Welfare

Until the 1996 Welfare Reform Act, the federal government financed the three major welfare programs in the United States under the SOCIAL SECURITY ACT of 1935 (42 U.S.C.A. § 301 et seq.): Supplemental Security Income (SSI), Medicaid, and Aid to Families with Dependent Children (AFDC). The 1996 law abolished the AFDC program. These types of assistance are in addition to the benefits available to the aged, disabled, and unemployed workers and their dependents. They are distributed to people who demonstrate financial need.

Supplemental Security Income Indigent persons who are aged or disabled receive monthly checks through the SSI program to help provide them with a minimum standard of living. In 1974, SSI assumed the responsibility for three separate plans previously administered by the states for these recipients. Funds are taken from the U.S. Treasury to provide monthly benefits at a standard nationwide rate. Where state funds already supply such benefits, they supplement the amount provided by the federal government.

The creation of the SSI program meant that applicants had to meet the same standards of eligibility in every state. For example, applicants must prove they are residents and citizens of the United States. The 1996 Welfare Reform Act cut billions of dollars of aid for legal ALIENS, and completely excluded legal aliens from receiving SSI benefits. No new noncitizens could be added to the program after the date of enactment, and all legal aliens who were receiving SSI benefits will eventually be removed from the rolls, unless they meet one of the law's exceptions. A recipient will not receive benefits for any full month that he is not living within the 50 states or the District of Columbia. Inmates in a public institution cannot collect SSI unless they reside in a community-run group home with a maximum of 16 residents.

The passage of the Contract with America Advancement Act of 1996 (P.L. 104-221) made a significant change in the basic philosophy of the SSI program. Beginning on the date of enactment (March 29, 1996), new applicants for SSI disability benefits are not eligible for benefits if drug addiction or alcoholism is a material factor in their disability. Unless they can qualify on some other medical basis, they cannot receive disability benefits. Previously, if a person had a medical condition that prevented them from working, he was considered disabled for SSI purposes, regardless of the cause of the disability.

All persons who are otherwise qualified must show that their incomes are below the levels prescribed by federal law and that they have no assets that can be used for their support. Various rules regulate the calculation of an applicant's income. A person need not be totally devoid of assets in order to receive benefits. A home, for example, does not count as an asset, and the government does not impose liens (charges against property to secure the payment of a debt) against the homes of recipients of SSI benefits.

Medicaid The largest government welfare program that provides benefits other than money for indigent persons is Medicaid. Medicaid was enacted in 1965 as an amendment to the Social Security Act of 1935, (Title XIX, 42 U.S.C.A. 1396). A state receives federal money if it furnishes additional financing and administers a medical program for the poor that satisfies federal standards. A state can supplement federal benefits with its own funds. Medicaid is designed to make private medical care available to impoverished people. As long as their procedures are reasonable, states can establish their own methods of determining a Medicaid applicant's income and resources and whether the applicant qualifies for aid.

Prior to the abolition of the AFDC program in the 1996 reform law, children and parents who received AFDC automatically qualified for Medicaid. The 1996 law provides Medicaid coverage to all families that meet their state's July 1996 AFDC income and asset standards. When a family becomes ineligible for Medicaid coverage due to increased earnings or CHILD SUPPORT income, it becomes eligible for transitional Medicaid, regardless of whether the family received assistance under the block grant program that has replaced AFDC.

As with SSI and other programs, however, the 1996 law denies Medicaid eligibility to most legal immigrants. Except for REFUGEES, those who have claimed political ASYLUM, and a few other categories, immigrants entering the United States are ineligible for Medicaid for five years, with states having the option of extending this ban for a longer period. Immigrants who had been receiving Medicaid as a result of receiving SSI are not eligible for Medicaid once their SSI benefits are cut off.

Medicaid furnishes at least five general categories of treatment, including inpatient hospital service, outpatient hospital services, laboratory and x-ray services, skilled nursing home services, and physicians' services. Generally each of these services is available to treat conditions that cause acute suffering, endanger life, result in illness or infirmity, interfere with the capacity for normal activity, or present a significant handicap. In addition, all states provide eye and dental care and prescription drugs. Almost all states provide physical therapy, hospice care, and rehabilitative services.

Medicaid is a "vendor" plan because payment is made directly to the vendor (the person or entity which provides the services) rather than to the patient. Only approved nursing homes, physicians, and other providers of medical care are entitled to receive Medicaid payments for their services. Since the early 1970s, rising medical costs have placed financial pressures on the Medicaid program. Consequently, health care providers are not fully reimbursed for the services they provide to Medicaid patients. When Medicaid began, persons who were eligible had the right to select their own doctors, hospitals, or other medical facilities. Because of skyrocketing medical expenditures, almost all states have received waivers from the federal government concerning the choice of physician.

Aid to Families with Dependent Children Prior to 1996, the most controversial component of the welfare system was the AFDC program. AFDC was established by Congress to ensure the welfare and protection of needy dependent children by providing them, and a custodial relative, with basic necessities within the framework of the family relationship. It was abolished in the 1996 welfare reform act, replaced by block grants to the states to fund welfare under new sets of rules and requirements. The block grant, which is titled the Temporary Assistance to Needy Families (TANF) block grant, converts AFDC to fixed funding. Under TANF, states receive a fixed level of resources for income support and work programs based on what they spent on these programs in 1994, without regard to subsequent changes in the level of need in a state.

Every state was required to establish an AFDC system within broad federal guidelines, with the federal government providing funds for the state programs. The state plan had to be applied uniformly throughout the state, with the state providing some funding itself and designating one state agency to administer the program. Even though the 1996 law eliminated AFDC, many of the general categories and definitions contained in state-AFDC statutes and regulations remained relevant in new state welfare program laws for determining eligibility.

A child is classified "dependent" if he has no parental support or care because of the death of a parent, the ABANDONMENT by a parent, or the physical or mental incapacity of a parent to fulfill the responsibilities to a child. Once a child qualifies as dependent under these standards, the state agency will decide whether the child is "needy." Each state establishes a minimum income level of subsistence. If the income of a child and the members of his family are below this level, these individuals are deemed needy. All sources of income actually received by the family are considered, as well as the value of all the family's assets.

Under the old AFDC system, each state fashioned exemptions depending upon the circumstances of the case. For example, a state might allow a portion of SOCIAL SECURITY benefits received because of the death of a parent to be saved for the child's future education.

Once the state agency determines the income of members of a family and decides whether their assets are sufficient to meet their needs, it compares their income to the standard of need applied in that state. The standard of need is based on the number of family members, sometimes up to a specific maximum. Under the old law, if the family's income was inadequate to provide what the state considered a minimum amount for the family's needs, AFDC benefits were issued. Under the 1996 law, there is no explicit requirement that the families get cash aid, making it possible for the states to provide vouchers or services rather than cash help. The law specifically eliminates the promise of help and eliminates individual entitlement to aid under federal law. In addition, if a state runs out of block grant funds for the year, and does not provide state funds, it can place new applicants on waiting lists. Under the old law, states received federal funds on an open-ended, entitlement basis.

The 1996 law placed a yearly limit of $16.4 billion nationally on federal welfare spending that replaced AFDC and several other programs, with no provision to raise the limit in the future. Within this financial framework, the states have greater autonomy in determining how to spend the funds on welfare. However, the 1996 law imposed several important changes in national welfare policy.

The 1996 law mandated that states increase the number of persons on welfare who work. It included a directive that by 2002, a minimum of half the families receiving public assistance must have an adult working a minimum of 30 hours per week. If states do not meet these requirements, they can be penalized by losing a percentage of their TANF block grants. Adults cannot be penalized for failure to meet work requirements if their failure is based on the inability to find or afford child care for a child under the age of six. Otherwise, if an adult recipient refuses to participate in a work program, states must reduce the family's assistance by a pro rata amount. States, however, have the option of increasing this penalty, including the termination of assistance to the entire family. Adults can also lose Medicaid as well as cash aid.

One of the criticisms of the AFDC program was that it allowed teenage mothers to set up independent living arrangements and receive AFDC. The 1996 law directs that minor parents can only receive TANF block grant funds if they are living at home or in another adult-supervised setting. They must attend high school or an alternative educational or training program as soon as their child is at least 12 weeks old.

The most radical change in abolishing AFDC and moving to the TANF block grants was the limitation on families receiving TANF funds. Federal funds can only be used to provide a total of five years of aid in a lifetime to a family. The law provides that states may give hardship exemptions of up to 20 percent of their average monthly caseload. However, the law also permits states to set limits shorter than five years.

A state welfare assistance plan must set forth objective criteria for the delivery of benefits and for fair and equitable treatment, as well as how the state will provide opportunities for recipients to appeal decisions against them. While the law and regulations governing AFDC were explicit regarding appeal rights, the 1996 law is more general in this area, leaving each state to devise DUE PROCESS protections in state law.