Topic:
SOCIAL SERVICES; TEMPORARY ASSISTANCE TO NEEDY FAMILIES; FOOD STAMPS;
Location:
FOOD STAMPS;

OLR Research Report


October 25, 2007

 

2007-R-0608

EFFECT OF INCOME INCREASE ON FOOD STAMP BENEFITS

By: Robin K. Cohen, Principal Analyst

You asked what happens when a Food Stamp recipient's income increases as a result of an increase in Temporary Family Assistance (TFA) benefits.

SUMMARY

When a family's TFA benefit rises, the Department of Social Services (DSS) considers this an increase in income. And when this family is also receiving Food Stamp benefits, DSS generally reduces the amount of Food Stamp benefits, assuming nothing else in the family's circumstances changes. This is because federal Food Stamp rules establish the benefit as the difference between the portion of the family's income that would be used for food and the amount of money the federal government determines the family needs each month to buy this food. An increase in family income would narrow the gap between the two and result in a lower benefit.

CALCULATING THE FOOD STAMP BENEFIT

DSS uses a fairly complicated process for calculating whether an individual or family qualifies for Food Stamps. For most families DSS first determines whether the family meets a gross income test (130% of the federal poverty level, FPL) followed by a net income test (100% of FPL). Families in which all members are receiving TFA benefits do not have to pass either test (7 CFR 273.2(j)(2)(A)), but DSS still calculates these families' net income to determine whether they qualify for benefits and their amount.

Income Eligibility

To establish net income, DSS takes the gross income figure (which includes earnings plus other income, such as TFA) and deducts several items. These include:

1. 20% from earnings;

2. a standard deduction ($134 for households of one to three people, with higher amounts for larger families);

3. a dependent care deduction if the care is needed for work, education, or training (no more than $200 per dependent under age two or $175 for older dependents);

4. legally owed child support payments; and

5. shelter costs, including heating fuel, that exceed half of the household's income after the above deductions are taken. This deduction is capped.

Determining Allotment

To determine the allotment amount, DSS multiplies the family's net monthly income by .30. The product is subtracted from the federally established “maximum monthly allotment” for the household size. The difference is the family's actual allotment. Table 1 provides the maximum allotments for FFY 08.

Table 1: Maximum Food Stamp Allotments for FFY 08

People in Household

Maximum Monthly Allotment

1

$162

2

298

3

426

4

542

5

643

6

772

7

853

8

975

Each additional person add…

122

Source: U.S. Department of Agriculture (2007)

TFA Example

The following example illustrates the effect that an increase in TFA benefits will have on Food Stamp benefits. For purposes of the example, we assume that the family lives in DSS Region B (most of the state falls into this region, which includes Hartford), consists of one adult and two children, and receives $50 per month in child support. The two children are over age 2 and are eligible for $350 in a dependent care deduction. The family has no excess shelter costs. We also assume the family has $600 of monthly earnings and receives the full TFA benefit ($560 for a family of three living in Region B as of July 1, 2007, per PA 07-2, JSS), bringing total gross monthly income to $1,160. Before July 1, the family's monthly TFA benefit was $543.

Table 2 calculates this family's Food Stamp allotment before and after TFA benefits rose by 3.2% on July 1, 2007. In this instance, the allotment decreased by about $5 per month.

Table 2: Example of Effect of Increase in TFA Benefits on Food Stamp Allotment

Before July 1, 2007

Gross income ($543 TFA + $600)

$1,143

--20% of $600

-120

--standard deduction

-134

--dependent care deduction

-350

--child support

- 50

   

Net income

$ 489

Net income x .30

146.70

   

Allotment (Maximum from Table 1 ($426) minus net income x .30 ($146.70)

$279.30

After - July 1, 2007

Gross income ($560 TFA + $600)

$1,1160

--20% of $600

-120

--standard deduction

-134

--dependent care deduction

-350

--child support

-50

   

Net income

$ 506

Net income x .30

151.80

   

Allotment (Maximum from Table 1 ($426) minus net income x .30 ($151.80)

$274.20

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