US may drop poverty level

The US government is considering lowering the poverty level, which would bring changes to who receives benefits. Those who are right on the edge of the qualification levels could see their government benefits disappear since they would no longer meet qualifications to receive benfits.

As an very rough example, say a state provides health insurance for those who at 200 percent of the poverty level or under. The figures are not exact but lets say that the Smith family makes 2,000 dollars a month which would be right at 200 percent of the poverty level. When that level is dropped, the Smith family are all of a sudden be at 225 percent of the poverty level, despite no change of income for the family.

From Vermont's Times Argus, writer Daniel Barlow explains this further.

For example, for a single person to qualify for a state or federal program that covers up to 100 percent of the federal poverty level they would need to make less than $906 a month. Starting next year, that benchmark changes to $899 a month for a single person.

Seven dollars may not seem like a dramatic shift, but the gap increases for larger families, according to Peter Sterling, the executive director of the organization Vermont Campaign for Health Care Security.

Sterling said the decrease in what the federal government considers poverty could have low-to-moderate income Vermonters paying more for their services or suddenly discovering they make too much to apply for help they are getting now.

"This will impact everything from food stamps to home heating fuel assistance," said Sterling. "How many people are making 299 percent of the federal poverty level and will soon find out that they no longer qualify for services?"

The federal government first began gauging what the federal poverty level is – the minimum amount a person can makes to be considered in poverty – in December 1965, setting the rate as $1,540 a year for a single person or $3,130 for a family of four. At the time, the median income in the United States was $6,882, according to Census date.

In 2007, when the median income was $50,233 a year, the federal poverty level was set at $10,210 for a single person and $20,650 for a family of four. Creating a new federal poverty level involves a complicated calculation that is tied to the country's consumer price index, similar to how benefits for Social Security are decided.