Midterm

Question 1

Medicare Eligibility

Answer 1

• 1965 Title XVIII of Social Security Act provided Medicare for the elderly (age 65 and older)
  o Work history not required, but does influence cost.
  o Spouses qualify on husband/wife’s work history
  o Legal aliens qualify to participate
• People with certain disabilities also qualify after a waiting period (added in 1973)
• People with End-Stage Renal Kidney Disease also qualify for Medicare (added in 1973)

Question 2

Medicare Financing

Answer 2

Part A: FICA (Federal Insurance Contributions Act) tax, 2.9% of income – with not limit
Part B: Premiums, copays and general revenues
Part C: FICA tax, premiums, federal and general revenues
Part D: Premiums, copays, state revenue, and federal general revenue

Question 3

Medicare Benefits

Answer 3

• Part A helps pay for inpatient hospital, home health, skilled nursing facility, and hospice care
• Part B helps pay for physician, outpatient hospital, home health, and other services
• Part C is the “Medicare Advantage” program that expands beneficiaries’ options for participation in private-sector health care plans (created in 1997)
• Part D is a prescription drug benefit (created in 2003 and phased in by 2006)
- In addition to Medicare benefits, people usually purchase “Medigap” insurance, private health insurance that pays, within limits, most of the health care service charges not covered by Parts A or B of Medicare
o Some also have secondary insurance from retirement plans or employers
- Extra help for the needy:
o People may qualify for “extra help” in 2012:
o Income less than $16,755 and resources less than $13,070 for a single person
o Income less than $22,695 and resources less than $26,120 a married person living with a spouse and no other dependents

Question 4

Medicare Administration

Answer 4

PARTS A & B - Federal

PARTS C & D - States

Question 5

SNAP eligibility

Answer 5

• Based on households
• Financial Tests
  o Gross Income test (130% of Federal Poverty Standard)
  o Net income test (subtract housing and child care costs) is usually below the Federal Poverty Standard
  o Assets ($2000 or less of countable assets), unless elderly or disabled
  o Fair market value of a vehicle in excess of $4,650 is counted as an asset, but states may count vehicles as assets only to the extent they do under their TANF programs (many do so)
• Employment/Training Related Tests
  o Certain household members must register for work, accept suitable job offers, and fulfill work or training requirements established by State welfare agencies.
  o Under a work requirement established in 1996, food stamp eligibility for ABAWDs (able-bodied adults without dependents) is limited to 3-6 months in any 36-month period unless they are working at least half time or in a work or training activity
• Categorically Eligible
  o Automatically eligible for food stamps
  o TANF, SSI, and GA recipients in most states
• Categorically deny eligibility to others
  o Strikers
  o Many non-citizens
  o Postsecondary students
  o People living in institutional settings (group homes, prison)

Question 6

SNAP Benefits

Answer 6

• Receive maximum benefits (for example $189 for an individual) if they have zero income
• Generally, food stamp benefits are reduced 30 cents for each dollar of income
• SNAP benefits were made more generous by ARRA (the stimulus bill), but that increase has ended

Question 7

SNAP Financing

Answer 7

• The Food Stamp Act provides 100 percent Federal funding of food stamp benefits, except when States choose to “buy into” the program and pay for issuing food stamp benefits to ineligible non-citizens or those made ineligible by the work rule for ABAWDs
• States are responsible for a share of the costs of administration

Question 8

SNAP Administration

Answer 8

Administered by the states, but the states are only responsible for some of the costs

Question 9

SSI Eligibility

Answer 9

• Aged (65 and older)
• Blind
• Disabled
– Adults: Unable to perform any substantial gainful activity
– Children: physical or mental impairment or impairments that causes marked and severe functional limitations
• Limited income
• Limited assets: your home is not counted
– Less than $2000 for individuals
– Less than $3000 for a couple
– 3 year look back on asset transfers
• U.S. Citizen or qualified alien

Question 10

SSI Financing

Answer 10

Funded by general Revenues

Question 11

SSI Benefits

Answer 11

 Maximum federal benefit in 2012
- $698 for individuals
- $1,048 for couples
- The average federal monthly benefit for 2012 was $517
 State benefit rates vary because most states and DC supplement federal payments
- Average child’s benefit, $620 monthly
- Average adult benefit, $533 monthly
- Average elder benefit, $415 monthly
 Many SSI participants also receive SNAP and Medicaid
- There are income limits however,
o SSI income limits are determined by circumstances, including living arrangements and income sources
o The basic federal benefit maximum (currently $698) is the base
• Benefits are inversely related to income
• Reduce total income by exclusions
• First $20 of income plus first $65 of earned income, plus one half of additional earned income
• Income sources that are counted are subtracted from the base benefit
• Benefit received is the net amount

Question 12

SSI Administration

Answer 12

Federal Government, the Social Security Administration

Question 13

Medicaid/SCHIP Eligibility

Answer 13

States:
o States generally have broad discretion in determining which groups their Medicaid programs will cover and the financial criteria for Medicaid eligibility
o Many States have additional “State-only” programs to provide medical assistance for specified poor persons who do not qualify for Medicaid
o States are not required to provide Medicaid services even for very poor persons unless they are part of a designated group
Federal:
o People qualified for the Aid to Families with Dependent Children (AFDC) program in their State on July 16, 1996.
o Children under age 19, in families with incomes at or below the Federal poverty level
o Children under age 6 whose family income is at or below 133 percent of the Federal poverty level
o Pregnant women whose family income is below 133 percent of the FPL
o Infants born to Medicaid-eligible women, for the first year of life with certain restrictions
o Supplemental Security Income (SSI) recipients in most States
o “Medically needy” persons - Persons may qualify immediately or may “spend down” by incurring medical expenses that reduce their income to or below their State’s income level
**The Affordable Care Act Expanded Eligiblity for those states who decided to “opt-in
o Expand Medicaid eligibility to all non-Medicare eligible individuals under age 65 with incomes up to 133% Federal Poverty Standard
o Before reform this was a state option for adults and children over age 6
o Undocumented immigrants are not eligible for Medicaid

Question 14

Medicaid/SCHIP Financing

Answer 14

• The Medicaid program is funded through Federal and state funds. States have different Federal matching rates to fund the services provided under their Medicaid programs
• State match rates are inversely related to state affluence
ACA altered financing:
•Medicaid cost sharing formula is altered to pay for newly eligible participants
• States receive 100% federal funding for 2014 through 2016
• 95% federal financing in 2017 that gradually declines to become 90% federal financing for 2020 and subsequent years

Question 15

Medicaid/SCHIP Benefits

Answer 15

• Medicaid pays Medicare expenses (including premiums, deductibles and coinsurance) for individuals whose income is at or below 100% of the Federal poverty level and whose resources are at or below twice the standard allowed under SSI
• There are additional groups for whom Medicare related expenses are paid by Medicaid—Medicare beneficiaries with income greater than 100% but less than 135% of the Federal poverty level
• Medicaid also can pay Medicare Part A premiums for certain disabled individuals who lose Medicare coverage because of work. These individuals have income below 200% of the Federal poverty level and resources that are no more than twice the standard allowed under SSI

ACA altered services and reimbursements
oNational standards for services
oState services must meet Silver standard in exchanges
oPrior to this, states established services
oIncrease Medicaid payments
oIn fee-for-service and managed care for primary care services provided by primary care doctors to 100% of the Medicare payment rates for 2013 and 2014
oPrior to this, states established payment rates
oStates will receive 100% federal financing for the increased payment rates

Question 16

Medicaid/SCHIP Administration

Answer 16

States

Question 17

SCHIP Overview

Answer 17

• State Children’s Health Insurance Program was initiated in 1997
• SCHIP provides Federal funds for States to expand Medicaid eligibility to include a greater number of children who were uninsured
• Generally, these were low-income children who would not have qualified for Medicaid based on State plan that were in effect on April 15, 1997
• SCHIP is not an entitlement program

Question 18

OASDI Eligibility

Answer 18

• Over the age of 65
• A survivor of spouse with a work history
• Disabled, with a work history

Question 19

OASDI Financing

Answer 19

•15.3% tax for employees
–12.4% for OASDI on the first $117,000 earned
–2.9% for Medicare, no earnings cap
•The tax is divided equally between employers and employees

Question 20

OASDI Benefits

Answer 20

•Calculate the AIME (Average Indexed Monthly Earnings).
– This is the average amount earned monthly over thirty-five years adjusted to reflect changes in the average national wage.
•Apply benefit calculation formula to this amount.
– 90% of the first $711, plus
– 32% of the amount between $711 and $4,288, plus
– 15% of the amount over $4,288

Question 21

OASDI Administration

Answer 21

Federal government – Social Security Administration

Question 22

TANF Eligibility

Answer 22

PRWORA created federal minimum requirements that linked eligibility to receive TANF to work participation
o This did not mean getting a job…it meant complying with the personal responsibility plan

Question 23

TANF benefits

Answer 23

Cash assistance to needy families

Question 24

TANF financing

Answer 24

General Revenues, a combination of many different taxes. Blocked grants to states

Question 25

TANF administration

Answer 25

States

Question 26

List and explain several key factors that are thought to distinguish social insurance programs and means-tested transfer programs.

Answer 26

Social Insurance Programs:
- Almost everyone benefits
- Dedicated Tax
- Not means tested, higher income earners tend to receive higher benefits
- Administered by national governments
- Widespread popularity, not stigmatized
Means-Tested Transfer Programs:
- A narrowly defined group of people benefit
- Financed by General Revenues
- Administered by State and local governments
- Very controversial, stigmatized

Question 27

What social insurance programs and means-tested transfer programs provide benefits to undocumented (illegal) immigrants? Please be specific.

Answer 27

There is only one program that provides benefits to undocumented workers, the school lunch program. This is means-tested.

Question 28

What restrictions exist on the receipt of social insurance or welfare programs for legal immigrants? Please be specific by program.

Answer 28

In the 1980s some legal immigrants were restricted from receiving AFDC, SSI, and Medicaid
The PRWORA expanded the limitations on receipt of welfare assistance by legal immigrants
Expanded restrictions on legal immigrants to receive access to federal welfare benefits
 Some of these restrictions were later modified
- SSI
Yes, only if on rolls before PRWORA or subsequently disabled,
Refugees and Asylees are eligible
- TANF
Yes, if in U.S. before PRWORA, State option using federal money; otherwise only state money
- Food stamps
Yes, if on rolls before PRWORA and 65 or older at the time or subsequently disabled,
Yes, if under 18; if in U.S. for five years; if refugee or asylee
- Medicaid
Yes, if SSI recipient; otherwise states decide,
Others get emergency treatment only

Question 29

What are the income sources that are counted as “income” in the Census definition?

Answer 29

Earnings, unemployment compensation, workers’ compensation, social security, supplemental security income, public assistance, Veterans’ assistance, survivor benefits, disability benefits, pension or retirement income, interest, dividends, rents (royalties, estates and trusts,) educational assistance, alimony, child support, financial assistance from outside the household, other income.

Question 30

How does the Census determine whether or not a person is “living in poverty”?

Answer 30

If a family’s total (pre-tax) income is less than the applicable threshold, then that family and every individual in it are considered in poverty.

• One person - $11,720
• Two people - $14,937
• Three people - $18,284
• Four People - $23,492

Question 31

How is poverty related to various factors such as nativity, work, age, race, and family structure?

Answer 31

Nativity: (in order from greatest median household income to least) Naturalized citizen, native-born citizen, non-citizen.
Work: Those who have worked full time before, only 2.9% likely to be below the poverty standard. Those who have only part-time experience were 16.6% likely to below the poverty standard.
Age: (in order from greatest median household income to least) 45-54, 35-44, 55-64, 65+, and 15-24. But the age group of 65+ is least likely to be in poverty.
Race: (in order from greatest median household income to least) Asians, non-Hispanic whites, Hispanic, blacks. Blacks are most likely to be in poverty
Family Structure: (in order from greatest median household income to least) Married couple, father – no mother present, mother – no father present. Mother with no father present is most likely to be in poverty.

Question 32

What two characteristics define the essential and consistent nature of the tax and benefit structure of the Social Security OASDI program? Briefly explain each characteristic.

Answer 32

A regressive tax structure – people with lower earning pay a higher percentage of their income in tax. With a progressive benefit structure - people with lower earnings receive a higher proportion of their contributions back as benefits

Question 33

What groups of workers were specifically excluded from the social security old age benefits when they were created in 1935?

Answer 33

Agricultural workers, domestic workers, Federal and state government workers, workers of non-profit organizations, and self-employed.

Question 34

What were the amendments to the Social Security Act in 1939? Why were they important?

Answer 34

These amendments were made because social security was not popular.

• Date of benefit payments was moved from January 1942 to January 1940.
• The “family concept” was introduced.
• Fully insured workers had worked 40 quarters in covered employment.

Question 35

When was the DI part of OASDI created?

Answer 35

1956

Question 36

Under what circumstances are OASDI benefits taxable?

Answer 36

If you make over $100,000 your benefits can be taxed up to 85%.

Question 37

What is the largest group of workers that is currently not included in the OASDI program?

Answer 37

State and local government workers for states that did not enroll in the program, Ohio is a state that did not enroll.

Question 38

What are the consequences of beginning to receive OA benefits before your full retirement age? What is the consequence of waiting to receive your full OA benefits until after your full retirement age?

Answer 38

-Those who retire before the retirement age will receive a reduction in benefits
o Present reductions for retirement at age 62 are 25% for the insured worker and 30% for spouse
-There is not a direct consequence for waiting until the retirement age. But there is a credit for late retirement.
o Addition of 8% per year until you reach age 70

Question 39

What are the two initial tests that one must pass in order to be eligible for Disability Insurance payments from OASDI?

Answer 39

Test 1: The “recent work” test
o Depends on your age when you became disabled
• Age 24 or less: 1.5 years of work during the three-year period ending with the quarter your disability began.
• Age 24-31: work during half the time for the period beginning with the quarter after you turned 21 and ending with the quarter you became disabled.
• Age 31 or older: work five years out of the 10-year period ending with the quarter your disability began.
Test 2: The duration of work test
- Before age 28 must have worked at least 1.5 years
o Age 30: 2 years
o Age 42: 5 years
o Age 50: 7 years
o Age 54: 8 years
o Age 58: 9 years
o Age 60: 9.5 years

Question 40

What are the five stages in the Disability Insurance eligibility determination process?

Answer 40

Step 1: Are you working? If you are working and your earnings average more than a certain amount each month, you are not disabled. The amount changes each year.
- In 2012, the amount was $1,010 per month.
Step 2: Is your medical condition “severe”? Your medical condition must significantly limit your ability to do basic work activities- such as walking, sitting and remembering- for at least one year
Step 3: Is your medical condition on the List of Impairments? The List of Impairments describes medical conditions that automatically mean that you are disabled as defined by law.
Step 4: Can you do the work you did before? At this step, the state agency decides if your medical condition prevents you from being able to do the work you did before.
Step 5: Can you do any other type of work? If you cannot do the work you did in the past, the state agency looks to see if you would be able to do other work. If you can, that state agency will decide that you are not disabled.

Question 41

What is the “donut hole” in Medicare coverage?

Answer 41

• Individuals who spend $850-$4150 on prescription drugs do not receive any Medicare coverage, it is all out-of-pocket costs
• Under the Affordable Care Act, the donut hole exists for those who spend $0-$325 on prescription drugs.

Question 42

What is a “Medigap” insurance policy? Why do people buy them?

Answer 42

• Medigap is private health insurance that pays, within limits, most of the health care service charges not covered by Medicare Parts A and B.
• People purchase Medigap insurance policies in order to avoid paying out-of-pocket costs not covered by Medicare.

Question 43

What is the FICA tax and what is it used for? What is the rate? Is this a regressive, flat, or progressive tax? Why?

Answer 43

• The FICA tax of 15.3% is split between the employer and employee that go to fund Social Security and Medicare.
  i. 12.4% for OASDI on the first $117,000 earned
  ii. 2.9% for Medicare, no earnings cap
• FICA tax is a regressive tax. Meaning the tax rate decreases as the amount subject to taxation increases.

Question 44

What is the AIME and how is it calculated?

Answer 44

• AIME stands for Average Indexed Monthly Earnings: this is the average amount earned monthly over thirty-five years, adjusted for to reflect changes in the average national wage.
• Benefit calculation formula
  i. 90% of the first $711, plus
  ii. 32% of the amount between $711 and $4,288, plus
  iii. 15% of the amount over $4,288

Question 45

Name and briefly explain several important changes in welfare policy that were made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).

Answer 45

-Key federal provisions include:
i. Repeal of AFDC and JOBS
ii. Created TANF, a cash-assistance program
iii. Provides block grants to states with approved TANF plans
A. TANF plans must include work requirements, doesn’t mean getting a job
iv. Lifetime limit of 60 months (with some hardship exemptions)
v. Instituted more state flexibility
B. States can determine TANF rules for aliens and people who move from state-to-state
C. States can establish conditions and requirements for “individual responsibility plans” linked to TANF assistance
D. States can terminate “waiver” programs early
E. States can contract with charitable, religious, and private service organizations
vi. Redefines disability for minors (and thus, SSI eligibility)

Question 46

Name the activities that qualify as “work” under the PRWORA. What are time limits and why are they thought to be significant to welfare policy?

Answer 46

a. A work requirement meant complying with a personal responsibility plan
b. Education, job search, volunteering, child care, or job preparation satisfy the work requirement
c. 2 year work requirement
d. These limits are actually considered inconsequential: Many people who received assistance were not counted as TANF cases, meaning the work requirement didn’t apply to them. Virtually no cases were closed between 1998 and 2008 due to time limits.
i. States were permitted to exempt 20% of caseloads
ii. Many people left the welfare roles routinely, which made it look like states were closing cases because they met requirements

Question 47

Explain why in-kind are provided as social policy benefits rather than cash…name and describe several programs that provide in-kind benefits.

Answer 47

a. In-kind benefits are more common because it ensures participants only have access to purchase particular goods or services
i. SNAP (previously Food Stamps)
ii. Medical assistance
iii. School Lunch programs

Question 48

What is the significance of a program being an “individual entitlement?” Name several programs that are individual entitlements.

Answer 48

a. Entitlement means that people have an individual legal right to receive assistance that can be enforced in federal court
b. Special budgetary status bypasses budget committees and obliges Congress to appropriate sufficient funds
i. Medicare
ii. OASDI

Question 49

What are Medicare Parts A, B, C, and D? What benefits do they provide? How are they financed?

Answer 49

Part A: Helps pay for inpatient hospital, home health, skilled nursing facility, and hospice care
i. Financed: By the FICA tax, 2.9% tax on earned income, without limit
Part B: Helps pay for physician, outpatient hospital, home health, and other services
i. Financed: By premiums, copays, and general revenue
Part C: is the “Medicare Advantage” program that expands beneficiaries options for participation in private-sector health care plans (created in 1997, Part C delivers Parts A and B services in a managed care environment)
i. Financed: By the FICA tax, premiums, federal and general revenue
Part D: is a prescription drug benefit (created in 2003 and phased in by 2006)
i. Financed: By premiums, copays, state revenue, and federal general revenues
Medicare DOESN’T cover: long term care, routine dental or eye care, cosmetic surgery, acupuncture, hearing aids and exams for fitting them

Question 50

What are the two conditions that are required in order to be categorically eligible to receive TANF benefits? What conditions make you ineligible?

Answer 50

a. Eligible: (1) Able-bodied poor people with children, and (2) Poor pregnant women
b. Ineligible:
i. Fugutives or probation violators
ii. Unmarried, teen drop-outs
iii. Fraud, ten year suspension of eligibility
iv. People who refuse to cooperate with IRP
v. People who refuse to cooperate with child support enforcement
vi. People convicted of drug-related crimes

Question 51

What is a Separate State cash assistance Program? Why is this significant to TANF time limits?

Answer 51

A Separate State cash assistance program is a program created by states using their MOE money required by the PRWORA to give cash assistance. It is significant to TANF time limits because states could use their SSPs to provide cash assistance to the same people that would’ve faced the elimination of federal cash assistance via TANF after meeting the 60 month lifetime limit.

Question 52

How did the Deficit Reduction Act of 2005 change TANF?

Answer 52

Congress saw that PWORA was not working as expected, so the Deficit Reduction Act of 2005 was created.

• Substantially increased the proportion of assistance recipients who must participate in work activities.
• New penalties were linked to state compliance with work requirements
• 50% of all adults that receive TANF assistance and 90% of two-parent households receiving assistance must participate in work activities
• Caseload credits are now based on reductions from the 2005 caseloads
• *Caseload is the combined total of TANF cases and cases in SSP that are counted as MOE**

Question 53

How did the American Recovery and Reinvestment Act change TANF?

Answer 53

Used social policies to stimulate the economy by distributing cash
o OASDI and SSI recipients each got $250
o SNAP benefits increased by 13.6%
o TANF emergency contingency fund was created
Modified caseload reduction credit
o States with growing caseloads would not be penalized
o Caseload reduction credit frozen, essentially halting the provisions of the DRA of 2005

Question 54

How do SCHIP eligibility guidelines relate to Medicaid eligibility guidelines?

Answer 54

1. Both programs are means-tested medical assistance
2. Jointly funded by federal and state governments
3. Federal regulations require some services, otherwise services are a matter of state discretion
4. Eligibility and service may vary from place to place

Question 55

How does Medicaid relate to Medicare?

Answer 55

a. Medicaid pays Medicare expenses for individuals whose income is at or below 100% of the Federal poverty level and whose resources are at or below twice the standard allowed under SSI
b. Medicaid also can pay for Medicare Part A premiums for certain disabled individuals who lose Medicare coverage because of work

Question 56

What must able-bodied adults without dependents (ABAWDS) do to qualify for SNAP benefits?

Answer 56

Most able-bodied adults must:

a. Register for work;
b. Accept a suitable job if offered one;
c. Fulfill any work, job search, or training requirements established by administering welfare agencies;
d. Provide the welfare agency with information to allow a determination with respect to their job availability;
e. Not voluntarily quit a job without good cause
f. Not reduce work effort below 30 hours a week

Question 57

Is eligibility to receive SNAP benefits is based on individual, family, or household characteristics?

Answer 57

Household Characteristics

Question 58

How did the American Recovery and Reinvestment Act change SNAP?

Answer 58

ARRA made SNAP benefits more generous, it has since dissolved and they are back to how they were.

Question 59

How are OASDI and SSI eligibility similar? How are they different?

Answer 59

• Elderly people on OASDI may also receive SSI
• Disabled adults may receive OASDI and/or SSI
• Disabled children (would not receive DI payments, since they have no work history)
  Who does SSI serve that OASDI does not?
• People without a work history or a relationship that qualifies them for OASDI

OASDI and SSI can provide income to elderly individuals (age 65 and older). While OASDI is a social insurance program financed through the payroll tax, SSI is a means-tested program financed through U.S. Treasury general funds that provides stipends.

Question 60

What did Berkowitz say about the origins of the distinction between welfare and social insurance?

Answer 60

Berkowitz said that the distinction between welfare and social insurance was politically motivated. Supporters of Social Security felt like they needed to make a clear distinction between Social Security, meant to be a distinctly American alternative to welfare, and state welfare, which was seen as paternalistic and compared to Nazi Germany and Stalinist Russia.

Question 61

What does Berkowitz mean when he suggests that welfare was a form of political patronage?

Answer 61

Welfare was a form of political patronage because state and local administrators wanted to spend the federal grants for old-age pensions on their own terms and fought hard to preserve the local welfare systems in the process.

Question 62

Why does Berkowitz suggest that the Social Security reforms in 1939 were cynical?

Answer 62

Berkowitz suggests that the 1939 reforms were cynical because its advocates distinguished between Social Security (social insurance) and welfare by citing the lack of state paternalism in the former. The 1939 amendments actually increased state paternalism because the state replaced the male breadwinner in giving out payments to survivors, the elderly, and distinguishing benefits between married and the non-married.