Policies as of July 2004: Ongoing Eligibility

IV. Ongoing Eligibility

The tables in this chapter of the Databook describe key aspects of the rules that affect recipients’ ongoing eligibility as of July 2004. After a family applies for assistance and passes all eligibility tests, its members become recipients and a benefit is calculated. However, the recipient unit still faces eligibility requirements that affect its ability to continue receiving benefits. Most states impose income and asset tests on recipients, which generally differ from the initial eligibility tests for applicants. When the requirements differ, states typically allow recipients more generous eligibility thresholds.

Recipients’ reproductive choices and the number of months they have received assistance may also affect eligibility and benefits. Some states impose family cap policies on recipients, which restrict benefits from increasing when a child is born to a family receiving assistance. Almost all states now impose time limits, which reduce or eliminate benefits to recipients based on their accumulated total months of benefit receipt.

The following three sections describe the eligibility requirements that affect the ongoing eligibility of recipients.

A. What eligibility tests must recipient families pass for continuing eligibility?

Like applicants, recipients must pass both nonfinancial and financial tests to remain eligible for assistance each month. The nonfinancial rules do not generally vary for applicants and recipients; however, for some rules, such as two-parent eligibility, they may. Unlike nonfinancial rules, the financial rules often differ for applicants and recipients. The following provides more information on those eligibility rules that tend to differ for applicants and recipients, including two-parent hours tests, treatment of child support income, asset tests, income eligibility tests, and maximum income for ongoing eligibility.

Two-parent eligibility for recipients: For states providing benefits to two-parent families, table IV.A.1 describes special eligibility rules imposed on two-parent recipients where neither parent is disabled (“UP,” or unemployed-parent families, in the former AFDC program).17 In addition to the standard eligibility tests that all recipient units must pass, some states impose “hours tests” on two-parent units. Under an hours test, the unit is not eligible if the principal wage earner is working more than a specified number of hours a month. States may apply this rule when determining the initial and/or continuing eligibility of two-parent families.

Related tables: See table I.B.2 for details on the hours test for applicants and table L2 for information on the rules for two-parent units from 1996 through 2004.

Treatment of child support income: Table IV.A.2 describes each state’s treatment of child support income for recipients. TANF recipients are required to assign their child support income to the state. The state then decides what portion, if any, of the child support collected is returned to the family as unearned income and how much of that income counts as income for eligibility and benefit computation.18 The amount of income transferred and disregarded may differ for eligibility calculations and benefit computation.

The first column of the table displays the amount of collected child support that is counted for recipients’ eligibility determination. Typically, states count all child support collected or all but $50 of the amount when considering eligibility, even if the state does not transfer any of the support directly to the family. Those states that do not count the child support for eligibility typically establish some method to ensure that families with high and continuing child support amounts do not remain on the rolls indefinitely.

The second column of the table shows what portion of the collected child support is transferred to the family as unearned income, while the third column indicates how much of that transferred amount is disregarded for benefit computation. The traditional $50 “pass-through” that states allowed under AFDC would be represented in this table with a “$50” coded in both the second and third columns; $50 is transferred to the unit as unearned income, and of that amount, all $50 is disregarded for benefit computation.

Asset limits for recipients: Table IV.A.3 describes each state’s asset tests for recipients. States determine the maximum amount of assets, including vehicles and restricted assets, a 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. Limits may vary for determining the initial eligibility versus continuing eligibility.

The second column describes whether some of or all the value of a vehicle(s) 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.

The last three columns of the table describe whether the state excludes a portion of assets deposited into savings accounts when earmarked for specific purposes and whether the state deposits additional matching funds into these accounts. For instance, a unit may be allowed to save money toward education or the purchase of a home without having that money count toward their overall asset limit. Some, but not all, restricted accounts are federally defined Individual Development Accounts (IDAs). In the table, those accounts that states specify as IDAs are distinguished from other restricted accounts.

Restricted accounts may or may not include a match, under which a third party, generally the state, contributes additional funds to the amount the family has saved. The match rate is typically defined by the state.

Related tables: See tables L8 and L9 for information on asset rules in effect from 1996 through 2004. See table I.C.1 for the asset tests applied at application.

Income eligibility tests for recipients: Table IV.A.4 describes states’ rules for the income eligibility tests that determine whether a recipient (whose income may have increased since initial eligibility) is eligible to continue receiving benefits. The table indicates which state income standard is used for each test. To determine the value of the particular standard for a family size of three, see table I.E.3.

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 the state’s benefit computation formula. In those cases, the family will not receive a benefit. In some cases, states have streamlined their eligibility policies and do not perform any income tests other than the implicit test imposed by benefit computation. In these states, the table 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, I.D.2, and IV.A.2 describe policies concerning the deeming of income from grandparents and stepparents, and child support income that may be used in determining gross income for income eligibility tests. Table I.E.2 describes the earned income disregards that may be used for net income tests.

In addition, the tables in sections I.B, I.D, I.E, and II are relevant to ongoing eligibility. In most states, recipients are required to pass both nonfinancial and financial tests to continue receiving benefits.

Maximum income for ongoing eligibility for a family of three: Table IV.A.5 synthesizes the various financial rules related to ongoing eligibility in order to provide information on the maximum amount of income a family of three can earn and still remain eligible for assistance in various months (2, 7, 13, and 25) of combining work and welfare. The maximum income for ongoing eligibility is a calculation that incorporates information on the income eligibility rules for recipients, 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 a recipient can have and still be “technically” eligible for assistance in each state. Technical eligibility does not mean the unit will necessarily receive a cash benefit, but it will have passed all eligibility tests and 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 I.E.4 provides information on the amount of earnings an applicant may have and become eligible for assistance. Table L3 provides this information for 1996 through 2004.

B. Are children eligible if born while the family receives benefits?

Benefits to recipients who give birth to a child while receiving aid may or may not be affected by the addition of the child to the assistance unit. Under AFDC, when a child was born to a member of an assistance unit, the benefit increased to meet the needs of the new child; however, many states have changed this policy. Family cap policies, as most states refer to them, prevent or limit an increase in a family’s benefit when another child is born. In these states, the benefit increase an assistance unit would otherwise receive for adding another member to the unit will be limited. Some states provide a percentage of the increase to the unit, while others provide no additional funds to the unit for the addition of a child.

Family caps: Table IV.B.1 describes states’ family cap policies. The table first indicates whether the state imposes a family cap, and then provides the number of months following the case opening after which a newborn child is excluded from the assistance unit. The table also describes the impact on the benefit when an additional child is born (whether there is no increase in benefit, or some increase smaller than what would occur in the absence of a family cap). In some cases, the amount of cash paid directly to the family does not increase, but the increment that would have been paid in the absence of the policy is instead paid to a third party or provided in the form of a voucher. That information is noted in the table as “third-party payment” or “voucher” and is explained further in the footnotes. States with “disregard” displayed in the table increase the earned income disregards for families that have a capped child; again, more details are provided in the footnotes. The table also indicates how long a cap, once applied, endures. The table indicates “always capped” if a family is never able to regain benefits for a capped child, even after the case has been closed for a period. Otherwise, the table provides the number of months a family must remain off the rolls for the cap to be removed, that is, for the child to be included in the benefit computation should the family apply for assistance again. States conducting demonstration projects that subject units to a family cap in a few counties, but not statewide, are footnoted.

Related tables: Table L10 indicates the presence of family cap policies in 1996 through 2004.

C. How long can a family receive benefits?

Since the passage of PRWORA, almost all states have limited the number of months an assistance unit may receive benefits. The type and length of these limits vary from state to state. There are two basic types of limits that states impose on recipients: “lifetime time limits,” which eliminate part of or the entire benefit permanently, and “other time limits,” which interrupt or limit benefits for a certain period but do not eliminate them permanently. Both types may terminate benefits to either the entire unit or just the adults in the unit. In addition, some states impose only lifetime limits or only other time limits; other states impose a combination of the two types.

Not all assistance units are subject to time limits, however. States may continue to provide benefits to up to 20 percent of their caseload (referred to as the hardship exemption) beyond the federal 60-month time limit. The individuals receiving these exemptions (which “stop the time limit clock” for a month) or extensions (which add a month of assistance after reaching the time limit) are determined on a state-by-state basis and are eligible to receive federal TANF funds as long as the circumstances that caused their exemption or extension exist.

Lifetime time limit: Under TANF, the federal government imposed a maximum 60-month lifetime limit on receipt of TANF funds. Therefore, after 60 months of receiving federally funded TANF benefits, either consecutively or nonconsecutively, an assistance unit is generally no longer eligible for federal cash assistance.19 Some states have adopted shorter lifetime limits, while others have chosen to fund recipients after the 60 months with state dollars. A few states have also chosen to terminate benefits only for the adults in the unit, in which case all children in the assistance unit remain eligible for benefits after the lifetime limit expires.

Table IV.C.1 describes states’ lifetime time limit policies. The first column indicates the total months in which the state allows benefits, while the second and third columns identify whose benefits are terminated.

Other time limits: States have developed several other time limits that interrupt or limit benefits. These limits are imposed instead of or in addition to the lifetime time limits, and include periodic limits and benefit waiting periods. Under a periodic limit, a unit (or the head of the unit) may receive benefits for only a specified number of months in a given period. For example, a state may impose a 12- out of 24-month periodic limit on the unit, in which the unit is eligible to receive only 12 months of benefits in any 24-month period. Under a benefit waiting period, an assistance unit (or the head of the unit) is ineligible for benefits for a specified number of months after the unit has received benefits for another specified number of months. To use the 12 and 24 example again, in this case, the unit may receive 12 months of assistance and is then ineligible for 24 months. This means that the unit may receive 12 months of benefits over any period but after it receives its 12th month of assistance, it will be ineligible for benefits for the next 24 months. Both the periodic limit and the benefit waiting period limit may apply to the entire unit or just the adult head of the unit.

Table IV.C.2 describes other state time limit policies.20 The first column describes the type of other time limit imposed, while the second and third columns identify whose benefits are terminated.

Exemptions and extensions: Exemption and extension policies are important for understanding time limits in the states. Exemptions and extensions could significantly increase the number of months, beyond the state and/or federal time limit, that an assistance unit may receive benefits and, depending on the criteria, a substantial portion of the caseload could be exempted or extended.

Tables IV.C.3 and IV.C.4 describe time limit exemption and extension policies, respectively. The exemption and extension policies for both lifetime limits and other limits are displayed in the table. If the policies do not apply to both types of limits, the policies for the lifetime limit are displayed in the table and the policies for the other limit are footnoted.