US & World Economies Economic Terms What Is a Welfare Program? By Kimberly Amadeo Updated on October 21, 2021 Reviewed by Somer G. Anderson Reviewed by Somer G. Anderson Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. learn about our financial review board Fact checked by Vikki Velasquez In This Article View All In This Article Welfare Programs Overview How Do Welfare Programs Work? Types of Welfare Programs Are Welfare Programs Worth It? Photo: The Balance / Adrian Mangel Definition Welfare programs are government subsidies for low-income families and individuals. Definition and Examples of Welfare Programs Welfare programs are government subsidies for low-income families and individuals. Anyone receiving welfare must prove their income falls below a target. This target is some percentage of the federal poverty level. In 2021, the poverty level for a family of four is $26,500. The United States has six major welfare programs with eligibility based on income and local poverty levels: Temporary Assistance for Needy Families (TANF) Medicaid Supplemental Nutrition Assistance Programs (SNAP or "food stamps") Supplemental Security Income (SSI) Earned Income Tax Credit (EITC) Housing assistance Every program has other eligibility requirements as well. How Do Welfare Programs Work? Many of the benefits from these programs don't go straight to recipients in the form of checks. They may be applied individually as tax credits. They may also be more broadly distributed to the public in federal grants to states and local municipalities. No matter where the money is going or who gets it, these programs make up a large part of the U.S. federal budget. As a result, there are often debates over how to fund and administer welfare. The federal government provides funding for welfare. But the programs themselves are run by the states. Some states also expand the programs by providing additional funds. Note Welfare programs are often debated in Congress. It's common for Congress to discuss reducing the funding for a program that already exists. Sometimes Congress reduces funding for a program without also reducing what a state has to do for that program. This creates what's known as an unfunded mandate. States and local governments usually end up picking up the rest of the tab for the program. For example, the federal government pays for SNAP benefits. But states pay half of the cost of administering the program. Certain kinds of unfunded mandates can also fall on the private sector. Welfare vs. Entitlement Each welfare program has its own set of eligibility requirements. They all, though, include a maximum income requirement. These income levels are often set by the state and are based on the federal poverty level. For example, an Illinois resident would not be able to get SNAP benefits if their household makes more than 165% of the federal poverty level. Note Maximum income levels may fluctuate, depending on other circumstances in the household. To continue with the Illinois SNAP example, households that include anyone who's disabled or older than 60 can make up to 200% of the federal poverty level and still get benefits. These maximum income levels are part of what makes welfare programs different from entitlement programs. While you have to prove eligibility to receive welfare program benefits, everyone can access entitlement programs if they have contributed to the program (often through payroll taxes). Even the richest Americans can receive Medicare coverage, for example, once they turn 65. The benefits these programs pay out are often far higher than what recipients paid in. The four major U.S. entitlement programs are: Social SecurityMedicareUnemployment insuranceWorker's compensation Types of Welfare Programs There are six different welfare programs in the United States. Each one serves a different purpose. Temporary Assistance for Needy Families (TANF) While many programs are welfare programs, the Temporary Assistance for Needy Families program is the one most often called "welfare." TANF provides help to families living in poverty. In June 2020, TANF provided income to more than 2.1 million Americans. Most TANF recipients are children. The June 2020 figures include 505,487 adults and over 1.6 million children. Those may seem like high numbers. But they represent just a fraction of American families living in poverty. In 2019, for instance, only 23% of the families with children living in poverty received TANF assistance, according to the Center on Budget and Policy Priorities. In 2020, the national median monthly assistance for a family of three with TANF benefits was $492 per month. Note TANF's predecessor was known as the Aid to Families with Dependent Children (AFDC). The AFDC was created in 1935 as part of the Social Security Act, but it later came under scrutiny. Public perception of welfare, then officially known as the AFDC, soured in the '70s.In 1976, President Ronald Reagan's campaign highlighted a case of welfare fraud and popularized the concept of a "welfare queen." Reagan pushed for welfare reforms and warned of how welfare created a cycle of poverty. In 1996, President Bill Clinton created TANF to replace AFDC, ending the original welfare system. Medicaid and the Child's Health Insurance Program (CHIP) Medicaid and CHIP provide health insurance. This allows low-income families to access medical care. In September 2020, Medicaid helped pay for the care of more than 81 million low-income adults and children. CHIP Children have a specialized form of Medicaid called the Child's Health Insurance Program (CHIP). It covers hospital care, medical supplies, tests, eye exams, dental care, and regular check-ups. Medicaid pays for a significant portion of U.S. births. In states that report this data, the rate of Medicaid-funded births commonly falls between 30% and 50%. The highest figure came from New Mexico, which reported that Medicaid funded 71% of births in 2018. The lowest figure came from New Hampshire—just 26%, also reported in 2018. The Affordable Care Act increased Medicaid coverage by 32.3%. It raised the maximum income level and allowed single adults to qualify. Supplemental Nutrition Assistance Program (SNAP) SNAP is more commonly known as food stamps. These government food benefits helped more than 42 million people buy food in 2021. In Sept. 2021, the USDA announced it would increase the benefits to the Supplemental Nutritional Assistance Program in order to help those afford a healthy diet. The average SNAP benefit increased by around $36 per person, per month. The maximum monthly benefit for a family of four in FY2022 is $835. In addition to SNAP, the Special Supplemental Food Program for Women, Infants, and Children (WIC) helps pregnant, postpartum, and breastfeeding women and children up to age five. It provides: FoodVouchersEducationReferrals In 2018, roughly 6.87 million people received WIC benefits. Of those, more than 76% were children or infants. Another food-based welfare program is known as the Child Nutrition Program. In 2019, this program provided free or reduced-cost lunches to 29.4 million children. It cost the federal government $14.1 billion. Supplemental Security Income (SSI) Supplemental Security Income provides extra cash to help low-income adults and children who live with disabilities. As of January 2021, more than 7.9 million people received an average of $585.53 per month. Of people getting benefits, more than 6.7 million were blind or disabled. Earned Income Tax Credit (EITC) The Earned Income Tax Credit is a tax credit for low-income families. For the tax year 2020, a family of four (in which couples are married and filing jointly) must have earned less than $53,330 a year to qualify for a potential tax credit of $5,920. More than 22 million individuals and families received EITC in 2018. The average credit for a family with children was worth $3,191. The credits lifted approximately 5.6 million people out of poverty in 2018. About 3 million of them were children. Housing Assistance Housing assistance often takes the form of rental assistance. It includes 1.2 million units of public housing, privately owned subsidized housing units, and a voucher program that allows low-income renters to find their unit. The Housing Choice Voucher Program aims to ensure that low-income families spend no more than 30% of their income on rent. Local agencies administer it to 2.2 million families. The Low-Income Home Energy Assistance Program is a similar welfare program that provides energy assistance and weatherization programs. Are Welfare Programs Worth It? A 2018 Rasmussen Reports survey found that 61% of Americans believe that too many people are dependent on government financial aid. Many of these respondents may not realize that they benefit from federal assistance given to their state governments. There are many misconceptions about who exactly benefits from federal aid. In 2012, for instance, Republican presidential candidate Mitt Romney said that 47% of the population would vote Democrat no matter what. He claimed this 47% of Americans vote Democrat because they "are dependent upon government" and don't want to see a reduction in welfare programs. In an interview, though, political scientist Suzanne Mettler said her research shows that welfare and food stamp recipients are far less likely to vote than others. They struggle so much to make ends meet that they don't have the extra time to read up on political issues and go to the polls. The Tax Foundation and Gallup polls also show that many of the states that rely the most on federal benefits vote Republican. Many voters who decry welfare programs may not be aware of how much they receive from government programs. For example, they may not be aware that the deduction for home mortgage interest is a form of government benefit. It's easier only to consider visible federal benefits, such as welfare checks or food stamps. As a result, many voters don't realize that they are getting government benefits too. Another myth accuses undocumented immigrants of coming to the U.S. to take advantage of welfare programs. Most welfare programs, though, only benefit legal immigrants. Even legal immigrants must have a 10-year work history or be a member of the military before they are eligible to receive TANF, for instance. Other welfare programs have similar restrictions. The only federal welfare program that benefits undocumented immigrants is Medicaid. Even then, the benefits are only allowed in cases of emergency. Kaiser Health News estimates that roughly $2 billion goes to hospitals every year to reimburse them for emergency room costs that are largely associated with undocumented immigrants. Key Takeaways Welfare programs in the United States provide assistance to low-income families, especially children living in poverty.The six major welfare programs are EITC, housing assistance, Medicaid, SNAP, SSI, and TANF.These welfare programs differ from entitlement programs like Medicare and Social Security.Many negative perceptions about the people receiving welfare benefits aren't rooted in fact. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. U.S. Department of Health and Human Services. "U.S. Federal Poverty Guidelines Used to Determine Financial Eligibility for Certain Federal Programs." Accessed June 24, 2021. U.S. Department of Agriculture. "Exploring the Causes of State Variation in SNAP Administrative Costs." Accessed June 24, 2021. Illinois Department of Human Services. "Supplemental Nutrition Assistance Program – SNAP." Accessed June 24, 2021. Medicare.gov. "What's Medicare?" Accessed June 24, 2021. U.S. Department of Health and Human Services. "TANF: Total Number of Recipients Fiscal Year 2020." Accessed June 24, 2021. U.S. Department of Health and Human Services. "TANF: Total Number of Adult Recipients Fiscal Year 2020." Accessed June 24, 2021. 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