SECTION 16. OTHER PROGRAMS * --------------------------------------------------------------------------- * The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 changed several of these programs; see appendix L for details. --------------------------------------------------------------------------- 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 Optional Coverage: The Medically Needy Medicaid and the Poor Services Financing Reimbursement Policy Administration Medicaid and Managed Care Legislative History Program Data Federal Housing Assistance 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 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 (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. Tables 16-1 and 16-2 describe the overlap in recipients between programs within the jurisdiction of the Committee on Ways and Means and other major Federal assistance programs. Table 16-1 illustrates that 87.2 percent of AFDC recipient households 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 16-1.--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 ---------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------- 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 16-2 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 16-2.--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 ---------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------- 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. Table 16-3 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. 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 16-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS FOR SELECTED TIME PERIODS ---------------------------------------------------------------------------------------------------------------- Year Assistance program ------------------------------------------------------- 1984 1987 1990 1992 1993 1994 1995 ---------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------- 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. \1\ 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 level, is derived from 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. --------------------------------------------------------------------------- \1\ 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 percent of their total cash monthly income on food. --------------------------------------------------------------------------- Benefits are available to nearly all households that meet Federal eligibility tests for limited monthly income and liquid assets, as long as certain household members fulfill work registration and, when imposed, employment and training program requirements. In addition, recipients in the two primary Federal/State cash welfare programs, the AFDC and SSI Programs, generally are automatically eligible for food stamps, as are recipients of State general assistance payments, if the household is composed entirely of AFDC, SSI, or general assistance beneficiaries. \2\ --------------------------------------------------------------------------- \2\ 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. --------------------------------------------------------------------------- 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 virtually all of the rules that govern the program and, with limited variations for Alaska, Hawaii, and the territories, these rules are nationally uniform. States, the District of Columbia, and the territories may choose to offer the program or not. However, if they do offer food stamp assistance, it must be made available throughout the jurisdiction and comply with Federal rules. 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). 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 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 stamps 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 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). Most often, the Food Stamp Program is operated through the same welfare agency and staff that runs the Federal/State AFDC 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.'' \3\ 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 \4\; (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; (3) benefits are paid in cash (checks) rather than food stamp coupons; (4) income and liquid assets eligibility limits are about half those used in the regular Food Stamp Program; (5) maximum benefit levels are about one-quarter less than in the 48 contiguous States and the District of Columbia; and (6) different rules are used in counting income for eligibility and benefit purposes. In fiscal year 1995, Puerto Rico's nutrition assistance program aided approximately 1.37 million persons each month with monthly benefits averaging $66 a person. --------------------------------------------------------------------------- \3\ Prior to July 1982, the regular Food Stamp Program operated in Puerto Rico, although with slightly different eligibility and benefit rules. \4\ For fiscal year 1995, $1.143 billion was earmarked. The block grant funds the full cost of benefits and half the cost of administration. --------------------------------------------------------------------------- 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. In fiscal year 1995, the Northern Marianas' program assisted some 4,200 people each month with monthly benefits averaging $77 a person. 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. In fiscal year 1995 (the first full fiscal year of operations), the program aided about 2,700 persons a month with average monthly benefits of about $100 a person. Program options The Food Stamp Act authorizes demonstration projects to test program variations that might improve operations, so long as benefits are not reduced and the projects are cost neutral. At present, five 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 households that are part of State welfare reform efforts); (2) some 20 welfare reform demonstrations in which food stamp rules are changed to support AFDC reform efforts (e.g., food stamps are used as a wage supplement or cashed out; food stamps are consolidated with AFDC benefits; food stamp income and asset rules are changed to encourage employment); (3) demonstrations conforming the operations of the AFDC JOBS Program and the Food Stamp Program's employment and training activities; (4) a project granting quarterly (instead of monthly) benefit payments to SSI recipients eligible for very small benefits; and (5) awards to nonprofit organizations to test ways to improve program responsiveness to specific low-income groups. In addition to demonstration projects, States are allowed to implement a few optional aspects of the Food Stamp Program. States may require ``monthly reporting'' and ``retrospective budgeting'' for parts of their food stamp caseload. They may disregard the first $50 a month in child support payments if they pay the benefit cost of doing so. 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. Finally, States or localities may opt to run ``workfare'' programs, and States determine which 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. The Federal Government is also 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. \5\ 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 cost of carrying out employment and training programs for food stamp recipients is shared in two ways: (1) each State receives a Federal grant for basic operating costs (a formula share of $75 million a year); 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. Finally, States are allowed to retain a portion of improperly issued benefits they recover (other than those caused by welfare agency error): 25 percent of recoveries in fraud cases and 10 percent in other circumstances. As shown in table 16-4, food stamp spending has grown from $7.4 billion in 1979 to $27.4 billion in 1995. --------------------------------------------------------------------------- \5\ 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. --------------------------------------------------------------------------- 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. The limited number of categorical eligibility rules make some automatically eligible for food stamps (most AFDC, SSI, and general assistance recipients), and categorically deny eligibility to others (e.g., strikers, illegal and temporarily resident aliens, most postsecondary students, 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. TABLE 16-4.--RECENT FOOD STAMP ACT EXPENDITURES [In millions of dollars] ------------------------------------------------------------------------ Administration \2\ -------------------- Fiscal year Benefits \1\ State Total (Federal) Federal and local ------------------------------------------------------------------------ 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......................... 23,761 1,917 1,748 27,426 ------------------------------------------------------------------------ \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 1981-97. Compiled by the Congressional Research Service. 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., AFDC 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, some related coresidents 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), other than children who themselves have a spouse or children; 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 AFDC, SSI, or general assistance recipients (who generally are automatically eligible for food stamps), monthly cash income is the primary food stamp eligibility determinant. \6\ In establishing eligibility for households without an elderly or disabled member, \7\ 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. --------------------------------------------------------------------------- \6\ Although they do not have to meet food stamp income and assets tests, AFDC, SSI, and general assistance households must still have their income calculated under food stamp rules to determine their food stamp benefits. \7\ 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). --------------------------------------------------------------------------- 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) energy assistance; (7) expense reimbursements that are not a ``gain or benefit'' to the household; (8) income earned by schoolchildren; (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: --An inflation-indexed (each October) standard deduction set at $134 a month in fiscal year 1996, regardless of household size; different standard deductions are used for Alaska ($229), Hawaii ($189), Guam ($269), and the Virgin Islands ($118). The normal October 1995 adjustment was suspended under terms of the fiscal year 1996 appropriation for food stamps; --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 $247 a month. Different ceilings prevail in Alaska, Hawaii, Guam, and the Virgin Islands: $429, $353, $300, and $182, respectively. Under current law, ceilings on shelter expense deductions will be completely lifted as of January 1997. 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 AFDC, 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 16-5. TABLE 16-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 1996 ------------------------------------------------------------------------ 48 States, the District of Household size Columbia, and Alaska Hawaii the territories ------------------------------------------------------------------------ COUNTED (NET) MONTHLY INCOME ELIGIBILITY LIMITS \1\ ------------------------------------------------------------------------ 1 person..................... $623 $779 $718 2 persons.................... 836 1,045 963 3 persons.................... 1,050 1,312 1,208 4 persons.................... 1,263 1,579 1,453 5 persons.................... 1,426 1,845 1,698 6 persons.................... 1,690 2,112 1,943 7 persons.................... 1,903 2,379 2,188 8 persons.................... 2,116 2,645 2,433 Each additional person....... +214 +267 +245 ------------------------------------------------------------------------ BASIC (GROSS) MONTHLY INCOME ELIGIBILITY LIMITS \2\ ------------------------------------------------------------------------ 1 person..................... $810 $1,012 $933 2 persons.................... 1,087 1,359 1,252 3 persons.................... 1,364 1,706 1,570 4 persons.................... 1,642 2,052 1,889 5 persons.................... 1,919 2,399 2,207 6 persons.................... 2,196 2,746 2,526 7 persons.................... 2,474 3,092 2,844 8 persons.................... 2,751 3,439 3,163 Each additional person....... +278 +347 +319 ------------------------------------------------------------------------ \1\ Set at the applicable Federal poverty guidelines, updated for inflation through calendar 1994. \2\ Set at 130 percent of the applicable Federal poverty guidelines, updated for inflation through calendar 1994. Source: U.S. Department of Agriculture. Allowable assets Except for households automatically eligible for food stamps because they are composed entirely of AFDC, 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. 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 $4,600) 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 registration, employment, and training requirements Unless exempt, adult applicants for food stamps must register for work, typically with the welfare agency or a State employment service office. To maintain eligibility, they must accept a suitable job if offered one and fulfill any work, job search, or training requirements established by administering welfare agencies. If the household head fails to fulfill any of these requirements, the entire household is disqualified, typically for 2 months; in other cases, failure to comply disqualifies the noncomplying household member only. Those who are exempt by law from these 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, the main thrust of the food stamp employment and training program is to ensure that nonexempt recipients also fulfill some type of work, job search, or training obligation. To carry this out, welfare agencies are required to 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 (with the Agriculture Department's approval) by further exempting additional categories and individuals for whom participation is judged impracticable or not cost-effective. But the agency must allow otherwise exempt recipients to participate as volunteers and may set up special programs for them. Once the pool of work registrants who will be required to participate in an employment or training program is identified, welfare agencies must place a minimum proportion (10 percent) in one or more program components. 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. In fiscal year 1995, there were some 5.6 million work registrants, of whom 37 percent were exempted from employment and training program requirements. Of the remainder, 1.5 million persons participated in some employment activity and over 500,000 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. Categorical eligibility rules and other limitations Some rules deny food stamp eligibility for reasons other than financial need or compliance with employment and training requirements. Households in which the head has voluntarily quit a job without good cause are barred for 90 days. 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. Illegal and temporarily resident aliens are barred, and legal aliens may be barred based on their sponsor's income. 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 they are boarding with. 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. And food stamps are denied those who intentionally violate program rules, for specific time periods ranging from 6 months (on a first violation) to permanently (on a third violation or other serious infraction). 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 income) from its maximum allotment. 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 1995, monthly benefits averaged $71 a person and about $175 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), increased by 3 percent, 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 16-6). 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 16-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 1996 ---------------------------------------------------------------------------------------------------------------- 48 States and the Virgin Household size District Alaska \1\ Hawaii Guam Islands of Columbia ---------------------------------------------------------------------------------------------------------------- 1 person....................................................... $119 $153 $198 $175 $153 2 persons...................................................... 218 280 364 322 281 3 persons...................................................... 313 401 522 461 402 4 persons...................................................... 397 510 663 586 511 5 persons...................................................... 472 605 787 696 607 6 persons...................................................... 566 726 945 835 728 7 persons...................................................... 626 803 1,044 923 805 8 persons...................................................... 716 918 1,193 1,055 920 Each additional person......................................... +90 +115 +149 +132 +115 ---------------------------------------------------------------------------------------------------------------- \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 29 and 56 percent higher than the urban allotments shown here. Source: U.S. Department of Agriculture. Application, processing, and issuing food stamps Food stamp benefits are normally 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 5 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, several pilot projects issue cash benefits, and in a small but growing number of State or substate areas, 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 statewide in five States; in eight States benefits are issued through an EBT system in at least part of the State. More than twenty additional 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. 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 in-depth 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 an error is made and the dollar value of the errors as a proportion of total benefit dollars. 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 7.3 percent in fiscal year 1995. This was slightly higher than the all-time low of 7 percent in 1991. Error rates for underpayments have been relatively unchanged over time. In fiscal year 1995, the national weighted average underpayment dollar error rate was estimated at 2.4 percent. Finally, the rate of denials and terminations found improper in the most recent estimate (1994) was 3.8 percent (table 16-7). TABLE 16-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1995 [Percent of benefits paid or not paid in error] ------------------------------------------------------------------------ Underpayment Overpayment Combined State error rate error rate error rate ------------------------------------------------------------------------ Alabama......................... 1.05 5.98 7.02 Alaska.......................... 1.20 3.93 5.12 Arizona......................... 2.88 10.60 13.48 Arkansas........................ 1.50 4.01 5.51 California...................... 3.40 6.08 9.48 Colorado........................ 1.52 4.87 6.39 Connecticut..................... 1.09 7.45 8.54 Delaware........................ 1.45 7.96 9.41 District of Columbia............ 2.89 6.42 9.31 Florida......................... 2.60 8.47 11.07 Georgia......................... 3.38 7.61 10.99 Guam............................ 2.16 5.36 7.53 Hawaii.......................... 1.17 2.61 3.78 Idaho........................... 1.61 5.08 6.69 Illinois........................ 2.20 9.49 11.70 Indiana......................... 3.26 13.09 16.35 Iowa............................ 3.20 8.42 11.63 Kansas.......................... 1.44 6.67 8.11 Kentucky........................ 1.45 3.25 4.70 Louisiana....................... 2.05 5.12 7.17 Maine........................... 2.03 4.44 6.46 Maryland........................ 2.43 9.66 12.09 Massachusetts................... 1.73 3.24 4.97 Michigan........................ 1.88 7.67 9.55 Minnesota....................... 1.92 4.65 6.58 Mississippi..................... 1.55 8.44 9.99 Missouri........................ 3.40 9.56 12.96 Montana......................... 3.00 5.18 8.18 Nebraska........................ 2.41 6.30 8.71 Nevada.......................... 2.50 6.91 9.41 New Hampshire................... 3.94 6.31 10.25 New Jersey...................... 1.99 6.71 8.70 New Mexico...................... 1.43 6.14 7.57 New York........................ 3.41 6.06 9.46 North Carolina.................. 2.66 5.48 8.14 North Dakota.................... 0.98 5.00 5.98 Ohio............................ 3.39 11.18 14.57 Oklahoma........................ 2.32 8.81 11.13 Oregon.......................... 2.08 6.96 9.04 Pennsylvania.................... 2.41 6.55 8.96 Rhode Island.................... 1.30 3.94 5.24 South Carolina.................. 1.81 4.43 6.24 South Dakota.................... 0.62 2.94 3.56 Tennessee....................... 1.50 9.10 10.60 Texas........................... 1.34 7.37 8.71 Utah............................ 1.80 6.16 7.96 Vermont......................... 1.55 7.58 9.13 Virginia........................ 3.17 10.20 13.37 Virgin Islands.................. 1.36 3.98 5.35 Washington...................... 1.41 7.12 8.53 West Virginia................... 2.51 8.61 11.13 Wisconsin....................... 2.62 9.57 12.19 Wyoming......................... 2.70 4.88 7.58 --------------------------------------- U.S. average................ 2.42 7.30 9.72 ------------------------------------------------------------------------ Note.--Underpayment and overpayment rates may not add to combined rates due to rounding. Source: Food and Consumer Service (1995). 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 about $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 (9.7 percent in 1995). 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 <greek-e> 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 <greek-e> 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 1995, 16 States had combined error rates above the 9.7 percent tolerance level and were assessed some $73 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 1995, eight States had combined error rates below 6 percent and received $16 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 1995. 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 AFDC 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 contributes to the income of about 41 percent of food stamp households, and for almost all of them AFDC is their only cash income. SSI benefits go to some 19 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; nearly 15 percent are paid general assistance, unemployment insurance, or workers' compensation benefits. Recipiency Rates Table 16-8 shows food stamp participation rates from 1975 to 1995 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 16-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-95 ---------------------------------------------------------------------------------------------------------------- Food stamp participation as a percent Number of of-- food stamp --------------------------------------- Year participants Pre- (in Total Poor transfer millions) population \1\ population poor 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 NA 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 263.2 million persons at the end of fiscal year 1995. NA--Not available. Note.--Participants in Puerto Rico are not included in this table. Source: U.S. Bureau of the Census. Table 16-9 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 1995. 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. TABLE 16-9.--FOOD STAMP RECIPIENTS BY STATE, SELECTED FISCAL YEARS 1975-95 [Thousands of persons] -------------------------------------------------------------------------------------------------------------------------------------------------------- State 1975 \1\ 1979 \2\ 1985 \3\ 1990 \3\ 1991 \3\ 1992 \3\ 1993 \3\ 1994 \3\ 1995 \3\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama....................................................... 393 525 588 449 504 550 560 551 525 Alaska........................................................ 12 25 22 25 30 38 43 46 45 Arizona....................................................... 166 129 206 317 388 457 489 512 480 Arkansas...................................................... 268 277 253 235 258 277 285 283 272 California.................................................... 1,517 1,334 1,615 1,936 2,212 2,558 2,866 3,155 3,175 Colorado...................................................... 162 145 170 221 241 260 273 268 252 Connecticut................................................... 189 155 145 133 171 202 215 223 227 Delaware...................................................... 39 45 40 33 41 51 58 59 57 District of Columbia.......................................... 112 100 72 62 72 82 87 91 94 Florida....................................................... 767 828 630 781 1,021 1,404 1,500 1,474 1,395 Georgia....................................................... 569 559 567 536 648 751 807 830 816 Hawaii........................................................ 84 96 99 77 83 94 103 115 125 Idaho......................................................... 39 47 59 59 65 72 79 82 80 Illinois...................................................... 948 837 1,110 1,013 1,096 1,156 1,178 1,189 1,151 Indiana....................................................... 255 275 406 311 375 448 497 521 470 Iowa.......................................................... 118 117 203 170 180 192 196 196 184 Kansas........................................................ 63 73 119 142 156 175 188 192 184 Kentucky...................................................... 449 405 560 458 496 529 530 522 520 Louisiana..................................................... 502 523 644 727 742 779 779 756 711 Maine......................................................... 151 121 114 94 116 133 138 136 132 Maryland...................................................... 273 299 291 254 304 343 375 387 399 Massachusetts................................................. 560 429 337 347 397 429 443 442 410 Michigan...................................................... 685 706 985 917 978 994 1,022 1,031 971 Minnesota..................................................... 191 143 228 263 286 309 317 316 308 Mississippi................................................... 390 452 495 499 520 536 537 511 480 Missouri...................................................... 299 280 362 431 490 549 591 593 576 Montana....................................................... 38 33 58 57 61 66 70 71 71 Nebraska...................................................... 50 55 94 95 99 107 113 111 105 Nevada........................................................ 34 27 32 50 63 80 93 97 99 New Hampshire................................................. 66 44 28 31 47 58 60 62 58 New Jersey.................................................... 565 524 464 381 441 495 531 545 540 New Mexico.................................................... 154 159 157 157 188 221 244 244 239 New York...................................................... 1,398 1,704 1,834 1,546 1,717 1,885 2,045 2,154 2,183 North Carolina................................................ 537 517 474 419 517 597 627 630 614 North Dakota.................................................. 19 20 33 39 41 46 48 45 41 Ohio.......................................................... 924 760 1,133 1,078 1,171 1,251 1,269 1,245 1,155 Oklahoma...................................................... 184 184 263 267 296 346 370 376 375 Oregon........................................................ 208 160 228 216 240 265 283 286 289 Pennsylvania.................................................. 893 923 1,032 954 1,052 1,137 1,186 1,208 1,173 Rhode Island.................................................. 104 80 69 64 78 87 92 93 100 South Carolina................................................ 421 369 373 299 329 369 394 385 364 South Dakota.................................................. 31 37 48 50 52 55 56 53 50 Tennessee..................................................... 435 531 518 527 608 702 774 735 662 Texas......................................................... 1,085 1,027 1,263 1,880 2,155 2,454 2,659 2,730 2,564 Utah.......................................................... 50 44 75 99 110 123 133 128 119 Vermont....................................................... 46 40 44 38 47 54 58 65 59 Virginia...................................................... 293 320 360 346 414 495 535 547 546 Washington.................................................... 239 205 281 337 385 432 462 468 476 West Virginia................................................. 204 182 278 262 281 310 322 321 329 Wisconsin..................................................... 163 171 363 286 294 334 337 330 320 Wyoming....................................................... 11 11 27 28 31 33 34 34 34 American Samoa................................................ NA NA NA NA NA NA NA 2 3 Guam.......................................................... 21 18 20 12 11 20 13 15 16 Northern Marianas............................................. NA NA 4 4 2 2 3 4 4 Puerto Rico................................................... 1,800 1,822 1,480 1,480 1,490 1,480 1,440 1,410 1,370 Virgin Islands................................................ 25 34 32 18 15 16 18 20 23 ----------------------------------------------------------------------------------------- Total................................................... 19,199 18,926 21,385 21,510 24,105 26,888 28,426 28,888 27,995 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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. 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). 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. Most recently, 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. Table 16-10 provides an overview of the characteristics of food stamp households for selected years since 1980; table 16- 11 summarizes annual vital statistics about the program since 1972. MEDICAID Medicaid, authorized under title XIX of the Social Security Act, is a Federal-State matching entitlement program providing medical assistance for 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 (for additional information, see Committee on Energy and Commerce, 1993). Eligibility Although Medicaid eligibility has traditionally been linked to actual or potential receipt of cash assistance under AFDC or SSI, both of which are under jurisdiction of the Committee on Ways and Means, legislation in the last decade has gradually extended coverage to low-income pregnant women and children who have no ties to the welfare system, and has provided partial coverage for new groups of low-income Medicare beneficiaries. 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. 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. \8\ 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. --------------------------------------------------------------------------- \8\ 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. TABLE 16-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-94 [In percent] -------------------------------------------------------------------------------------------------------------------------------------------------------- Year and month survey was conducted ----------------------------------------------------------------------------------------------------------- Food stamp recipient households 1980 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 (Aug.) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) -------------------------------------------------------------------------------------------------------------------------------------------------------- With gross monthly income: Below the Federal poverty levels........ 87 94 93 94 92 92 92 91 92 91 90 Between the poverty levels and 130 percent of the poverty levels.......... 10 6 6 6 8 8 8 9 8 8 9 Above 130 percent of the poverty levels. 2 (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) 1 1 With earnings............................... 19 20 21 21 20 20 19 20 21 21 21 With public assistance income \1\........... 65 68 69 74 72 73 73 70 66 68 69 With AFDC income........................ NA 39 38 41 42 42 43 41 40 40 38 With SSI income......................... 18 19 18 21 20 21 19 19 19 20 23 With children............................... 60 59 61 61 61 60 61 61 62 60 61 And female heads of household........... NA 46 48 50 50 50 51 51 51 52 51 With elderly members \2\.................... 23 21 20 21 19 20 18 17 15 16 16 With elderly female heads of household \2\.................................... NA 16 15 15 14 14 11 10 9 NA 11 ----------------------------------------------------------------------------------------------------------- Average household size...................... 2.8 2.7 2.7 2.7 2.6 2.6 2.6 2.6 2.5 2.6 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\ Less than 0.5 percent. 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. 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 16-11.--HISTORICAL FOOD STAMP STATISTICS, 1972-95 ---------------------------------------------------------------------------------------------------------------- Total Federal spending Average monthly (in millions) \1\ Average benefits (per person) Four-person ------------------------ monthly ------------------------ maximum Fiscal year Constant participation Constant monthly Current (1995) (in millions Current (1995) allotment \2\ dollars dollars \3\ of persons) dollars dollars \3\ ---------------------------------------------------------------------------------------------------------------- 1972 \4\.......................... $1,871 $6,879 11.1 $13.50 $47.90 $108 1973.............................. 2,211 7,813 12.2 14.60 47.70 112 1974.............................. 2,843 9,230 12.9 17.60 48.10 116 1975 \5\.......................... 4,624 13,520 17.1 21.40 53.40 150 1976.............................. 5,692 15,552 18.5 23.90 56.10 162 Transition quarter \6\............ 1,367 3,597 17.3 24.40 56.10 166 1977.............................. 5,469 13,881 17.1 24.70 55.60 166 1978.............................. 5,573 13,206 16.0 26.80 55.10 170 1979 \7\.......................... 6,995 15,043 17.7 30.60 56.40 182 1980.............................. 9,188 17,401 21.1 34.40 59.00 204 1981.............................. 11,308 19,264 22.4 39.50 62.10 209 1982 \8\.......................... 11,117 17,646 22.0 39.20 59.40 233 1983 \8\.......................... 12,733 19,529 23.2 43.00 64.30 253 1984 \8\.......................... 12,470 18,365 22.4 42.70 62.00 253 1985 \8\.......................... 12,599 17,896 21.4 45.00 64.00 264 1986 \8\.......................... 12,528 17,352 20.9 45.50 63.40 268 1987 \8\.......................... 12,539 16,899 20.6 45.80 61.00 271 1988 \8\.......................... 13,289 17,191 20.1 49.80 64.00 290 1989 \8\.......................... 13,815 17,055 20.2 51.90 62.60 300 1990 \8\.......................... 16,512 19,426 21.5 59.00 66.90 331 1991 \8\.......................... 19,765 22,133 24.1 63.90 69.70 352 1992 \8\.......................... 23,539 25,585 26.9 68.50 74.30 370 1993 \8\.......................... 24,749 26,106 28.4 68.00 72.30 375 1994.............................. 25,525 26,233 28.9 69.00 71.30 375 1995.............................. 25,678 25,678 28.0 71.30 71.30 386 ---------------------------------------------------------------------------------------------------------------- \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 All 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 1.4 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. AFDC-related groups States must provide Medicaid to all persons receiving cash assistance under AFDC, as well as to additional AFDC-related groups that are not actually receiving cash payments. These groups include: persons who do not receive a payment because the amount would be less than $10; persons whose payments are reduced to zero because of recovery of previous overpayments; certain work supplementation participants; certain children for whom adoption assistance agreements are in effect or for whom foster care payments are being made under title IV-E of the Social Security Act; and persons ineligible for AFDC because of a requirement that may not be imposed under Medicaid. States are required to continue Medicaid for specified periods for certain families losing AFDC benefits after receiving them in at least 3 of the preceding 6 months. If the family loses AFDC benefits because of increased income from earnings or hours of employment, Medicaid coverage must be extended for 12 months. (During the second 6 months a premium may be imposed, the scope of benefits may be limited, or alternate delivery systems may be used.) If the family loses AFDC because of increased child or spousal support, coverage must be extended for 4 months. States are also required to furnish Medicaid to certain two-parent families whose principal earner is unemployed and who are not receiving cash assistance because the State is one of those permitted (under the Family Support Act of 1988) to set a time limit on AFDC coverage for such families. States are permitted, but not required, to provide coverage to additional AFDC-related groups. The most important of these are the ``Ribicoff children,'' whose income and resources are within AFDC standards but who do not meet the definition of ``dependent child.'' States may cover these children up to a maximum age of 18, 19, 20, or 21, at the State's option, and may limit coverage to reasonable subgroups, such as children in privately subsidized foster care, or those who live in certain institutional settings. States may also furnish Medicaid to persons who would receive AFDC if the State's AFDC Program were as broad as permitted under Federal law. Non-AFDC 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 and resources, 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. (The State may impose a resource standard that is no more restrictive than that for SSI, in the case of pregnant women, or AFDC, in the case of children.) Coverage for pregnant women is limited to services related to the pregnancy or complications 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. (Coverage of such children through age 7 has been optional since OBRA 1987.) 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 with incomes below a State- established maximum that is above 133 percent of the poverty level. As of July 1995, 35 States and the District of Columbia had made use of this option; 25 had set their income limits at the maximum of 185 percent. 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 ``spenddown.'' 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 spenddown 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. 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. 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, and whose resources do not exceed twice the allowable amount under SSI. 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 beneficiaries who would be QMBs except that their incomes are between 100 and 120 percent of the poverty level. States are also 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. 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. 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. 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. Optional Coverage: 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, spenddown 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. 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 1994, Medicaid covered 12 percent of the total U.S. population (excluding institutionalized persons) and 46.2 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 16-12 shows Medicaid coverage by age and income status in 1994, as reported in the March 1995 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 Medicare and/or private coverage. Children under age 6 with family incomes below poverty are most likely to be covered. Coverage rates drop steadily with age and income until age 65. TABLE 16-12.--MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1994 [In thousands] ------------------------------------------------------------------------ Percent Age Covered by Persons in with Medicaid age group Medicaid ------------------------------------------------------------------------ In poverty: 0-5.......................... 4,358 6,093 71.5 6-10......................... 2,762 4,228 65.3 11-18........................ 2,940 5,611 52.4 19-44........................ 5,101 13,823 36.9 45-64........................ 1,366 4,639 29.4 65 or older.................. 1,050 3,663 28.7 -------------------------------------- Total...................... 17,577 38,057 46.2 ====================================== Family income between 100 and 133 percent of poverty: 0-5.......................... 875 1,967 44.5 6-10......................... 548 1,472 37.2 11-18........................ 575 1,987 28.9 19-44........................ 1,151 6,258 18.4 45-64........................ 346 1,997 17.3 65 or older.................. 552 2,907 19.0 -------------------------------------- Total...................... 4,047 16,589 24.4 ====================================== Family income between 133 and 185 percent of poverty: 0-5.......................... 825 2,822 29.2 6-10......................... 391 2,166 18.0 11-18........................ 496 3,257 15.2 19-44........................ 1,072 10,175 10.5 45-64........................ 374 3,625 10.3 65 or older.................. 430 4,915 8.8 -------------------------------------- Total...................... 3,588 26,960 13.3 ====================================== Family income greater than 185 percent of poverty: 0-5.......................... 1,109 13,379 8.3 6-10......................... 621 11,401 5.4 11-18........................ 874 19,094 4.6 19-44........................ 2,034