Policies as of July 2004: Initial Eligibility

I. Initial Eligibility

The tables in this chapter of the Databook describe key aspects of the rules imposed on families and individuals in order to determine initial eligibility for TANF cash assistance, as of July 2004. Rules for initial eligibility apply to individuals who are newly applying or reapplying for assistance. To be eligible, an applicant family must pass both nonfinancial tests based on the demographic characteristics of the family and its members, and financial tests based on the income and asset holdings available to the family. This chapter is divided into five sections covering initial eligibility rules related to diversion, family composition, assets, income definitions, and income tests.

A. Does the state try to divert some families from becoming recipients?

During the 1990s, first under state waivers and then after the passage of PRWORA, states began focusing their efforts on decreasing caseloads, as well as encouraging families to become self-sufficient. To meet these goals, many states developed policies that attempt to divert from assistance those applicants needing the least amount of state help to become self-sufficient.

Two policies intended to encourage self-sufficiency are diversion and job search at application. By July 2004, almost two-thirds of states have created a formal diversion program. Under formal diversion programs, families may choose to receive a lump-sum cash payment to deal with immediate needs instead of receiving a monthly TANF benefit. Generally, the benefits are provided to families to alleviate short-term problems that interfere with either keeping or finding employment. Families that accept diversion payments are typically barred from applying for monthly TANF benefits for some period.

About a third of the states have instituted a job search at application policy, which encourages applicants to find work. These policies require applicants to search for a job either before or while their application is processed. To be eligible for aid, applicants must prove that they have searched for a job at a set number of businesses. States hope that applicants who may not have previously pursued employment as aggressively as the state required will find a job and no longer need assistance.

Below is a further discussion of these topics and the tables included in this section.

Formal diversion: Table I.A.1 describes states’ formal diversion programs. For purposes of the WRD and this table, a formal diversion program diverts eligible applicants or recipients from ongoing TANF receipt by providing a one-time cash payment paid directly to the family or to a vendor for expenses incurred by the family. Other strategies that states may use to divert applicants from ongoing receipt of cash benefits (such as requiring an applicant to participate in job search or resource and referral services) are not identified as diversion programs in the table.

Families applying for a diversion payment must still be eligible for assistance using the state’s eligibility rules (see sections I.B–I.E). The rules are generally the same for families that apply for diversion and those that apply for monthly assistance.

The amount of a diversion payment varies greatly across the states. Currently, 11 states (including 2 states with variable lump-sum payments) provide families a flat lump-sum amount of diversion, regardless of the family’s size. These payments range from $1,000 to $4,000, depending on the state. The majority of states with diversion programs, however, determine the lump-sum diversion payment amount based on a multiple of the benefit the family would receive if it were eligible and received monthly TANF payments. The diversion payments range from two to eight months’ worth of monthly benefits, depending on the state. The majority offer up to three months of the maximum benefit the family would receive if receiving assistance. Note that the maximum diversion amount in these states is also affected by the variation in the states’ maximum monthly benefit levels and the family size.

Table I.A.1 describes whether states provide a diversion payment, the maximum payment, the form of the payment, how often a recipient may receive the maximum payment, the period of TANF ineligibility after receiving a diversion payment, and whether the diversion payment counts toward the state’s time limit. States conducting demonstration projects that provide diversion assistance in a few counties, but not statewide, are footnoted.

Related tables: Table L1 indicates whether each state had a formal diversion program in 1996 through 2004.

Mandatory job search at application: Table I.A.2 indicates which states require applicants to search for a job before application as a condition of eligibility. Presently, 19 states require an applicant to seek employment either before or while the application is processed. The job search requirements vary by state, but in all cases the family is not eligible for assistance if the applicant does not comply with the requirement.

B. How does family composition or individual status affect eligibility?

To be eligible for either a diversion payment or monthly benefits, a family must pass several nonfinancial tests based on the demographic characteristics of the overall family or individuals within the family. States impose several rules on families to determine whether they may be eligible for TANF. At the most basic level, the family must include a child or, in some states, a pregnant woman. If the family includes two parents, some states impose special eligibility tests based on the parents’ current or prior labor force status. If the head of the family is a teenager, she may or may not be eligible to receive a benefit on her own, and in most states she is eligible only if she is living with her parents or in another state-approved setting.

Even when a family passes these tests, some members of the family may not be eligible to be part of the “assistance unit” (the group of people whose needs are considered in establishing the benefit). For instance, many states prohibit the inclusion of stepparents in the assistance unit, while other states require their inclusion, and still others give the family the option. The degree to which individual noncitizens are eligible to be in the assistance unit also varies from one state to the next. States base the eligibility of noncitizens on several factors, including when they arrived in the country, how long they have resided in the country, and their immigrant status.

Below is a further discussion of these topics and the tables included in this section.

Eligibility of pregnant women: Table I.B.1 indicates whether pregnant women who have no other children are eligible to receive TANF cash assistance. For those states that provide benefits, the table also indicates in which month of pregnancy benefits begin.

Two-parent eligibility for applicants: For states providing benefits to two-parent families, table I.B.2 describes any special eligibility rules imposed on two-parent applicant units where neither parent is disabled (“UP,” or unemployed-parent families, in the former AFDC program).6 Traditionally, there are three types of tests that states have imposed—limits on hours of work, work history tests, and waiting periods. Under an “hours test,” the unit is ineligible if the principal wage earner is working more than a specified number of hours a month. Note that states may apply this rule when determining the initial or continuing eligibility of two-parent families.

Under a work history test, the eligibility of two-parent units is restricted to those where the principal wage earner worked during a certain number of calendar quarters over a specified number of years, or where the principal wage earner satisfies other criteria related to labor force attachment.

Waiting periods restrict the eligibility of two-parent families until a certain number of days or weeks after the family would otherwise have been eligible.7 In other words, under a 30-day waiting period, if the principal wage earner becomes unemployed and the family would not have been eligible when the parent was working, the family would not become eligible to apply for assistance until one month after the parent lost his or her job.

Related tables: See table IV.A.1 for details on the hours test for recipients and table L2 for information on the rules for two-parent units in 1996 through 2004.

Minor parent eligibility: Table I.B.3 describes special eligibility rules for families where the parent is a minor (usually defined as under age 18 and never married). The first column indicates whether a minor parent can ever head a TANF unit and receive the benefit check in his or her own name. The second column indicates whether the state requires the minor parent to live with a parent or in another state-approved setting (referred to in the table as a living arrangement restriction). In nearly all states, unless exempt due to good cause, a minor parent must live with her own parent(s) or in some other state-approved setting.8

Related tables: See table I.D.1 for the rules related to the treatment of income from the parents of a minor parent who is heading her own assistance unit.

Eligibility of stepparents: Table I.B.4 describes whether a stepparent is included in the TANF assistance unit. Depending on the state policy, stepparents may be required to be part of the unit, may be prohibited from being part of the unit, or may be included in the unit at the option of the family. This table focuses on rules for stepparents who have no child in common with their spouses and who have no biological children of their own in the assistance unit. State rules for stepparents not meeting these criteria may vary and are discussed in the WRD.

Related tables: See table I.D.2 for the rules related to the treatment of income from a stepparent who is not included in the assistance unit.

Eligibility of noncitizens: After the passage of PRWORA, noncitizens’ access to federal TANF benefits was significantly restricted. PRWORA created the “qualified alien” distinction, which more narrowly defined the group of noncitizens potentially eligible for most federally funded TANF assistance.9 Apart from a few exempted groups, the federal law further limited qualified aliens’ access to assistance based on their date of entry into the country.10 Qualified aliens who entered the United States before August 22, 1996, (the date PRWORA was passed) are potentially eligible for assistance without any waiting period, whereas certain qualified aliens who arrive in the country on or after August 22, 1996 are subject to a five-year bar on federal TANF assistance.11 (If the alien enters the United States on or after August 22, 1996, but is not qualified when he or she enters, the five-year clock begins on the date his or her immigrant status becomes qualified.) After the five-year bar, qualified aliens are again potentially eligible for federally funded TANF assistance. Although federal law determines which aliens are potentially eligible for benefits and during which periods, states have some flexibility. States can provide or deny assistance to certain qualified aliens who the federal government has indicated are potentially eligible for benefits.12 States can also provide state-funded assistance to certain aliens ineligible for federally funded assistance—such as qualified aliens during the five-year bar or certain unqualified aliens.

States have made three types of decisions about the eligibility of aliens: (1) Will some of or all qualified aliens who arrived before PRWORA (pre-PRWORA) be eligible for benefits?; (2) Will some of or all aliens who arrived on or after PRWORA (post-PRWORA) be eligible for benefits during the five-year bar?; and (3) Will some of or all post-PRWORA aliens be eligible for benefits after the five-year bar? As of 2004, all states provide TANF benefits to at least some of, if not all, pre-PRWORA qualified aliens. But states vary considerably in their decisions concerning post-PRWORA aliens. Tables I.B.5, I.B.6, and I.B.7 describe the variation in state policies concerning pre-PRWORA and post-PRWORA aliens.13

Table I.B.5 describes whether states consider pre-PRWORA qualified aliens eligible for federally funded assistance. The table provides eligibility rules for several different categories of qualified aliens, including legal permanent residents, asylees/refugees, aliens with deportation withheld, aliens paroled in the country for at least one year, and battered aliens. Even if a state does not provide assistance to all qualified aliens, those qualifying for special exceptions based on work history or veteran or military status are still eligible for federally funded benefits.

Table I.B.6 shows the extent to which states use their own funding to provide assistance to post-PRWORA qualified aliens during the five-year bar. (The table also indicates state-funded coverage of certain groups of nonqualified aliens.) Some states fund all qualified aliens, while others fund only legal permanent residents or particular groups of post-PRWORA aliens.

Table I.B.7 shows whether states consider post-PRWORA qualified aliens eligible for federally funded assistance after they have resided in the United States with a qualified alien status for at least five years. The table provides eligibility rules for several different categories of qualified aliens—legal permanent residents, asylees/refugees, aliens with deportation withheld, aliens paroled in the country for at least one year, and battered aliens. Even if a state does not provide assistance to all qualified aliens, those qualifying for special exceptions based on work history or veteran or military status are still eligible for federally funded benefits.

All noncitizen rules discussed here apply to individuals, not to entire families. Within a family, some individuals may be ineligible based on immigrant status, while others may remain eligible. The WRD provides details on the extent to which income of these ineligible family members is available to the eligible individuals in the unit. The WRD also provides information on income deemed from an alien’s sponsor.

C. What level of assets can a family have and still be eligible?

If the family passes the nonfinancial eligibility tests, the state then calculates the amount of assets the family owns. Almost all states restrict the amount of assets a family may hold and still be eligible for assistance; however, these amounts vary greatly by state and by type of asset.

If the family’s total assets exceed the amounts determined by the state, the family is ineligible for assistance.

Asset limits for applicants: Table I.C.1 describes each state’s asset tests for applicants. States determine the maximum value of assets, including vehicles, an applicant family may hold and still remain eligible for benefits.

The first column of the table provides the limit on the value of unrestricted assets a family may hold and still be eligible for assistance. Unrestricted assets include the cash value of any asset the state counts toward the limit, regardless of the asset’s purpose.

The second column describes whether some of or all the value of a vehicle is excluded in determining the amount of a family’s assets for eligibility purposes. When a portion of the vehicle’s value is exempted, that value may be given in terms of equity or fair market value. The fair market value is the amount for which the vehicle could be sold, while the equity value is the fair market value minus any amount still owed on the vehicle. When a family still owes money on a vehicle, the equity value will be less than the fair market value, so this distinction is important when comparing vehicle exemption amounts across states.

Related tables: The limits may vary for determining the initial eligibility of applicants versus the continuing eligibility of recipients. For information on the asset test for recipients, see table IV.A.3. Tables L8 and L9 provide information on asset limits for recipients and the vehicle exemption for recipients, respectively, from 1996 through 2004.

D. How is income counted in determining eligibility?

Once a family has passed the state’s asset tests, its available income is computed for eligibility purposes. States have discretion in determining the portion and types of earned and unearned income they will count, in addition to whose income will count, for eligibility purposes. Generally, states count most of the earned income from each assistance unit member toward the unit’s gross income (total income of the unit); however, states vary greatly in their treatment of unearned income. There are several types of unearned income; this book only addresses unearned income in the form of child support payments (in chapter IV, Ongoing Eligibility). For more details on the treatment of other unearned income, including interest income, EITC income, and lump-sum income, see the WRD.

States determine not only how much and what type of income is counted, but also whose income is counted. Many states count a portion of or all income from certain individuals who are not part of the assistance unit but have an obligation to support a member of the assistance unit. For instance, as long as a nonapplicant—such as a stepparent or a parent of a minor parent—lives in the same home as the applicant, a portion of the nonapplicant’s income may be counted against the applicant for eligibility and benefit computation purposes. Typically, states allow these individuals to allocate a portion of their income for their own needs, while any remaining income is “deemed available” to the assistance unit as unearned income. This income may or may not actually be available to the unit, but the state assumes the individual bears some financial responsibility and therefore requires that a portion of his or her income count against the unit.

Below is a further discussion of these topics and the tables included in this section.

Treatment of grandparent income: When a minor parent is potentially eligible to head her own assistance unit, a portion of her parents’ income may be “deemed available” to the minor’s unit when determining eligibility and benefits. Typically, income is deemed from the minor’s parents (referred to as “grandparents”) only if the minor is living in the home with her parents; however, in one state—New Jersey—the income is deemed even if the minor is not living with her parents.

Generally, states allow the grandparents to disregard a portion of their earned income, similar to the earned income disregards available to applicants. In addition, the grandparents may subtract from their income a second disregard approximating the amount of their basic needs and the needs of their dependents outside of the unit. The income that remains after these disregards is deemed available to the minor unit and is counted as unearned income for eligibility and benefit computation purposes.

Table I.D.1 describes the deeming process for grandparents’ income. The first column indicates if the state deems income, the second column indicates the initial earned income disregard available to the grandparents, and the third column describes any other disregards available to the grandparents (most often referred to as the need-based disregard). The table indicates the income standards used by states to determine the disregard. To determine the value of these standards for a family size of three, see table I.E.3 (Eligibility Standards).

Related tables: Table I.B.3 describes whether minor parents are potentially eligible to head their own TANF units.

Treatment of stepparent income: In states where a stepparent is either always excluded from the assistance unit or may choose to be excluded from the assistance unit, a portion of the stepparent’s income may be “deemed available” to the unit. As with grandparent deeming, states generally allow the stepparent to disregard a portion of their earned income, similar to the earned income disregards available to applicants. In addition, the stepparent may subtract from his or her income a second disregard approximating the amount of his or her basic needs and the needs of his or her dependents outside of the unit. The remaining income after these disregards is deemed available to the stepparent’s spouse and the spouse’s dependents and is counted as unearned income for eligibility and benefit computation purposes.

Table I.D.2 describes the deeming process for stepparents’ income. The first column indicates if the state deems income, the second column indicates the initial earned income disregard available to the stepparent, and the third column describes any other disregards available to the stepparent (most often referred to as the need-based disregard). The table indicates the income standards used by states to determine the disregard. To determine the value of these standards for a family of three, see table I.E.3 (Eligibility Standards).

Related tables: Table I.B.4 describes whether stepparents are potentially eligible to be included in the assistance unit.

E. How much income can a family have and still be eligible?

To determine initial eligibility for benefits, most states impose income eligibility tests on applicants. States use the total gross income calculated from the unit’s earned and unearned income as a starting point for these tests. Many states currently impose one income test on applicants; however, others use a combination of tests, which may include a gross income test, a gross earnings test, an unearned income test, or a net income test. There are other tests, but these are the most common. A gross income test compares all the unit’s total income (earned and unearned) with a state-determined standard. If the unit’s income is less than the standard, the next test is applied, if there is one, or the unit is considered eligible and a benefit is computed. A gross earnings test and an unearned income test both work similarly; however, only the unit’s earned income is used for a gross earnings test and only the unit’s unearned income is used for an unearned income test.

States may also impose net income tests, either after a gross income test or in lieu of it. Net income is calculated by subtracting the state’s earned income disregards from the unit’s gross earned income and then adding to this amount the unit’s unearned income. The net income is then compared to an income standard determined by the state. If the net income is less than the standard, the next test is applied, if there is one, or the unit is considered eligible and a benefit is computed.

The following sections describe the types of eligibility tests in the states, the earned income disregards used for the net income tests, the income eligibility standards used for the various tests, and a calculation for the maximum income for initial eligibility at application. The first three tables must be used together to fully understand the income eligibility tests in each state.

Income eligibility tests for applicants: Table I.E.1 describes states’ income eligibility tests for determining whether an applicant can begin receiving benefits. The table indicates which state income standard is used for each test. To determine the value of the particular standard for a three-person family, see table I.E.3, discussed below. States that impose a net income test generally disregard a portion of the unit’s earned income before comparing the income to the state’s income standard. These earnings disregards are captured in table I.E.2.

This table describes the income tests imposed in addition to the implicit income test imposed by benefit computation. Even if a family passes all eligibility tests, it is possible in some states that the family will not qualify for a positive benefit under that state’s benefit computation formula. In those cases, the family will not receive a benefit. Some states have streamlined their eligibility policies and do not perform any income tests other than the implicit test imposed by the benefit computation procedure. In those states, table I.E.1 indicates “No explicit tests.”

Related tables: As mentioned above, table I.E.3 provides the eligibility standard(s) used to determine eligibility for a three-person family. Tables I.D.1 and I.D.2 describe policies concerning the deeming of income from grandparents and stepparents that may be used when determining gross income for income eligibility tests. Table I.E.2 describes the earned income disregards that may be used for net income tests. Table I.E.4 combines information on the income eligibility tests applied to applicants with information on the earned income disregards and eligibility standards to show the maximum earnings a family can have and still be eligible for TANF. Table L3, in the last section of this book, provides the same information as in table I.E.4 for 1996 through 2004.

Earned income disregards for income eligibility: Table I.E.2 describes the earned income disregards applied to applicants’ and recipients’ income in determining net income for the income eligibility tests. Additional disregards for child care expenses paid by a family or special disregards for units affected by a family cap or time limit are not included in this table; however, this information is included in the WRD.

The body of the table focuses on the earned income disregards used to establish net income when determining an applicant’s initial eligibility. In some cases, states also use net income tests to determine a recipient’s continuing eligibility. If that is the case, and if different earned income disregards are used in applying net income tests for recipients versus applicants, the rules for recipients are footnoted.

When a state has no explicit net income tests, the table indicates “No explicit net income test.” Some states have net income tests but do not apply any of the earned income disregards described in the table to the applicant’s earnings. In other words, all of a family’s earnings are typically included in the income amount. In those cases, “No disregards allowed” appears in the table.

Eligibility standards: As described earlier, most income tests involve state-established income amounts that vary by the size of the assistance unit. The WRD includes the standards used for each family size from 1 through 12. Table I.E.3 provides the standards for a three-person assistance unit.

The table identifies the standard by the name used in the caseworker manual. Under the former AFDC program, the standard for income eligibility tests was the need standard. However, because of the complexity of state programs, identifying the need standard is no longer clear. States may compare an assistance unit’s income against multiple standards, depending on the type or amount of income. Therefore, the term “need standard” is not used in the table unless the state explicitly uses it to refer to its eligibility standard.

Some details concerning eligibility standards are not included in the table. In some states, different dollar amounts are used in different regions of the state; in those cases, the table includes the amounts applied to the majority of the state’s caseload. In other states, the amounts may be higher for families with certain types of “special needs,” such as a pregnancy; the amounts in the table assume no special needs. Also, a few states vary standards for one-parent families, two-parent families, and child-only units; the table includes values for a one-parent family with two children. And some states prorate the eligibility and/or benefit standards depending on whether a unit pays for shelter; the amounts in the table assume the unit pays all shelter costs and does not live in public housing.

Related tables: These standards by themselves are not necessarily comparable across states, since the income tests might be quite different. To determine how the standards are used in practice, see tables I.D.1, I.D.2, I.E.1, and IV.A.4.

Maximum income for initial eligibility for a family of three: Table I.E.4 synthesizes the various financial rules related to initial eligibility in order to provide information on the maximum amount of income a family of three can earn and still be eligible for assistance. The calculation incorporates information on the income eligibility rules for applicants, earned income disregards for eligibility and benefit computation, benefit computation policies, and the eligibility and payment standards. The calculation determines the maximum amount of earnings an applicant can have and still be “technically” eligible for assistance in each state. Technical eligibility does not mean that the unit will necessarily receive a cash benefit, but it will have passed all eligibility tests and will be eligible for some positive amount. Most states only distribute a cash benefit if it is over $10.

The calculation assumes the assistance unit includes one parent and two children, has only earned income, has no child care expenses, contains no children subject to a family cap, has no special needs, pays for all shelter costs with no subsidies, and is subject to the benefit standard that applies to the majority of the state’s caseload.

Related tables: Table L3 provides the maximum income for initial eligibility from 1996 through 2004. Table IV.A.5 provides information on the amount of earnings a recipient may receive and remain eligible for assistance.