Particularly for long-term welfare recipients, leaving welfare can be difficult, both financially and emotionally. Transitional benefits can smooth the transition from welfare to work by continuing to provide government supports for a limited time. They can also help to make work pay for families who leave welfare. There are two main transitional benefits generally available to former welfare recipients: child care and medical assistance. In addition, some programs provide other types of transitional benefits.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 consolidates welfare-related child care programs into block grants to states. Funding from the child care block grant can be used to extend child care subsidies for parents who leave welfare for work. States can also choose to provide transitional child care through other programs available to all low-income working parents. Some states require parents to pay some of their child care costs on a sliding scale.
However transitional child care is structured, work first programs need to market available options to participants and help them take advantage of that support. A study conducted by the General Accounting Office found that utilization rates of Transitional Child Care (a program now consolidated under the block grant) were extremely low, with roughly 20 percent of eligible families making use of the program for at least one month. The study found that in some states, inadequate mechanisms for informing welfare recipients about the availability of the transitional benefits limited the effectiveness of the benefits as work incentives.
Because many of the jobs participants get will not provide health benefits, transitional medical assistance can help make work pay and provide security for parents who leave welfare for work. Transitional Medicaid is available for a limited time to most families who would otherwise become ineligible due to earnings. Some states also operate state-funded programs that subsidize medical assistance for low-income families. Because Medicaid is no longer categorically linked to welfare receipt, states will need to decide whether they wish to establish their own link (for example, by creating a single application form for both welfare and Medicaid) and what systems to develop for transferring the eligibility of families who leave welfare for work. Again, work first programs need to educate participants about the availability of medical assistance and help participants take advantage of it.
Other Transitional Benefits
Some programs provide other types of transitional benefits. For example, Utah allows former participants to access all program services for two years after leaving welfare. This includes assistance for transportation, car repairs, uniforms, and other work-related needs, as well as access to education and training. In addition, former participants are encouraged to ask case managers for help with any issues that might jeopardize employment. Some offices have specialized staff who take over closed cases; in other offices, participants keep their work first case manager for two years after leaving the program.
Facilitating the Use of Transitional Benefits
Individuals will be more likely to take advantage of transitional benefits if they have accurate information about the benefits and if the benefits are easily accessible. Clearly communicating information about transitional benefits can also alleviate the fear that participants may have about leaving welfare for work. Below are some suggestions:
- Make sure that both work first and eligibility staff understand the criteria for receiving transitional benefits and the importance of these benefits as a complement to the work first program.
- Include transitional benefits in all work-related discussions at both the eligibility and work first offices. Eligibility staff can include explanations of these benefits in their interviews with new applicants and in regular redetermination meetings. Work first orientation and the first day of job club are also good times to discuss work-related program incentives, including transitional benefits.
- Case managers and child care staff can mention transitional benefits when program participants are arranging for child care that is needed so that they can participate in program activities. Let participants know that child care assistance will not end with welfare.
- When welfare recipients start reporting income, send them a letter congratulating them and reminding them about transitional benefits. Include all appropriate application forms.
- Keep applications for transitional benefits simple. Consider using one application form for both transitional medical assistance and child care, or have cases roll over to transitional benefits automatically, without a new application.
Services Available After Transitional Benefits End
It is also helpful to inform participants about-and assist them in receiving-supports available to them beyond transitional benefits, particularly as they near the end of their eligibility. When Transitional Medicaid ends, states should determine whether any member of the family is eligible for Medicaid under another category. In addition, many states provide subsidized medical coverage for low-income working families and children who are not eligible for Medicaid. Low-income working parents who exhaust transitional child care benefits may be eligible for other federally and state-funded child care programs. Funding for low-income child care benefits is limited, however, so it may be helpful to give parents information on how to access benefits or get on waiting lists early.
States should design fluid delivery systems that bridge the gaps between welfare and transitional benefits, and between transitional benefits and follow-up supports. For example, some states have established systems that automatically roll over child care assistance from transitional benefits to another funding stream. Consistent payment rates and mechanisms can also ease transitions from one funding stream to another.