Poverty Thresholds and Poverty Guidelines

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Poverty thresholds are used for calculating all official poverty population statistics — for instance, figures on the number of Americans in poverty each year. They are updated each year by the Census Bureau . Poverty thresholds since 1973 (and for selected earlier years) and weighted average poverty thresholds since 1959 are available on the Census Bureau’s web site. For poverty thresholds before 1980, contact the Census Bureau at 1-800-923-8282. For an example of how the Census Bureau applies the thresholds to a family’s income to determine its poverty status, see “ How the Census Bureau Measures Poverty ” on the Census Bureau’s web site. The poverty guidelines are a simplified version of the federal poverty thresholds used for administrative purposes — for instance, determining financial eligibility for certain federal programs. They are issued each year in the Federal Register by the Department of Health and Human Services (HHS). Key differences between the poverty thresholds and the poverty guidelines are summarized in the table below. For more information, see the discussion of poverty thresholds and poverty guidelines on the Institute for Research on Poverty’s web site. Key Differences Between Thresholds and Guidelines

This phrase refers to the Census Bureau poverty thresholds, although it is included in the legislative section of the 1981 Omnibus Budget Reconciliation Act (OBRA) that requires the Secretary of Health and Human Services to update the poverty guidelines annually. The thresholds are mentioned in this legislative section because they are the starting point from which the poverty guidelines are calculated. (The legislative section is section 673(2) of OBRA-1981 or of the Community Services Block Grant Act; the U.S. Code citation is 42 U.S.C. 9902(2) .) The Census Bureau poverty thresholds are described using this phrase because in August 1969, the Bureau of the Budget (the predecessor of the Office of Management and Budget) issued a document designating the Census Bureau poverty thresholds as the federal government’s official statistical definition of poverty. (The 1978 version of this document is available on the Census Bureau website.) However, the role of the Office of Management and Budget (OMB) vis-a-vis the poverty line was limited to this one-time designation of the poverty thresholds as the official federal statistical definition of poverty. OMB has never issued either the poverty thresholds or the poverty guidelines. To make a statutory reference to the poverty guidelines, one can use the phrase “the poverty guidelines updated periodically in the Federal Register by the U.S. Department of Health and Human Services under the authority of 42 U.S.C. 9902(2) .”

The Census Bureau’s poverty thresholds are the same nationwide, with no separate figures for different states, metropolitan areas, or cities. The Department of Health and Human Services’ poverty guidelines, which are a simplified version of the Census Bureau’s poverty thresholds used for program eligibility purposes, are the same for the 48 contiguous states and the District of Columbia. Due to Office of Economic Opportunity administrative practices beginning in the 1966-1970 period, there are separate poverty guidelines for Alaska and for Hawaii.

Poverty Guidelines (for Program Eligibility)

Since 2006, the poverty guidelines have been published in late January (except for 2010). There is a list of the dates on which the poverty guidelines have been published since 1982.

The poverty guidelines may be used as soon as they are published in the Federal Register each year — usually in late January — unless a program has chosen to make them effective at a later date. To determine when the poverty guidelines are effective for a particular program, one must contact the office or organization that administers that program< .

The only way to get an official update of a chart showing percentage multiples of the poverty guidelines is to contact the organization or office that prepared it. While ASPE calculates the poverty guidelines each year, ASPE does not calculate or prepare any official charts showing percentage multiples of the poverty guidelines even though such charts may indicate the HHS poverty guidelines as the source. However, ASPE provides a spreadsheet tool to assist organizations in creating these charts. Be aware, however, that the rounding rules for these calculations, as well as procedures for calculating monthly income, are determined by the federal, state, and local program offices that use the poverty guidelines for eligibility purposes. Therefore, the numbers in these spreadsheets could differ somewhat from what is used by other federal, state, or other organizations. br> 2020 Percentage Poverty Tool

The only way to get an update of a sliding fee scale is to contact the organization or office that prepared it. While ASPE calculates the poverty guidelines each year, ASPE does not calculate or prepare any sliding fee scales even though such scales may indicate the HHS poverty guidelines as the source.

The HHS poverty guidelines, or percentage multiples of them (such as 125 percent, 150 percent, or 185 percent), are used as an eligibility criterion by a number of federal programs, including those listed below. For examples of major means-tested programs that do not use the poverty guidelines, see the end of this response. Department of Health and Human Services: Community Services Block Grant Head Start Low-Income Home Energy Assistance Program (LIHEAP) PARTS of Medicaid (31 percent of eligibles in Fiscal Year 2004) Hill-Burton Uncompensated Services Program AIDS Drug Assistance Program Children’s Health Insurance Program Medicare – Prescription Drug Coverage (subsidized portion only) Community Health Centers Migrant Health Centers Family Planning Services Health Professions Student Loans — Loans for Disadvantaged Students Health Careers Opportunity Program Scholarships for Health Professions Students from Disadvantaged Backgrounds Job Opportunities for Low-Income Individuals Assets for Independence Demonstration Program

Department of Agriculture: Supplemental Nutrition Assistance Program (SNAP) (formerly Food Stamp Program) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) National School Lunch Program (for free and reduced-price meals only) School Breakfast Program (for free and reduced-price meals only) Child and Adult Care Food Program (for free and reduced-price meals only) Expanded Food and Nutrition Education Program

Department of Energy: Weatherization Assistance for Low-Income Persons

Department of Labor: Job Corps National Farmworker Jobs Program Senior Community Service Employment Program Workforce Investment Act Youth Activities

Department of the Treasury: Low-Income Taxpayer Clinics

Corporation for National and Community Service: Foster Grandparent Program Senior Companion Program

Legal Services Corporation: Legal Services for the Poor

Most of these programs are non-open-ended programs — that is, programs for which a fixed amount of money is appropriated each year. A few open-ended or “entitlement” programs that use the poverty guidelines for eligibility are the Supplemental Nutrition Assistance Program (formerly Food Stamps), the National School Lunch Program, certain parts of Medicaid, and the subsidized portion of Medicare – Prescription Drug Coverage. Some state and local governments have chosen to use the federal poverty guidelines in some of their own programs and activities. Examples include financial guidelines for child support enforcement and determination of legal indigence for court purposes. Some private companies (such as utilities, telephone companies, and pharmaceutical companies) and some charitable agencies also use the guidelines in setting eligibility for their services to low-income persons. Major means-tested programs that do not use the poverty guidelines in determining eligibility include the following: Supplemental Security Income (SSI)

Earned Income Tax Credit (EITC)

State/local-funded General Assistance (in most cases)

Some parts of Medicaid

Section 8 low-income housing assistance

Low-rent public housing

There is no simple answer to these questions. When determining program eligibility, some agencies compare before-tax income to the poverty guidelines, while other agencies compare after-tax income. Likewise, eligibility can be dependent on gross income, net income, or some other measure of income. Federal, state, and local program offices that use the poverty guidelines for eligibility purposes may define income in different ways. To find out the specific definition of income (before-tax, after-tax, etc.) used by a particular program or activity, one must consult the office or organization that administers that program. While there is no standard definition of income for program eligibility purposes, the Census Bureau uses a standard definition of income for computing poverty statistics based on the official poverty thresholds. More information is available on the Census Bureau’s web site.

No. ASPE does not project price changes for the current year; instead, we issue guidelines based on price changes through the most recent completed year. Accordingly, the 2020 poverty guidelines, issued in January 2020, reflect actual price changes through calendar year 2019.

Poverty Thresholds (for Statistical Purposes) and Their Origin

The poverty thresholds were originally developed in 1963-1964 by Mollie Orshansky of the Social Security Administration. Orshansky took the dollar costs of the U.S. Department of Agriculture’s economy food She followed somewhat different procedures to calculate thresholds for one- and two-person units in order to allow for the relatively larger fixed costs that small family units face. (The economy food plan used by Orshansky is included in a 1962 Agriculture Department report .) Orshansky used a factor of three because the Agriculture Department’s 1955 Household Food Consumption Survey found that for families of three or more persons, the average dollar value of all food used during a week (both at home and away from home) accounted for about one third of their total money income after taxes. In May 1965, the U.S. Office of Economic Opportunity adopted Orshansky’s poverty thresholds as a working or quasi-official definition of poverty. In August 1969, the U.S. Bureau of the Budget (predecessor of the Office of Management and Budget) designated the poverty thresholds with certain revisions as the federal government’s official statistical definition of poverty. More information is available on how Orshansky developed the thresholds and their subsequent history as the official U.S. poverty measure .

No. The Agriculture Department’s economy food plan — the predecessor of the current thrifty food plan — was used in developing the poverty thresholds in 1963-1964. (The economy food plan used to develop the thresholds is included in a 1962 Agriculture Department report .) The thrifty food plan was not established until 1975, when it replaced the economy food plan at the same general level of cost. The thrifty food plan has never been used to update or revise the poverty thresholds. Poverty thresholds are updated for price changes only using the Consumer Price Index.

No. The “three-times-the-cost-of-the-food-plan” calculation was done only once, for the 1963 base year poverty thresholds, using the Agriculture Department’s economy food plan. Poverty thresholds for years since 1963 have been updated for price changes only using the Consumer Price Index.

The poverty thresholds were not developed as an item-by-item budget with specific dollar amounts for each consumption category. If one tries to consider the thresholds as a budget, all that one can say is that they were developed in 1963-1964 by multiplying the cost of the economy food plan by three. Other than that, it is not possible to say what share of the poverty line goes for any specific consumption category. (Note that the food share used to develop the thresholds does not represent today’s consumption pattern for either the general population or the poverty population.)

Other Poverty-Related Questions

The Census Bureau is the federal agency that prepares statistics on the number of people in poverty in the United States. To obtain figures on the number of people in poverty since 1959, visit the Poverty section of the Census Bureau’s web site, or contact the Census Bureau’s Customer Service Center at 1-800-923-8282 (toll-free), or visit ask.census.gov. The Census Bureau’s poverty statistics represent the number of people below the Census Bureau poverty thresholds. Neither the Census Bureau nor the U.S. Departmen`t of Health and Human Services publish tabulations of the number of people below the HHS poverty guidelines, which are a simplified version of the poverty thresholds used for program eligibility purposes, although they are used when estimating the number of persons eligible for particular programs. The best approximation for the number of people below the HHS poverty guidelines in a particular area would be the number of persons below the Census Bureau poverty thresholds in that area.

No. The federal government does not have official definitions for such terms as “middle class,” “middle income,” “rich,” and “upper income.

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