55 94 95 99 107 113 111 105 102
Nevada.............................................. 34 27 32 50 63 80 93 97 99 97
New Hampshire....................................... 66 44 28 31 47 58 60 62 58 53
New Jersey.......................................... 565 524 464 381 441 495 531 545 540 541
New Mexico.......................................... 154 159 157 157 188 221 244 244 239 235
New York............................................ 1,398 1,704 1,834 1,546 1,717 1,885 2,045 2,154 2,183 2,099
North Carolina...................................... 537 517 474 419 517 597 627 630 614 631
North Dakota........................................ 19 20 33 39 41 46 48 45 41 40
Ohio................................................ 924 760 1,133 1,078 1,171 1,251 1,269 1,245 1,155 1,045
Oklahoma............................................ 184 184 263 267 296 346 370 376 375 354
Oregon.............................................. 208 160 228 216 240 265 283 286 289 288
Pennsylvania........................................ 893 923 1,032 954 1,052 1,137 1,186 1,208 1,173 1,124
Rhode Island........................................ 104 80 69 64 78 87 92 93 100 91
South Carolina...................................... 421 369 373 299 329 369 394 385 364 358
South Dakota........................................ 31 37 48 50 52 55 56 53 50 49
Tennessee........................................... 435 531 518 527 608 702 774 735 662 638
Texas............................................... 1,085 1,027 1,263 1,880 2,155 2,454 2,659 2,730 2,564 2,372
Utah................................................ 50 44 75 99 110 123 133 128 119 110
Vermont............................................. 46 40 44 38 47 54 58 65 59 56
Virginia............................................ 293 320 360 346 414 495 535 547 546 538
Washington.......................................... 239 205 281 337 385 432 462 468 476 476
West Virginia....................................... 204 182 278 262 281 310 322 321 329 300
Wisconsin........................................... 163 171 363 286 294 334 337 330 320 283
Wyoming............................................. 11 11 27 28 31 33 34 34 34 33
American Samoa...................................... NA NA NA NA NA NA NA 2 3 3
Guam................................................ 21 18 20 12 11 20 13 15 16 18
Northern Marianas................................... NA NA 4 4 2 2 3 4 4 4
Puerto Rico......................................... 1,800 1,822 1,480 1,480 1,490 1,480 1,440 1,410 1,370 1,330
Virgin Islands...................................... 25 34 32 18 15 16 18 20 23 31
---------------------------------------------------------------------------------------------------
Total......................................... 19,199 18,926 21,385 21,510 24,105 26,888 28,426 28,888 27,995 26,871
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Year end participation, July 1975. Total does not match totals in other tables, which are annual average participation.
\2\ Year end participation, September 1979. Total does not match totals in other tables, which are annual average participation. During fiscal year
1979, and into 1980, participation increases were largely due to the elimination of the food stamp purchase requirement. Figures for Alabama and
Mississippi are estimates.
\3\ Annual average monthly participation.
NA--Not available.
Source: U.S. Department of Agriculture, Food and Consumer Service. Compiled by the Congressional Research Service.
Legislation expanding eligibility and benefits continued
into 1988 and 1989. The Hunger Prevention Act of 1988 (Public
Law 100-435) increased food stamp benefits across the board,
liberalized several eligibility and benefit rules, eased
program access and administrative rules, and restructured the
employment and training program and quality control system. The
across-the-board benefit increase in maximum benefits (above
normal inflation adjustments) called for by the act was 0.65
percent in fiscal year 1989, 2.05 percent in fiscal year 1990,
and 3 percent in later years. Eligibility and benefit
liberalizations included higher benefits for those with
dependent care expenses, extension of liberal treatment for
disabled applicants and recipients to new categories of
disability, addition of a new income disregard for earned
income tax credits, and liberalized treatment for farm
households. Major provisions pertaining to program access and
administration authorized 50-percent Federal cost sharing for
State-option outreach activities, required coordination with
cash welfare program application procedures, loosened rules
governing monthly reporting and retrospective budgeting,
allowed training of community volunteers to help screen
applicants, and required, in some instances, issuance of the
first 2 months' worth of benefits in a single allotment.
Employment and training rules were revised by allowing some
expansion in the types of activities supported (e.g., basic
skills education), requiring increased support for
participants' dependent care expenses, and mandating new
performance standards for States. Finally, the food stamp
quality control system was completely revamped to substantially
reduce fiscal sanctions on States for erroneous benefit
determinations, retroactive to fiscal year 1986.
The 1990 Food, Agriculture, Conservation, and Trade Act
(Public Law 101-624) reauthorized food stamp appropriations
through fiscal year 1995. Although early versions of this act
would have significantly liberalized food stamp eligibility and
benefit rules, budget constraints dictated minimal expansions.
The changes included: limited revisions for postsecondary
students, forgiveness of most pre-1986 quality control
sanctions on States, a few changes in administrative rules to
open up program access and strengthen penalties for
trafficking, and new pilot projects and study commissions for
welfare program coordination. In addition, other laws
eliminated a special requirement for single food stamp/SSI
applications for those about to be discharged from institutions
and barred the Food Stamp Program from counting (as a liquid
asset) lump-sum earned income tax credit payments.
The Mickey Leland Childhood Hunger Relief Act (incorporated
in the 1993 Omnibus Budget Reconciliation Act, Public Law 103-
66) increased food stamp benefits and eased eligibility rules
by: increasing and then removing the limit on special benefit
adjustments (deductions) for households with very high shelter
expenses, ending a practice of reducing benefits when there are
short ``procedural'' breaks in enrollment, disregarding child
support payments as income to the payor, increasing the degree
to which vehicles are disregarded as assets in judging
eligibility, revising the definition of a food stamp household
to allow more persons who live together to apply separately,
increasing the degree to which dependent care expense
deductions can be claimed, expanding the degree to which earned
income credits are disregarded as assets and State/local
general assistance is disregarded as income, and boosting
Puerto Rico's block grant. The act also lowered the Federal
share of some State administrative expenses (to 50 percent),
reduced quality control fiscal penalties on States with high
rates of erroneous benefit and eligibility determinations, and
liberalized the appeals process for those penalties. Finally,
it expanded support for employment and training programs for
food stamp recipients, added a new method for collecting claims
against recipients, and increased penalties for trafficking in
food stamps. The net cost of the 1993 amendments was estimated
at $2.5 billion over fiscal years 1994-98.
The 1996 Omnibus ``farm bill'' (the Federal Agriculture
Improvement and Reform Act; Public Law 104-127) extended the
Food Stamp Act's overall authorization for appropriations
through fiscal year 1997, with no specific dollar limits. It
also: (1) continued the requirement for nutrition assistance
grants to Puerto Rico and American Samoa, and for employment
and training programs, through fiscal year 2002; (2) revised
rules for penalizing food stores in trafficking cases involving
management; and (3) extended authority for several pilot
projects.
Most recently table 15-10 provides an overview of the
characteristics of food stamp households for selected years
since 1980; table 15-11 summarizes annual vital statistics
about the program since 1972.
TABLE 15-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-95
[In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year and month survey was conducted
-----------------------------------------------------------------------------------------------------------
Food stamp recipient households 1980 1985 1987 1988 1989 1990 1991 1992 1993 1994 1995
(Aug.) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Annual)
--------------------------------------------------------------------------------------------------------------------------------------------------------
With gross monthly income:
Below the Federal poverty levels........ 87 94 94 92 92 92 91 92 91 90 92
Between the poverty levels and 130
percent of the poverty levels.......... 10 6 6 8 8 8 9 8 8 9 8
Above 130 percent of the poverty levels. 2 (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) 1 1 (\3\)
With earnings............................... 19 20 21 20 20 19 20 21 21 21 21
With public assistance income \1\........... 65 68 74 72 73 73 70 66 68 69 68
With AFDC income........................ NA 39 41 42 42 43 41 40 40 38 38
With SSI income......................... 18 19 21 20 21 19 19 19 20 23 23
With children............................... 60 59 61 61 60 61 61 62 60 61 60
And female heads of household........... NA 46 50 50 50 51 51 51 52 51 50
With elderly members \2\.................... 23 21 21 19 20 18 17 15 16 16 16
With elderly female heads of household
\2\.................................... NA 16 15 14 14 11 10 9 NA 11 NA
-----------------------------------------------------------------------------------------------------------
Average household size...................... 2.8 2.7 2.7 2.6 2.6 2.6 2.6 2.5 2.6 2.5 2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Public assistance income includes Aid to Families with Dependent Children, Supplemental Security Income, and general assistance.
\2\ Elderly members and heads of household include those age 60 or older.
\3\ Percentage equals 0.5 or less.
NA--Not available.
Note.--The proportion of households with public assistance income shown in this table is an estimate that generally overcounts them because it is not
corrected for households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table
for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households. The 1995 figures
represent characteristics over the full course of fiscal year 1995.
Source: U.S. Department of Agriculture, Food and Consumer Service surveys of the characteristics of food stamp households. Compiled by the
Congressional Research Service.
TABLE 15-11.--HISTORICAL FOOD STAMP STATISTICS, 1972-96
----------------------------------------------------------------------------------------------------------------
Total Federal spending Average monthly
(in millions) \1\ Average benefits (per person) Four-person
------------------------ monthly ------------------------ maximum
Fiscal year Constant participation Constant monthly
Current (1996) (in millions Current (1996) allotment \2\
dollars dollars \3\ of persons) dollars dollars \3\
----------------------------------------------------------------------------------------------------------------
1972 \4\.......................... $1,871 $7,072 11.1 $13.50 $49.30 $108
1973.............................. 2,211 8,048 12.2 14.60 49.20 112
1974.............................. 2,843 9,496 12.9 17.60 49.60 116
1975 \5\.......................... 4,624 13,872 17.1 21.40 55.00 150
1976.............................. 5,692 15,995 18.5 23.90 57.80 162
Transition quarter \6\............ 1,367 3,705 17.3 24.40 58.60 166
1977.............................. 5,469 14,274 17.1 24.70 57.30 166
1978.............................. 5,573 13,598 16.0 26.80 56.80 170
1979 \7\.......................... 6,995 15,459 17.7 30.60 58.10 182
1980.............................. 9,188 17,917 21.1 34.40 60.90 204
1981.............................. 11,308 19,789 22.4 39.50 64.00 209
1982 \8\.......................... 11,117 18,121 22.0 39.20 61.20 233
1983 \8\.......................... 12,733 20,118 23.2 43.00 66.20 253
1984 \8\.......................... 12,470 18,830 22.4 42.70 64.10 253
1985 \8\.......................... 12,599 18,395 21.4 45.00 66.20 264
1986 \8\.......................... 12,528 17,790 20.9 45.50 65.50 268
1987 \8\.......................... 12,539 17,304 20.6 45.80 62.70 271
1988 \8\.......................... 13,289 17,674 20.1 49.80 66.20 290
1989 \8\.......................... 13,815 17,545 20.2 51.90 64.40 300
1990 \8\.......................... 16,512 19,980 21.5 59.00 69.00 331
1991 \8\.......................... 19,765 22,730 24.1 63.90 71.60 352
1992 \8\.......................... 23,539 26,364 26.9 68.50 76.70 370
1993 \8\.......................... 24,749 26,729 28.4 68.00 74.80 375
1994.............................. 25,525 27,057 28.9 69.00 73.80 375
1995.............................. 25,676 26,446 28.0 71.30 73.40 386
1996.............................. 25,494 25,494 26.9 73.30 73.30 397
----------------------------------------------------------------------------------------------------------------
\1\ Spending for benefits and administration, including Puerto Rico.
\2\ For the 48 contiguous States and the District of Columbia, as in effect at the beginning of the fiscal year
in current dollars.
\3\ Constant dollar adjustments were made using the overall Consumer Price Index for Urban Consumers (CPI-U) for
spending and the CPI-U ``food at home'' component for benefits.
\4\ The first fiscal year in which benefit and eligibility rules were, by law, nationally uniform and indexed
for inflation.
\5\ The first fiscal year in which food stamps were available nationwide.
\6\ July through September 1976.
\7\ The fiscal year in which the food stamp purchase requirement was eliminated, on a phased in basis.
\8\ Includes funding for Puerto Rico's nutrition assistance grant; earlier years include funding for Puerto Rico
under the regular Food Stamp Program. Participation figures include enrollment in Puerto Rico (averaging 1.3
to 1.5 million persons a month under the nutrition assistance grant and higher figures in earlier years).
Average benefit figures do not reflect somewhat lower benefits in Puerto Rico under its nutrition assistance
grant.
Note.--Figures in this table have been revised from similar tables presented in earlier versions of the Green
Book to reflect more recent spending information and more precise inflation adjustments for constant dollar
amounts.
Source: Compiled by the Congressional Research Service.
MEDICAID
Medicaid, authorized under title XIX of the Social
Security Act, is a Federal-State matching entitlement program
providing medical assistance to low-income persons who are
aged, blind, disabled, members of families with dependent
children, and certain other pregnant women and children. Within
Federal guidelines, each State designs and administers its own
program. Thus, there is substantial variation among States in
coverage, types and scope of benefits offered, and amounts of
payments for services. Recent legislation has expanded the
authority of States to decide who should be eligible for
Medicaid, changed the rules governing Medicaid reimbursement to
hospitals and community health centers, and increased States'
flexibility to enroll Medicaid recipients into managed care
programs.
Eligibility
Medicaid does not provide medical assistance to all poor
persons. States are required to serve some population groups
and are permitted to serve others. In general, eligibility for
Medicaid is limited to low-income children and pregnant women,
adults in families with dependent children, low-income persons
with disabilities, and low-income elderly persons. Applicants'
income and assets must be within program financial standards.
For some population groups, these standards vary among States.
For others, standards are set by Federal law. Medicaid is
available to two broad classes of eligible persons: the
``categorically needy'' and the ``medically needy.'' The two
terms once distinguished between welfare-related beneficiaries
and those qualifying only under special Medicaid rules.
However, nonwelfare groups have been added to the
``categorically needy'' list over the years, and recent
legislation has partially severed the automatic connection
between Medicaid and welfare. As a result, the terms are no
longer especially helpful in sorting out the various
populations for whom mandatory or optional Medicaid coverage
has been made available, and some analysts believe they should
be abandoned. However, the distinction between the
categorically and medically needy is still an important one
because the scope of covered services that States must provide
to the categorically needy is much broader than the minimum
scope of services for the medically needy.
All States must cover certain mandatory groups of
categorically needy individuals.\10\ Coverage of additional
categorically needy groups is optional, as is coverage of the
medically needy. The following discussion describes the
mandatory and optional categorically eligible groups; the
medically needy are discussed separately at the end of this
section.
---------------------------------------------------------------------------
\10\ Arizona does not operate a traditional Medicaid Program. Since
1982 it has operated a federally assisted medical assistance program
for low-income persons under a demonstration waiver.
---------------------------------------------------------------------------
Categorically Needy
Families, Pregnant Women, and Children
Prior to the enactment of the Personal Responsibility and
Work Opportunities Act of 1996 (PRWORA, Public Law 104-193),
there were two major routes to Medicaid for low-income women
and children. The first was through cash welfare: individuals
who qualified for Aid to Families with Dependent Children
(AFDC) cash assistance or Supplemental Security Income (SSI)
were automatically eligible for Medicaid. The second was
through legislation in the last decade that extended coverage
to low-income pregnant women and children who have no ties to
the welfare system. PRWORA replaced the AFDC Program with a
block grant to States for Temporary Assistance for Needy
Families (TANF), severing the automatic connection between cash
assistance and Medicaid.
AFDC-related groups
Prior to the enactment of the Personal Responsibility and
Work Opportunities Act of 1996, States were required to provide
Medicaid to all persons receiving cash assistance under AFDC,
as well as to additional AFDC-related groups that did not
actually receive cash payments. These groups included: persons
who did not receive a payment because the amount would be less
than $10; persons whose payments were reduced to zero because
of recovery of previous overpayments; certain work
supplementation participants; certain children for whom
adoption assistance agreements were in effect or for whom
foster care payments were being made under title IV-E of the
Social Security Act; and persons who were ineligible for AFDC
because of a requirement that could not be imposed under
Medicaid.
States were required to continue Medicaid for specified
periods for certain families who lost AFDC benefits after
receiving them in at least 3 of the preceding 6 months. If the
family lost AFDC benefits because of increased income from
earnings or hours of employment, Medicaid coverage had to be
extended for 12 months. (During the second 6 months a premium
could be imposed, the scope of benefits could be limited, or
alternate delivery systems could be used.) If the family lost
AFDC because of increased child or spousal support, coverage
had to be extended for 4 months. States were also required to
furnish Medicaid to certain two-parent families whose principal
earner was unemployed and who did not receive cash assistance
because the State was one of those permitted (under the Family
Support Act of 1988) to set a time limit on AFDC coverage for
such families.
States were permitted, but not required, to provide
coverage to additional AFDC-related groups. The most important
of these were the ``Ribicoff children,'' whose income and
resources were within AFDC standards but who did not meet the
definition of ``dependent child.'' States could cover these
children up to a maximum age of 21, and could limit coverage to
reasonable subgroups, such as children in privately subsidized
foster care, or those who lived in certain institutional
settings. States could also furnish Medicaid to persons who
would have received AFDC if the State's AFDC Program were as
broad as permitted under Federal law.
PRWORA repealed the AFDC Program, replacing it with the
block grant program Temporary Assistance for Needy Families
(TANF). Unlike AFDC, TANF eligibility does not confer automatic
Medicaid eligibility. Although the automatic link between AFDC
and Medicaid has been broken, the new law preserves Medicaid
entitlement for individuals who meet the requirements for the
AFDC Program that were in their State on July 16, 1996, even if
they do not qualify for assistance under TANF. States are
required to use the eligibility determination process already
in place for AFDC and Medicaid, including the same income and
resource standards and other rules formerly used to determine
if a family's income and composition made them eligible for
AFDC and Medicaid. States must continue Medicaid assistance for
recipients of adoption assistance and foster care under title
IV-E of the Social Security Act. As under prereform law, if a
family becomes ineligible for Medicaid because of earnings or
child or spousal support income and received Medicaid in three
of the preceding 6 months, the family is eligible for a period
of transitional Medicaid assistance. States also may continue
Medicaid coverage to children up to age 21 who meet what were
the AFDC income and resources requirements in effect in their
State on July 16, 1996, but do not meet the definition of
dependent child. States are permitted to deny Medicaid benefits
to nonpregnant adults and heads of households who lose TANF
benefits because of refusal to work, but must continue to
provide Medicaid coverage to their children.
PRWORA allows States to modify their ``prereform'' AFDC
income and resource standards as follows: (1) States may lower
their income eligibility standards, but not below those it used
on May 1, 1988; (2) States may increase their income and
resource standards up to the percentage increase in the
Consumer Price Index (CPI); (3) States may use less restrictive
income and resource standards than those in effect on July 16,
1996.
Poverty level pregnant women and children
Between 1986 and 1991, Congress gradually extended
Medicaid to groups of pregnant women and children defined in
terms of family income, rather than in terms of their ties to
the AFDC Program.
States are required to cover pregnant women and children
under age 6 with family incomes below 133 percent of the
Federal poverty income guidelines. In 1997, the poverty
guideline in the 48 contiguous States and the District of
Columbia is $13,330 for a family of three. Coverage for
pregnant women is limited to services related to the pregnancy
or complications of the pregnancy. Eligibility extends to 60
days after termination of the pregnancy. Children receive full
Medicaid coverage.
Since July 1, 1991, States have been required to cover all
children who are under age 19, who were born after September
30, 1983, and whose family income is below 100 percent of the
Federal poverty level. The 1983 start date means that the age
of mandatory coverage will increase each year until reaching
age 18 in fiscal year 2002.
States are permitted, but not required, to cover pregnant
women and infants under 1 year old not covered under the
mandatory rules whose family income is no more than 185 percent
of the Federal poverty level. As of August 1996, 30 States and
the District of Columbia made use of this option to cover
pregnant women and infants with family incomes over 133 percent
of poverty. States wishing to further expand eligibility have
several options under Medicaid law, including waivers of
Federal rules. As of August 1996, six States had expanded
eligibility to pregnant women, infants, or children in families
with incomes over 185 percent of the Federal poverty level.
The recently enacted Balanced Budget Act of 1997 (BBA
1997), Public Law 105-33, gives States the option to provide 12
months continuous Medicaid coverage for children regardless of
whether they continue to meet income eligibility tests and to
presume eligibility for low-income children, allowing the
States to provide services during the time that eligibility is
determined.
Aged and Disabled Persons
SSI-related groups
States are generally required to cover recipients of SSI.
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). States that have chosen to apply at least one more
restrictive standard are known as ``section 209(b)'' States,
after the section of the Social Security Amendments of 1972
(Public Law 92-603) that established the option. These States
may vary in their definition of disability, or in their
standards related to income or resources. There are 12 section
209(b) States:
Connecticut
Hawaii
Illinois
Indiana
Minnesota
Missouri
New Hampshire
North Carolina
North Dakota
Ohio
Oklahoma
Virginia
States using more restrictive income standards must allow
applicants to deduct medical expenses from income (not
including SSI or State supplemental payments, SSP) in
determining eligibility. This process is known as ``spend
down.'' For example, if an applicant has a monthly income of
$400 (not including any SSI or SSP) and the State's maximum
allowable income is $350, the applicant would be required to
incur $50 in medical expenses before qualifying for Medicaid.
As will be discussed below, the spend down process is also used
in establishing eligibility for the medically needy.
States must continue Medicaid coverage for several defined
groups of individuals who have lost SSI or SSP eligibility. The
``qualified severely impaired'' are disabled persons who have
returned to work and have lost eligibility as a result of
employment earnings, but still have the condition that
originally rendered them disabled and meet all nondisability
criteria for SSI except income (the current law threshold for
earnings is $1,053 per month). Medicaid must be continued if
such an individual needs continued medical assistance to
continue employment and the individual's earnings are
insufficient to provide the equivalent of SSI, Medicaid, and
attendant care benefits the individual would qualify for 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 disabled individual).
States are permitted to provide Medicaid to individuals
who are not receiving SSI but are receiving State-only
supplementary cash payments. Effective August 1997, States have
the option of creating a new eligibility category for disabled
SSI beneficiaries with incomes up to 250 percent of poverty.
Beneficiaries can ``buy into'' Medicaid by paying a sliding
scale premium based on the individual's income as determined by
the State.
Qualified Medicare beneficiaries and related groups
Effective January 1, 1991, States must provide limited
Medicaid coverage for ``qualified Medicare beneficiaries''
(QMBs). These are aged and disabled persons who are receiving
Medicare, whose income is below 100 percent of the Federal
poverty level ($7,890 for an individual and $10,610 for a
couple in 1997), and whose resources do not exceed twice the
allowable amount under SSI ($4,000 for an individual and $6,000
for a couple). States must pay Medicare part B premiums (and,
if applicable, part A premiums) for QMBs, along with required
Medicare coinsurance and deductible amounts.
In addition, all States must pay part B premiums (but not
part A premiums or part A or B coinsurance and deductibles) for
``specified low-income Medicare beneficiaries'' (SLMBs). These
are beneficiaries who would be QMBs except that their incomes
are between 100 and 120 percent of the poverty level. Beginning
January 1998, the income eligibility level for the SLMB Program
will increase to 135 percent of poverty and States will be
required to cover a portion of the part B premium for Medicare
beneficiaries with incomes between 135 percent and 175 percent
of poverty.
States also are required to pay part A premiums, but no
other expenses, for ``qualified disabled and working
individuals.'' These are persons who formerly received Social
Security disability benefits and hence Medicare, have lost
eligibility for both programs, but are permitted under Medicare
law to continue to receive Medicare in return for payment of
the part A premium. Medicaid must pay this premium on behalf of
such individuals who have incomes below 200 percent of poverty
and resources no greater than twice the SSI standard.
States are permitted to provide full Medicaid benefits,
rather than just Medicare premiums and cost sharing, to QMBs
who meet a State-established income standard that is no higher
than 100 percent of the Federal poverty level. Seven States
make use of this option.
Institutionalized persons and related groups (all optional)
States may provide Medicaid to certain otherwise
ineligible groups of persons who are in nursing facilities 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 percent of the
maximum SSI benefits payable to a person who is living at home
and has no other resources. States may also provide Medicaid to
persons who would qualify for SSI but for the fact that they
are in an institution.
A State may obtain a waiver under section 2176 of OBRA
1981 to provide home and community-based services to a defined
group of individuals who would otherwise require institutional
care.\11\ Persons served under such a waiver may receive
Medicaid coverage if they would be eligible if they lived in an
institution. Such individuals may also be covered in a State
that terminates its waiver program in order to take advantage
of a new, no-waiver home and community-based services option
created by OBRA 1990.
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\11\ These waivers are also known as 1915(c) waivers.
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A State may also provide Medicaid to several other classes
of persons who need the level of care provided by an
institution and who would be eligible if they were in an
institution. These include children being cared for at home,
persons of any age who are ventilator-dependent, and persons
receiving hospice benefits in lieu of institutional services.
Aliens
Legal immigrants arriving in the United States after
August 22, 1996 are ineligible for Medicaid benefits for 5
years. Coverage of such persons after the 5 year ban is a State
option. States are required to provide Medicaid coverage to
legal immigrants who resided in the country and were receiving
benefits on August 22,1996, and for those residing in the
country as of that date who become disabled in the future.
States are also required to provide coverage to: refugees for
the first 7 years after entry into the United States; asylees
for the first 7 years after asylum is granted; individuals
whose deportation is being withheld by the Immigration and
Naturalization Service for the first 7 years after grant of
deportation withholding; lawful permanent aliens after they
have been credited with 40 quarters of coverage under Social
Security; and honorably discharged U.S. military veterans,
active duty military personnel, and their spouses and unmarried
dependent children. Qualified aliens and nonqualified aliens
who meet the financial and categorical eligibility requirements
for Medicaid may receive emergency Medicaid services.
The Medically Needy
Forty States and other jurisdictions provide Medicaid to at
least some groups of ``medically needy'' persons. These are
persons who meet the nonfinancial standards for inclusion in
one of the groups covered under Medicaid, but who do not meet
the applicable income or resource requirements for
categorically needy eligibility. The State may establish higher
income or resource standards for the medically needy. In
addition, individuals may spend down to the medically needy
standard by incurring medical expenses, in the same way that
SSI recipients in section 209(b) States may spend down to
Medicaid eligibility. For the medically needy, spend down may
involve the reduction of assets and income.
The State may set its separate medically needy income
standard for a family of a given size at any level up to 133
percent of the maximum payment for a similar family under the
State's AFDC Program as in place on July 16, 1996. States may
limit the groups of individuals who may receive medically needy
coverage. If the State provides any medically needy program,
however, it must include all children under 18 who would
qualify under one of the mandatory categorically needy groups,
and all pregnant women who would qualify under either a
mandatory or optional group, if their income or resources were
lower.
As of October 1, 1995, the following 40 States and
territories covered some groups of the medically needy:
American Samoa
Arkansas
California
Connecticut
District of Columbia
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
Northern Mariana Islands
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
Tennessee
Texas
Utah
Vermont
Virgin Islands
Virginia
Washington
West Virginia
Wisconsin
Medicaid and the Poor
In 1996, Medicaid covered 12 percent of the total U.S.
population (excluding institutionalized persons) and 44.6
percent of those with incomes below the Federal poverty level.
Because categorical eligibility requirements for children are
less restrictive than those for adults, poor children are much
more likely to receive coverage. Table 15-12 shows Medicaid
coverage by age and income status in 1995, as reported in the
March 1996 Current Population Survey (CPS) conducted by the
Census Bureau. Note that persons shown as receiving Medicaid
may have had other health coverage as well. Nearly all the
elderly, for example, have