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The Personal Responsibility Work Opportunity Act (PRWORA) of 1996 eliminated the Aid to Families with Dependent Children (AFDC) program, the major cash assistance entitlement program and replaced it with Temporary Assistance for Needy Families (TANF), a block grant program that provides time-limited assistance in the form of monthly cash payments and other services. The TANF program is marked by a high degree of policy and program variation across and within states. States set all major eligibility parameters, including income eligibility thresholds, resource limits, disregards and benefit levels. Many functions and decisions regarding TANF program design and implementation, including aspects of the application process, are often devolved to localities.
The federal Food Stamp Program (FSP) is designed prevent hunger and poor nutrition by providing monthly food coupons (or electronic debit cards) to help low-income families purchase food. Of the four study programs, FSP is the most standardized and has uniform thresholds on resources, income and benefit levels that are set at the Federal level.(1) Concern over barriers to participation, particularly among low-income working families affected by welfare reform, prompted the Food and Nutrition Service (FNS) of the U.S. Department of Agriculture to introduce several options and waivers to food stamp program rules and regulations. These have been implemented to varying degrees by states (GAO-02-409, February 2002).
Medicaid is the largest public program for financing basic health and long-term care services for low-income families and individuals. Historically, Medicaid eligibility was tied to eligibility for cash assistance, primarily through AFDC and Supplemental Security Income (SSI), but during the 1980s, states began expanding coverage to children and pregnant women who did not qualify for cash assistance.(2) Medicaid eligibility varies by state, age, disability status, and other criteria. However, at a minimum, children are income eligible for coverage if family income is below 100 percent of poverty. Younger children, through age five, are eligible with slightly higher incomes, at a minimum of 133 percent of the federal poverty level. Income eligibility thresholds for Medicaid or other public-sponsored coverage have risen markedly since the enactment of the State Children's Health Insurance Program (see below), and now hover slightly above 200 percent of the poverty level on average.
Congress enacted the State Children's Health Insurance program (SCHIP) in 1997 to expand health insurance coverage to children of low-income families. This program entitles states to block grants in order to initiate and expand health insurance programs for low-income children with higher federal matching payments than under Medicaid. The program is designed to make funds available only for those uninsured children who were not eligible for Medicaid but whose families have incomes below 200 percent of the federal poverty level.(3) The SCHIP legislation gave states the option of using Medicaid, a separate state program, or some combination of the two to expand coverage. The SCHIP legislation, along with other provisions of the Balanced Budget Act of 1997, also gave states greater flexibility to streamline the eligibility determination process under both Medicaid and SCHIP by allowing them to implement presumptive and continuous eligibility for children. By the end of 1999, all states had received federal approval to participate in the program, and by 2002 most states provided coverage to children in families with income at or above 200 percent of the poverty guidelines.
States have considerable flexibility in the design of their SCHIP programs; however, the federal government establishes basic guidelines. These standards primarily affect program eligibility, scope of benefits, and out-of-pocket costs. States define the eligibility standards for health assistance under their own plans. These standards include those related to geographic areas served, age, income and assets, residency, disability status, access to or coverage under other health plans, and duration of eligibility.
1. TANF recipients are categorically eligible for food stamps; the income threshold for most other cases is at 135 percent of the federal poverty level (FPL). For thresholds as of Fiscal Year 2002, see "Food Stamp Resources, Income, and Benefits for Households in the 48 Contiguous States and the District of Columbia, 10/1/01 through 9/30/02." Washington, D.C.: U.S. Department of Agriculture.
2. States began by extending eligibility to women and children in families with income slightly higher than historic Medicaid eligibility thresholds. They also began providing coverage to other "medically needy" persons who did not qualify for welfare programs but incurred large health-related expenses. Throughout the 1990s, most states continued to expand Medicaid coverage for children, and in the early to mid-1990s a limited number of states began to implement health insurance coverage programs that provided private, non-Medicaid coverage, for children ineligible for Medicaid. Again, these programs primarily targeted children in families with income too high to qualify for Medicaid.
3. However, as a result of state flexibility in determining what income is counted for eligibility determination, states, in effect, can provide coverage up to any income eligibility threshold as desired, as long as coverage policies favor children in families with lower income. For example, a state can choose to disregard, or not count, an amount of income equal to 100 percent of poverty. This policy can effectively raise an income eligibility ceiling from, say, 200 percent of poverty to 300 percent. The SCHIP legislation allowed some states with generous coverage eligibility policies, such as Washington and Missouri, to expand beyond 200 percent of poverty (their Medicaid thresholds) without the use of disregard mechanisms. States can also modify eligibility criteria, including income, by seeking federal waivers.
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