Working Title: A Guide to Government Assistance Programs
Looking for government assistance or just want to find out what programs are out there? You’ve come to the right place.
One of the primary functions of government is to provide services for its citizens. Some of these services include infrastructure, public education, and public safety personnel (police, military, etc.). Another key way governments give back to their citizens is through social welfare and financial assistance programs.
A common method of social assistance is government transfer payments. A government transfer payment is a payment by the government to a person who has not given anything in return for it. These redistribute money to pay for government programs such as old age or disability pensions (Social Security), student grants for college, and unemployment benefits.
Government transfer payments are typically taxed as unearned income, that is, income that comes from sources unrelated to employment. Essentially, if you’re not working for the money, it’s unearned income. This is an advantage because the tax on earned income (wages, salary, etc.) is usually much higher than the tax on unearned income.
One of the most well-known sources of government transfer payments is Social Security. Social Security is a federal program started in 1935 that gives a monthly income to retired people, people with disabilities, and families of retired, disabled or deceased workers.
Social Security is a pay-as-you-go program. This means that workers pay payroll taxes that go towards Social Security. That money then flows back out to the beneficiaries.
One of the primary functions of Social Security is retirement benefits. Workers who have paid taxes into Social Security are eligible to receive money every month once they retire. The size of their benefit (how much money they receive) depends on their average monthly earnings (and therefore, contributions) when they were working.
Social Security also provides disability benefits in the form of Social Security Disability Insurance (SSDI). People who can’t work due to a disability may be eligible to receive cash assistance. To qualify, a person must prove they have a disability, show that they have worked and paid into the program long enough, and prove that their income and assets are low enough that they need the benefit.
Supplemental Security Income (SSI) is another social security program that can provide financial assistance to people with disabilities. It is designed for disabled people with little to no income and can help pay for housing, food, clothing, and other necessities.
Though not a Social Security program, veterans who get sick or injured while serving in the military or whose service worsens an existing condition may be eligible for VA disability compensation. Qualifying veterans receive a tax-free, monthly payment.
The government also offers financial assistance for loss of income due to premature death. The families of workers who pay into Social Security could be eligible for Survivor Benefits, or payments to cover income loss if the worker were to pass away.
Financial assistance is not the only government assistance available. The government also provides various programs and protections regarding healthcare.
The most comprehensive of these protections is the Patient Protection and Affordable Care Act of 2010, also known as Obamacare, which was signed into law by President Barack Obama. The Affordable Care Act changed the law so that everyone would be required to have health insurance (although this provision has since been changed by President Trump’s administration so it is no longer mandatory), large companies would be required to provide healthcare to their employees, children could stay on their parent’s health insurance until they are 26, and health insurance companies couldn’t deny you coverage because of a pre-existing condition.
Alongside these healthcare protections, the government also provides healthcare programs such as Medicare. Medicare is the federal government health insurance program for people aged 65 or above, some younger people with disabilities, and people with End-Stage Renal Disease. Medicare has four parts.
- Part A covers hospital care, including expenses like hospital room, meals, nursing services, and medications.
- Part B covers medical care services or supplies that are needed to prevent, diagnose, or treat a medical condition.
- Part C covers everything in Parts A and B while offering additional benefits such as dental, hearing, and vision.
- Part D covers expenses for prescription drugs.
If you are within a certain low-income limit and need affordable housing, you can seek government programs for help! There are two types of federal housing programs: direct assistance for individual families and indirect assistance for low-income housing markets. To apply, contact your local public housing agency to complete an application!
Direct housing assistance includes public housing and Section 8 vouchers that allow recipients to rent private market units of their choosing. Sounds great, right? Yes, but there is a huge shortage for these types of programs and waiting lists are typically closed or span five to ten years!
Federal and local governments also indirectly influence housing markets through funding, taxing, and regulatory activities. Federal Community Development Block Grants (CDBG) and HOME funds increase the supply of affordable housing units. The Low-Income Housing Tax Credit similarly increases affordable apartments in each state.
Other Government Programs
Besides housing, other government benefits exist for low-income individuals! Requirements vary by state, but you typically must be within a certain income limit and be a U.S. citizen or eligible non-citizen.
For example, the Supplemental Nutrition Assistance Program (aka food stamps) provides those eligible with benefits cards for authorized food stores/markets. There’s also Medicaid for low-cost health benefits and Temporary Assistance for Needy Families (TANF or welfare) that provides families with limited-time cash and non-cash benefits.
The Welfare Cliff
If you’re on welfare or know someone who is, you may have heard of the welfare cliff. The welfare cliff is an unexpected decrease in public benefits (ex: TANF, health care, child care assistance) that occurs with an increase in income. This “cliff effect” is heavily politicized and often used as an argument against welfare programs. Let’s untangle the myths from truths.
Myth #1: The most common myth assumes you’ll always be at an economic disadvantage if you leave welfare and begin working. For some, this may be true — but not always. For some, moving from welfare to work causes rising income to offset lost welfare benefits.
Myth #2: Another myth is that you’ll be “thrown off” the cliff once your income rises, losing all your benefits. In reality, many programs provide off-ramps — hills rather than steep cliffs. Food stamps, for example, gradually reduce benefits as income rises, ensuring that higher earnings accumulate faster than benefits are reduced.
Myths aside, worries about the “cliff effect” are valid — especially for working families with young children and single parent families, who are most likely to be on multiple welfare programs and feel the cliff effect most deeply. There’s no way of knowing how the cliff effect will affect multiple programs at once.
How does the cliff effect manifest? Rose is a single mother of 3. Her family is on child care and cash assistance, food stamps, Medicaid and housing vouchers. Her boss wants to give her a raise, but she is worried the pay increase won’t make up for the multiple welfare benefits she’ll lose. This uncertainty causes Rose to forgo raises and promotions to maintain welfare benefits.
Regardless of your circumstances, remember that you’re not alone. If you need assistance, help is out there. You just have to know where to look!