OFFICE OF FAMILY ASSISTANCE Aid to Families with Dependent Children Program Aid to Families with Dependent Children (AFDC) provides transitional financial assistance to needy families. Federal and state governments share in its cost. The federal government provides broad guidelines and program requirements, and states are responsible for program formulation, benefit determinations, and administration. Eligibility for benefits is based on the state's standard of need as well as the income and resources available to the recipient. Eligibility Requirements In order to be eligible for AFDC, a family must have a dependent child who is: • Under age 18 (A state may elect to extend the age limit to include 18-year-olds who are expected to complete secondary school or the equivalent level of vocational or technical training before turning 19.); • Deprived of parental support or care because of a parent's death, continued absence, incapacity, or the unemployment of the principal family earner in a two-parent family under the AFDC-Unemployed Parent (UP) program; • Living in the home of a parent or other specified, close relative; • A resident of the state; and • A U.S. citizen or an alien permanently and lawfully residing in the U.S. Along with the dependent child, an application for AFDC includes any eligible natural or adoptive parent and any eligible blood-related or adoptive sibling with whom the child is living. Income and Financial Need Considerations Each state sets its own need standard for determining eligibility. The term "need standard" refers to what a state determines that a particular size family needs to live. A state takes into consideration the needs as well as the income and resources of all individuals in the assistance unit. The state "disregards" some family income, thus permitting it to be retained along with AFDC payments. Determination of income eligibility is a two-step process. First, the gross income of the assistance unit, after applicable disregards, cannot exceed 185 percent of the state-determined need standard. The disregards include the first $50 per month of child support received by the family and optional earned income disregards for certain students. Second, the family income is compared to the state's need standard. In addition to the disregards described above for the 185 percent test, the state must disregard the Earned Income Tax Credit (EITC) and the following amounts of earned income: • $90 per month for work expenses for individuals employed full- or part-time; • For an individual who received AFDC in at least one of the prior four months: -- all of the monthly earned income of a child who is a full-time student or who is a part-time student and not employed full-time; -- $30 and one-third of such person's remaining income for the first four consecutive months, and $30 for each of the eight subsequent months; • For full-time workers -- actual expenses for dependent care up to $175 per month for each dependent child who is at least age two or each incapacitated adult, and up to $200 per month for each dependent child who is under age two. (For part-time workers, a lesser amount may be applicable at state option.) Resource Limitations The federal statute sets a maximum limit of $1,000 in resources per assistance unit. Resources include such things as stocks, bonds, and real property. The family's place of residence, burial plots, and funeral agreements valued up to $1,500 are excluded from this resource limit as is that amount of equity in an automobile. The state may set lower dollar amounts for total resources, funeral agreements, and the automobile, and may also exclude from consideration household necessities. Benefit Calculations Each state establishes its own payment standard to determine the assistance unit's benefit amount. The payment standard may be lower than the need standard and is generally the amount which the state actually pays to a family for assistance. The state determines the benefit amount by considering the countable income of all persons included in the assistance unit and applying it against the state's payment standard. Income disregarded in determining eligibility is also disregarded in calculating benefits. Work Program Requirements The Family Support Act of 1988 established a Job Opportunities and Basic Skills Training (JOBS) program and revamped the requirements for state-operated welfare-to-work programs. All states have JOBS programs in place. The program provides training, work experience, and education opportunities for AFDC recipients. Unless otherwise exempt, AFDC recipients are required to participate in JOBS as a condition of eligibility. The goal of JOBS is to promote self-sufficiency. Program Operation All 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and Guam participate in the AFDC program. American Samoa is authorized under the Family Support Act of 1988 to operate an AFDC program. States must submit plans and plan amendments to the Department of Health and Human Services for approval. Federal Financial Participation The federal government reimburses the states for operating an AFDC program with matching funds. Federal financial participation is provided to the states at different rates for various activities. Administrative and training costs are matched at a 50 percent rate. AFDC benefit payment costs are matched under a formula which takes into account a state's per capita income relative to national per capita income. The federal matching rate for AFDC benefits may range from 50 percent for states with the highest per capita income to 83 percent for the state with the lowest per capita income. Caseload and Expenditures -- Fiscal Year 1993 AFDC Caseload Average No. of Monthly Families -------------4,981,300 Average No. of Monthly Recipients ----------------14,144,315 Benefit Expenditures Total ---------------------------------------- $22.5 billion Average Monthly Benefits (per Family)-----------$376.70 Average Monthly Benefits (per Recipient)------------ $132.64
Prior to enactment of P.L 104-193, the Personal Responsibility and Work Opportunities Act of 1996:
o Individuals who received AFDC cash assistance or who were deemed to have received AFDC were automatically eligible for Medicaid. (Section 1902(a)(10)(A)(i)(I) of the Social Security Act)
o Families who lost AFDC cash assistance because of employment or receipt of child (or spousal) support payments were eligible for transitional Medicaid assistance for an additional period of time. (Sections 1902(a)(10)(A)(i)(I) and 1925 of the Social Security Act)
o Various rules of the AFDC program were used to establish Medicaid eligibility for other Medicaid-only eligibility groups (e.g., pregnant women and children whose eligibility is related to the poverty level, optional groups of children and caretaker relatives who do not receive AFDC, and the medically needy.) (Section 1902 of the Social Security Act)
The new welfare reform law eliminates the AFDC cash assistance program and replaces it with a block grant program called Temporary Assistance for Needy Families (TANF) (Section 103 of the new law). However, families who meet the AFDC eligibility criteria prior to welfare reform will be eligible for Medicaid. States are not required to make a complete eligibility determination using all the pre-reform AFDC program rules. This determination is replaced by two basic eligibility requirements:
o The family income and resources must meet the pre-reform AFDC standards (Section 1931(b)(1)(I) of the Social Security Act).
o The pre-reform AFDC deprivation requirement must be met. (i.e., a child must be living with a parent or other relative and deprived of parental support or care by the death, absence, incapacity or unemployment of a parent.) (Section 1931(b)(1)(A)(ii) of the Social Security Act)
As under pre-reform law, if a family loses Medicaid eligibility because of employment or receipt of support payments or employment and received Medicaid in three of the preceding six months, the family is eligible for a period of extended Medicaid benefits. (Sections 408(a)(11) and 1931(c) of the Social Security Act)
States are permitted to deny Medicaid benefits to adults and heads of household who lose TANF benefits because of refusal to work. However, welfare reform law specifically exempts poverty-related pregnant women and children from this provision and mandates their continued Medicaid eligibility. (Section 1931(b)(3) of the Social Security Act)
Because the AFDC cash assistance program is eliminated, welfare reform provides that any reference in Title XIX to an AFDC provision or an AFDC State Plan will be considered a reference to the AFDC provision or plan in effect for the State on July 16, 1996, i.e. "pre-reform" AFDC. This effectively freezes the pre-reform AFDC program for all Medicaid eligibility purposes, except that welfare reform also permits States to retain flexibility to change the applicable income and resource methodologies, as follows:
o A State may lower its income standards, but not below the standards it applied on May 1, 1988. (Section 1931(b)(2)(A) of the Social Security Act)
o A State may increase its income and resource standards up to the percentage increase in the CPI subsequent to July 16, 1996. (Section 1931(b)(2)(B) of the Social Security Act)
o A State may also use less restrictive income and resource methodologies than those in effect on July 16, 1996. (Section 1931(b)(2)(C) of the Social Security Act)
Source: http://www.acf.dhhs.gov/programs/afdc/afdc.txt; http://www.hcfa.gov/medicaid/wrfs1.htm.