LeadingAge Highlights Impact of Federal Poverty Threshold on Aging Services

Posted on June 23, 2019 by Jodi Boyne

In a response to a request for comments on how the federal government measures poverty, LeadingAge provided insight on how potential changes to the poverty threshold’s calculation could negatively impact older adults and aging services. 

Background

The White House Office for Management and Budget (OMB) published a request for comment on potential changes to how the federal government measures poverty in May. On June 20, LeadingAge published its response to OMB and highlighted the impact of these potential changes on older adults and on aging services.

In short, if the federal government were to proceed on certain proposals discussed in the request for comment, fewer older adults would be eligible for publicly-funded aging services over time, and aging services providers would be less able to serve low-income older adults.

LeadingAge’s response letter is available on the Federal Register and discussed below.

Potential Changes to the Poverty Threshold

Each year, the U.S. Census Bureau establishes the poverty threshold, or the income level under which individuals and families are considered to be living in poverty. In 2018, the poverty threshold for a single adult age 65+ was $13,064.

The poverty threshold is used to determine the federal poverty level (FPL), which is then used to determine eligibility for a whole range of programs important to older adults and aging services providers, including Medicaid long-term services and supports (LTSS), nutrition benefits, Medicare subsidies and more.

The U.S. Census Bureau increases the poverty threshold each year to keep pace with inflation. Historically, it has used the consumer price index for urban consumers (CPI-U; colloquially known as the consumer price index) to do so. In the request for comment, OMB lists other potential inflation measures that could be used instead of the consumer price index, including an alternative Chained CPI-U.

If the federal government were to adopt Chained CPI-U as the inflation factor for increasing the poverty threshold, fewer people would be considered to be living in poverty compared to if the use of CPI-U were to continue. Over time, fewer people- including older adults- would have access to services that use poverty as eligibility criteria.

Impact of the Poverty Threshold on Aging Services

Changes to the poverty threshold calculation would have specific and negative implications for access to LTSS and other aging services. According to the Medicaid and CHIP Payment and Access Commission, every state uses the FPL, which is derived the poverty threshold, to determine eligibility for Medicaid LTSS both in nursing homes and in home and community-based settings. While states have varying levels of the FPL set as eligibility criteria, there is consistent, national use of FPL as the financial eligibility determinate for Medicaid LTSS that would be affected over time by any change in how the U.S. Census Bureau calculates the poverty threshold.

If a slower growing inflation factor, such as Chained CPI-U, were to be used in calculating the poverty threshold, then over time there would be fewer older adults eligible for such services and supports compared to the continued use of CPI-U. As a result, low-income older adults would not have access to the LTSS they need, and aging services providers of all types, including nursing homes, home-based care providers, adult day services centers, PACE organizations and more, would be able to serve fewer people through Medicaid.

LeadingAge will continue to monitor OMB activity related to the poverty threshold and keep our members informed. Members with questions or concerns can reach out to Brendan Flinn.