Expanded unemployment benefits may bump people from welfare, other aid

Reading, PA – May 8: Major Joy Mudge, left, and Kristy Kushner, right the Director of Social Services, helps to organize boxes ready for distribution. During a food distribution at the Salvation Army location on South 5th Street in Reading, PA Friday afternoon May 8, 2020. (Photo by Ben Hasty/MediaNews Group/Reading Eagle via Getty Images)

MediaNews Group/Reading Eagle via Getty Images

Expanded unemployment benefits have been a lifeline for millions of Americans who lost their jobs due to the coronavirus pandemic.

That lifeline, however, may reduce or eliminate the financial aid some get through other safety net programs such as Medicaid, food stamps and welfare.

That’s because unemployment benefits generally count as income for individuals in such programs, according to Jennifer Wagner, a senior policy analyst with the Center on Budget and Policy Priorities.

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These assistance programs, which provide aid for lower-income Americans, typically carry some sort of means testing to determine eligibility and aid amount.

Some aid recipients may be unaware of the potential interplay between expanded unemployment benefits and the social assistance they receive, especially since the one-time economic stimulus checks millions of Americans have received from the federal government don’t count as income toward these means-tested programs. 

However, the expanded unemployment benefits may count as income in some circumstances and some states have different rules, Wagner said.

Expanded unemployment benefits

The CARES Act, the $2.2 trillion federal coronavirus relief law enacted in March, expanded unemployment benefits, namely by increasing weekly pay by $600, increasing benefit duration and expanding eligibility to the self-employed and other workers.

Nearly 41 million Americans have applied for jobless benefits since mid-March. Unemployment levels in the U.S. are their worst since the Great Depression.

The situation has hit lower-income households hardest.

Nearly 40% of people with household income below $40,000 lost their jobs as a result of the pandemic, according to a Federal Reserve report published earlier this month. That’s true for just 13% of Americans with income exceeding $100,000.

Medicaid, food stamps and more

Social assistance programs differ in terms of how they measure eligibility and aid. Medicaid, for example, examines monthly household income.

States that expanded Medicaid under the Affordable Care Act generally set their income threshold at 138% of the poverty level — $1,436 a month for a single adult and $2,453 for a family of three, for example, Wagner said. Being just $1 over the threshold typically renders people ineligible.

The Supplemental Nutrition Assistance Program calculation factors in several things, like household size and daycare and medical expenses, Wagner said.

But unlike with Medicaid, Wagner said, eligibility for SNAP doesn’t fall off a cliff over a certain threshold — there’s a wide range of benefits.

The Temporary Assistance for Needy Families program is generally available to some of the poorest households, those with income below 50% of the poverty line, Wagner said. This program — which is commonly known as “welfare” and offers temporary cash assistance — varies greatly, however, between states, she said.

Unemployment benefits could increase an individual’s income to such a degree that aid through these programs is either reduced or eliminated entirely.

But the $600 a week in extra federal unemployment stimulus, created by the CARES Act and available through July 31, doesn’t count as income in determining Medicaid eligibility.

However, it is taken into consideration for SNAP. It may also be for TANF, depending on the state, though most states do count the $600 federal supplement as income, Wagner said.

Of course, households may ultimately reap a greater financial benefit from the additional $600 week. They also may be able to re-enter the social programs or have prior aid reinstated in August, when the $600 stimulus payments are scheduled to end.