New Hampshire’s Department of Health and Human Services is commissioning a study to look at the “cliff effect” in public benefits programs like the Supplemental Nutrition Assistance Program (SNAP) and Medicaid, and what the state can do to address it.
The cliff effect refers to situations where a person uses a benefit program but then gets a slight raise in salary and no longer meets the income eligibility for that program. In many cases, the salary increase is not enough to make up for the loss of the benefits themselves, thus creating a “cliff” in support for that person.
The dynamic has long vexed public officials, and some have raised concerns that it creates a disincentive for recipients of benefits to pursue work opportunities that could put their salary over the eligibility threshold.
Different benefits programs have different cutoffs: Under Medicaid expansion, New Hampshire residents can receive benefits if they make below 138 percent of the federal poverty level, or $41,400 for a family of four, while SNAP, also known as food stamps, uses 130 percent of the poverty level as the cutoff threshold, or $39,000 for a family of four.
On Wenesday [Oct. 4], the Executive Council approved a $200,000 contract with Econsult Solutions to continue economic research for the state that began in 2021, and specifically to examine the cliff effect. Lawmakers added a requirement to undertake the research in the budget that passed in June.
The study, which will be funded with state tax dollars, will explore the use of a graduated benefits approach in which people receive a tapering off of benefits as they enter higher income brackets rather than a sharp drop off.
“The analysis shall be taken to help the state fully understand the wage and benefits dynamics, identify policy changes of the cliff effect with maximum potential impact for working families, and identify changes for impactful economic growth and family self-sufficiency for all areas of the state,” the department wrote in its request to the Executive Council.
Since 2019, DHHS has partnered with the Department of Education, New Hampshire Employment Security, the governor’s office, the Community College System, and New Hampshire businesses for a “Whole Family Approach to Jobs” team that is seeking to find ways to alleviate the cliff effect for benefits programs like SNAP and Temporary Assistance for Needy Families (TANF). That group produced a report with recommendations in 2021, including expanding SNAP eligibility to 200 percent of the federal poverty level and allowing TANF recipients to continue receiving benefits for up to two years after getting a higher paying job.
This story is courtesy of NH Bulletin under creative commons license. No changes have been made to the article.
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