. ,

"'-
IMPACT OF NEW REQUIREMENTS: 
AFDC STANDARD 
FILING UNIT 
National Program Inspection 
.. SEl.Yl(lS. 
'0 
-It'-'lIe 
OFFICE OF INSPECTOR 
GENERAL 
OFFICE OF ANALYSIS 
AND INSPECTIONS 
MARCH 1988  .. . .
Office of InsDector General

The mission of the Office of Inspector General 
(OIG) is to

promote the efficiency, effectiveness and integrity of

programs in the United states Department of Health and Human

Services 
(HHS). It does this by developing methods to
detect and prevent fraud, waste and abuse. 
Created by
statute in 1976, the Inspector General keeps both the

Secretary and the Congress fully and currently informed

about programs or management problems and recommends

corrective action. The OIG performs its mission by

conducting audits 
, investigations and inspections with
approximately 1, 
200 staff strategically located around the
country . 
Office of Analvsis and InsDections

This report is produced by the Office of Analysis and

Inspections 
(OAI), one of the three major offices within the
OIG. 
The other two are the Office of Audit and the Office 
of Investigations. The OAI conducts inspections which are

typically, short-term studies designed to determine program

effectiveness 
, efficiency and vulnerability to fraud or
abuse. 
This study was conducted to analyze the effect on HHS 
programs of changes in the composition of the standard filing 
unit mandated in the Deficit Reduction Act of 
1984. 
The report was prepared under the direction of Kaye
Kidwell 
, the Regional Inspector General of Region 
IX, Office
of Analysis and Inspections. 
Participating in this project
were the following people:

Kathy L. Admire, Project Director

Leonard Czajka, Program Analyst

Ruth E. Carlson, Secretary

Albert J. Nace, Project Liaison, Headquarters

Wm. Mark Krushat, Mathematical Statistician

Headquarters  DlACT OF NE REQUIRES:
AFDC STANAR FILING UNIT 
RICH 
P.G KUESSNERO W 
INSPECTR 
MACH 1988 
OAI-09-87-00003  EXECUIV SUMY

PURSE 
The purpose of this study was to analyze the effect 
of new requirements mandated in Section 2640 of the Deficit

Reduction Act of 1984 (DEFRA) regarding the composition of

the Aid to Families with Dependent Children 
filing unit  (AFDC) standard

(SFU). The SFU is the family unit which serves
grant. 
as a basis for computing an AFDC  The study forecasts
the impact of the statutory changes (i. 
, Sections 402(a) (38)
and 402 (a) (7) of the Social Security Act) on three Department 
of Health and Human Services (HHS) programs: AFDC, Medicaid

and Child Support Enforcement. 
Specifically, the study was
intended to: 
determine the types of cases which are likely to result

in either savings or additional costs

analyze the effect on eligibility  welfare 
(i. 
caseloads) and

estimate the fiscal impact on HHS programs 

BACKGROUND  Prior to enactment of DEFRA, household family 
members eligible for AFDC were not required to file for bene
fits as a single SFU. Some families were receiving maximum
welfare grants by 
(1) forming multiple SFUs within a household
and/or 
(2) excluding persons with income or resources, thus 
sheltering money which would adversely affect the family' 
AFDC grant. The DEFRA ended these options by requiring 
consolidation of multiple SFUs involving teenage mothers under

eliqible 
age 18 and prohibiting the exclusion of any  member of 
the immediate family from the SFU. Th  resources of previ

ously excluded persons, such as child support payments and

Social Security Administration 
(SSA) death or disability
benefits 
, must be considered in determining the family' 
eligibility as well as the amount of their grant. 
The legis
lation did not create new AFDC and Medicaid eligibility for 
anyone, but it does prohibit eligible family members from 
not 
to apply for assistance. 
electing 
The Department projected Federal savings of $143 million for 
AFDC during fiscal year 1985 and $439 million over a 5-year
period. 
Additional annual costs of $93 million were pro
jected for Medicaid. 
Although final regulations have not 
been issued, most States have implemented these changes,
acting under interim instructions issued by the Department.
Class action suits challenging the constitutionality of the 
SFU provisions have been filed in Federal courts in many 
States. A decision by the united States Supreme Court, 
involving a lawsuit filed in North Carolina, upheld the
constitutionality of the SFU provisions.  Grant Consolidation  Approximately two-thirds of the 
children receiving AFDC in an SFU separate from their
mothers/grandmothers were unaffected by grant consolidation 
requirements because these separate SFUs were headed by 
mothers over age 17. 
RECOMMDATIONS: 
THE DEPARTMENT SHOULD CONTINUE TO SUPPORT AGGRESSIVE 
CHILD SUPPORT COLLECTION ACTIVITIES. 
Recommendations for 
the implementation of improved child support enforcement 
collections have been addressed in five OIG inspections: 
Child SUDDort Enforcement Collections on AFDC 
Cases--An Overview (OAI-05-86-00097) 
Child SUDDort Enforcement Collections on AFDC

Cases--Non-Pursuit  (OAI-05-87-00033) 
Child SUDDort Enforcement Collections on AFDC

Cases--Arrearaqes  (OAI-05-87-00034) 
Child SUDDort Enforcement Collections on AFDC 
Cases--Modified Court Orders  (OAI-05-87-00035) 
Child SUDDort Enforcement/Absent Parent Medical

Liabilitv 
(OAI-07-86-00045) 
THE DEPARTMENT SHOULD SEEK STATUTORY CHAGE TO 
EXPAND 
MADATORY GRAT CONSOLIDATION OF RELATED FAMILY MEMBERS 
IN MULTIPLE SFUS IN THE SAM HOME BY ELIMINATING THE AGE 
CEILING OF 17. This is consistent with the recommenda

Economies 
tions in an audit released by the OIG entitled 
of Shared Livinq Arranqements Under the Aid to Families 
With DeDendent Children Proqram (CIN: A-09-86-62615). 
iii
 CONTS

TABLE OF 
Page 
EXECUIVE SUMY 
INTODUCTION 
FINDINGS 
OVEVIEW: EFFECT OF STANAR FILING UNIT
CHGES ON PERONS LIVING IN HOMES CONTAINING 
AFDC RECIPIENS

Adul t Caretakers of AFDC Children

Natural Children Not in SFU

CAES AFFECTD BY SFU CHGES 
Persons with SSA Benefits Who Must Be in SFU 
Consolidation of Multiple SFUs in a Home 
Children Receiving Child Support Payments 
Who Must Be in SFU 

Half-Siblings and Parents Who Must Be in SFU 

other Eligible Children Excluded from SFUs 

Mothers Who Are Not on AFDC and Must Be in

the SFU with Their Children

Summary of SFU Effect on Sampled Cases

Fiscal Projections of the Effect of the SFU

Changes 
RECOMMATIONS 
APPENDICES 
SUMY 
APPENDIX A:  OF CASES AFFECTING 
STANDARD FILING UNIT (SFU)  A-1 
APPENDIX B:  METHODOLOGY  B-1 
SUMY 
APPENDIX C:  OF PERSONS IN HOUSEHOLDS 
WITH AFDC RECIPIENTS  C-1 
APPENDIX D:  SFU EFFECT ON AFDC/MEDICAID 
CASELOAD BY STATE  D-1  INTODUCTION

Prior to enactment of the Deficit Reduction Act of 1984

(DEFRA), family members living in the same home who were

eligible for Aid to Families With Dependent Children 
(AFDC)
were not required to file for benefits as a single standard

filing unit 
(SFU). Some families received maximum welfare
grants by 
(1) forming multiple filing units within.a house
hold and/or 
(2) excluding persons with income or resources 
thus sheltering money which would adversely affect the

family' 
s AFDC grant. 
The DEFRA ended these options, however, with changes in 
Sections 402 (a) (38) and 402 (a) (7) of the Social Security Act. 
Within a home all eligible adults and their children,

including siblings and half-siblings, must be included in a

single SFU. Specifically, the 
income and resources, such as
Social Security Administration 
(SSA) death or disability 
payments or child support payments, of eligible persons 
previously excluded from AFDC must be counted in determining
the family' 
s eligibility, as well as the level of their AFDC
grant. 
The legislation also requires the consolidation of 
multiple filing units where a teenage mother under 18 is 
residing with other related AFDC recipients. The DEFRA did 
not create new AFDC and Medicaid eligibility for anyone, but 
not 
to apply
prohibits eligible family members from electing 
for assistance.

The Department of Health and Human Services (HHS) supported

enactment of this provision and projected Federal savings for

AFDC of $143 million for Fiscal Year (FY) 1985 and $439 mil

lion over a 5-year period. The projections were based on the 
assumption that consolidation of multiple filing units would 
be less costly and that income or resources from previously 
excluded adults and children would result in reduced welfare 
grants and render some families ineligible. The Department
further projected a cost of $93 million to the Medicaid 
program to cover persons who would be added to the AFDC case-
load. 
The Department assumed it would realize substantial 
savings through reduced grants, even if the overall caseload

increased. 
Although final regulations have not been issued, most States 
have implemented the DEFRA provision, acting under interim
instructions. 
Class action suits challenging the constitu
tionality of the SFU provisions have been filed in Federal 
courts in many States. A decision by the united States 
Supreme Court, involving a lawsuit filed in North Carolina, 
upheld the constitutionality of the SFU provisions. In the 
fall of 1986, the Office of Inspector General (OIG) undertook
an inspection which would forecast the effect of the SFU  SI 
OF  REIBE 
CA 
cases review 
1306  by OIG staff

(10OX of QC s  le in 8 Western States for  4/84  9/84)

drop 
351 cases  be  (QC did not c  lete review or cases 
should have  inel igible during review period) 
955 cases receive full review (worksheets c  leted) 
88 
cases - OIG staff review only 
73 cases - referred to OFAlQC staff for further review

28 cases - no filing unit effect

45 cases - fi l 
ing unit effect 
Both the Regions IX and X OFA QC and policy staffs assisted

us with analysis of issues and specific cases affected by the

SFU changes. Cases analyzed by the QC staff were returned to

QIG for further analysis. Information from all 955 cases was

entered into a microcomputer data base for extensive analysis.
The data generated served as a basis for proj ecting changes in
eligibility as well as costs or savings to the AFDC, Medicaid 
and Child Support Enforcement programs in the eight States and
nationally. 
Average Medicaid costs for adults and children in 
the eight sample States were calculated based on data from 
Form 2082 for FY 1984, published by the Health Care Financing
Administration (HCFA). Child support 
payments reflect the
actual amounts recorded in the AFDC case record. 
proj ections 
were calculated by the OIG mathematical 
statistician with assistance from FSA statisticians. 
Appendix B summarizes in further detail the methodology used 
in this study.  samDled AFDC cases is the sub; ect of this reDort  Appendix C

contains a more detailed breakout of persons in each of these

categories. 
SUMMARY OF PERSONS IN AFDC HOMES 
(AS RELATED TO  "'ARY CARETAKERI

iP?iNTS 
TOTAL. IN HOMES

755 
(100%) 
UNRELATED PERSONS  RELATIVES 
NAT'-AL C..LDfiEN 
NOT IN 
.., IAII .u. 
, IN 
Adul t Caretakers of AFDC Children  Only 12 percent of the

180 adult caretakers of AFDC children would have been affec
ted by the SFU changes. The following table describes these 
22 adults. Only one was an AFDC recipient who would have been 
affected through grant consolidation. The remaining 21 par
ents were not on AFDC, but had children who were. Of these 
21 parents, one mother was receiving social Security death or
disability benefits. 
One mother and two fathers would have 
been drawn into the SFU as parents of half-siblings. The
remaining 17 were mothers with children on AFDC. 
Most were 
married or living with a boyfriend. Drawing all 22 adults  been affected by the SFU changes and drawn into filing 
rThee chaildrsen onot naffescte.d  by SFU changes in the " units.
other
reasons" category were all undocumented aliens. 
been left out of the family filing unit for a variTehtey  roefst had
1l11 Clll. II II STNI 
1:49 
FILING IIIT 
Category  II  SFU 
Total  Effect  Percent 
SSI Recipients 
SSA Recipients 
100 
Child Suprt Recipients 
100 
Other Incom 
No Deprivation (Inel igible) 
OVer  Age 18 
Half Siblings (Eligible) 
100 
In Seprate AFDC SFUs 
Other Reasons 
Totals 
249 
CAES AFFECTD BY 
SFU CHGES 
The following discussion analyzes the 45 cases which would

have been affected by the SFU changes in terms of their

impact on three HHS programs: AFDC

Enforcement and Medicaid.  , Child Support

Appendix A summarizes these cases.
They fall into six classifications:

persons receiving SSA death or disability benefits who

had been excluded from their family'

s SFU (cases A-F)

consolidation of multiple SFUs within the same home

(cases G-

children receiving child support payments who had been

excluded from their family'

s SFU (cases L-P)

excluded half-
siblings who must be in the SFU and who

also draw a parent into the filing unit 

(cases Q-S)

children who
, for a variety of reasons
SFU with the rest of their family 
 , were not in the

(cases T-BB)

mothers who were not on AFDC

, but whose children were

AFDC recipients 
(cases CC-SS) STAI 
FlLlII "IT (SR) EFFE: 
$S IEFITS
(AFix A d!ibe e8 C8. 
EFFE t8 Af 
Standrd Fil ing Units: 
N=6 
Total 
Exclud 
SSA Recipients 
Total SSA S/Year 
076  540  816  172  139 132 
AFDC Recipients in SFU

Pre-DEFRA

Post-DEFRA

Mothly AFDC Grant 
Pre-DEFRA 
Post-DEFRA  180  216  555  424  304  S 2 025 
AnnSla vings or (Costs)  180  216  S 34  413250   329  210004   S 1.369314
Savings or (Costs) 
16O  592  152  440  , 948  , 400  S16 692 
EFFECT CI RICAID 1'

Stanrd 
Fi ling Units: 
N=6 
Total 
Recipients Gain El igibi l ity 
Recipients lose Eligibility

Ave. An. Savings or (Costs)  S136  182  374  (S58O)  (S2)  (S1  151)  S 321 
Table slmrizes 
only persons where Meicaid eligibility is
with continu Meicaid eligibility are not includ.  affected;  SFU recipients 
SI: 
EFFECT CI 
HI 
Stanrd Fil  Average (Costs) or
ing Units:  N=6  Total  Savi ngs per 
SFU 
Recipients ne 
to AFDC/Medicaid

Recipients who lose AFDC/Medicaid

Anal 
Anl MAFeDdCic Saaidv iS  avs i or (Costs)  S16 692  782
s or (Costs)  321
Total HHS Savings or (Costs)

S17 013 
Consolidation of MultiDle SFUs in a Home 

required that a teenage mother under age 1(8C absee si Gn-cKl)u ded DiEnF
RA

the same SFU with her own mother if the older mother is an

AFDC recipient. In 
other words, the two mothers cannot be

in separate SFUs if they are living in the same 

home. 
idation of multiple SFUs must occur where mothers under Caognes o1l8 

are involved. states 
had an option to require such a consoli
idation prior to DEFRA
, and we found that some States were
already doing this. 
We did not include
cases , any in which consolidation had a,l reina dtyhe o c45c uarfrfeedc.ted 
mother 
, daughter and grandchild were already in the same SFU 
any savings would have been realized prior to the enactment of  Children Recei vinq Child SUDDort PaYments Who Must Be in the
SFU (Cases L-P) 
Child support payments are not counted
directly against an AFDC grant unless the monthly payment is

high enough to render the entire family 

absent parent provides child support paymiennetlsi
 gible. When the
of each monthly payment is given to the mother,  atnhde  nfoitr scto u$n5t0e
 d

against her AFDC grant. 
The remainder of the payment is

turned over to the child support enforcement 

agency. 
We found six children in five homes receiving child support

payments who were not on AFDC with the rest of their 

In no case were the child support payments high enoughfa tmoi
ly.
render the entire family 
ineligible. This 
five AFDC grants would  means that (1) all

increase, because these children must

be added to their family'

s SFU and (2) the child support money

goes not to AFDC
, but to the child support enforcement agency.

These six children would also become eligible for 

Medicaid. 
As the following tables indicate

, HHS ultimately saves money

on these cases. 
We estimated that adding six children to

these five SFUs would cost AFDC an additional $5

Medicaid an additional $1  472 and

763 per year. 
enforcement agency, however
 The child support

, would collect $11,
these families. Assuming  460 from

are collectible (i. e.,  all these child support payments

absent fathers pay their full child

support obligations), there would be an overall savings of

225 despite the increase in costs to AFDC and Medicaid.

Case L illustrates the effect of child support payments. 
Prior to DEFRA
, the SFU consisted of a mother and two
children. A 
third child, not on AFDC, received $280 per
month in child support. 
The family' 
to DEFRA was $228.  s monthly AFDC grant prior
Adding the fourth child would result in an
$44. 
increase of 
Annually this would increase AFDC costs by
$528 and Medicaid by $514. 
The child support enforcement
agency, however
, could potentially collect $2 
from this family, resulting in annual savings t7o6 0t hpee r year

Government of $1, 718.  ..-  .-:
.. .. _.

Half-siblinas and Parents Who Must Be in the SFU 
(Cases Q-S)

The DEFRA states that half-siblings who are otherwise eligible

for AFDC must be in the same SFU. We found many cases where

half-siblings were not eligible for AFDC because they were not
deprived. 
There were, however, thrbeee c.a ses where a half-
sibling was not on AFDC but should  In each instance the 
SFU. 
children draw a parent into the  These three cases would 
increase the welfare rolls by six people (three adults and

three children). Each case would cost additional money, 
totaling $7, 531 annually ($5, 412 for AFDC and $2, 119 for
Medicaid) . 
Case Q illustrates the effect the SFU changes would have on
this type of case. 
Prior to DEFRA, the SFU consisted of a 
father and five children. The stepmother to these children

(i. e.,
and a child who belonged to the father and stepmother 
half-sibling) were not on AFDC. After DEFRA, the half-sibling 
would have to be in the SFU because he was otherwise eligible.
(i. e., 
He also draws his natural mother  the stepmother) into
the unit. Adding two more persons to the AFDC grant would cost
$69 per month 
($828 annually). Annual Medicaid costs are esti
mated at $136, for a total additional cost of $964 per year. 
(II Ef: "'-1".-
- _0
FIll. I8uITw  a 
EF .. 
AR 
Stllrd Fill". !.It.: 
105  Totel 
f-Slbll"llW. 
bel. 111 
Af laclpl_. 
In IRI: 
P,.-oFIA 
Pot-DEFI 
III Y Af GIW 
PrDEFI  156  476  I 44  11,
I't-DFIA
S8". 
01 (Cot.)  (I 69)  (I 170)  (I 212)  (I 451) 
Ar1 _I". 01 (Cots)  (I 82)  (12,06)  CI2,54)  (15,412) 
EF .. -1c: 
It"" 
Flllrw !.It.:  Totel 
laclpl_e Gain Elillbility 
laclpl_e L- Elillbility 
Sr". 
Aw.Am.  01 (Coti)  (I 156)  (11, 151)  83)  (12, 119) 
-rlz. 
T8I1e  onlcy opeirnacun  lI.,e NlIc.ld elillbilityn oI.  inef:fleuctded. : 
SFU I'lpilntl with  NliC8ld elilibility e,. 
EffK.. 
It8  Awl' ..1".
Fill rw !.I t.:  Totel  CC.-U) per SFU 
laclpi_. rw to AFDCtMIc.ld 
lacipi_. 110 I.. AFDC/lceid

AAmlr l AFD ..1". or cCotl)  (CI 5,.4.1)2)   CCI'--)
11C8ld ..1". or cCot.) 
Totel Mil ..1". or cCot.)  (I 7 551)  CI 2,510)  Mothers Who Are Not on AFDC and Must Be in the SFU with

Their Children 
(Cases CC-SS)  We identified 17 cases where 
not. 
children were in SFUs, but their mothers were  DEFRA 
requires that these mothers must be in the SFU with their

children. 
Looking at all 17 mothers as a group, the overall 
effect would be an addition of 12 persons to the welfare rolls 
with increased annual costs of $13, 700 ($8, 124 for AFDC and 
$5, 576 for Medicaid) 
six of these mothers were teenagers under age 18 
(Cases NN-SS)
parents. In 
who were living with their own  each case, the 
only person in the home receiving AFDC and Medicaid was the
teenager' s baby. 
Because the resources of other persons in 
the home must be counted against the AFDC grant, children in 
five of the six SFUs would become ineligible. In other words, 
off 
stav off
tahe sbabsiesi stanceao . In thaessi sstanicex antd hthe  cteeanagse meot hers 
(Case NN), even though the 
teenage mother would become eligible for AFDC, the grant for

both would be significantly less than the grant for just the

child prior to DEFRA. 
For the remaining 11 mothers (Cases CC-MM), the effect of

RA would be very different. In every case, the mothers 
would become eligibile for AFDC with increased costs both to 
AFDC and Medicaid. Addi tional family resources had no 
effect on eligibility or reducing grant levels. 
Case CC illustrates DEFRA' s effect. One child was in the SFU.
The child' s mother, stepfather and two half-siblings were not. 
The two half-siblings were ineligible for AFDC because they
were not deprived (i. 
, both biological parents were in the
home). 
DEFRA requires that the child' s mother must be in the
SFU. The mother had no income. The stepfather reported
earnings of $450 during the review month. 
Some of his income 
would be deemed to the filing unit after removing the needs of 
the three people who do not qualify for AFDC (i. e., himself 
and the two half-siblings). Since the need standard for three 
persons exceeded the stepfather' s income, there was no income 
to budget against the AFDC grant. Adding the mother to the 
SFU would result in an annual increase of $2, 534 ($1  992 for 
AFDC and $542 for Medicaid) . 
The tables on the next two pages illustrate the fiscal impact 
DEFRA would have had on these types of cases.  Summary of SFU Effect on SamDled Cases

Of the 955 cases reviewed, 45 (5 percent) would have been
atifofenct.e d by the SFU changes mandated in the DEFRA legisla
The overall impact on HHS programs would have been an 
addition of 30 persons (12 adults and 18 children) to the
AFDC/Medicaid rolls and increased Federal and state costs of

257. In 
other words, the QC sample identified 2,
adults.  665 AFDC 
recipients and 18 sanctioned 
There were also 13 AFDC 
recipients in separate SFUs who would be affected by the new
grant consolidation requirements. 
This comes to a total of 
696 AFDC recipients prior to 
DEFRA. 
Application of the DEFRA requirements would have affected 
55 persons currently not receiving AFDC
, plus 13 AFDC recip-
ients affected by grant consolidation.
All 55 persons had
family members who were in SFUs. Forty-two of the 
persons  55 affected
(76 percent) would have to be included in the SFU with
. the rest 
of their eligible family members and be added to the 
welfare rolls. The other 13 persons (24 percent) would not be
eligible for AFDC because of excess resources (SSA or child
support payments). 
Furthermore, mandating that these 13 per
sons be considered in the SFU with other family members would 
render 12 current AFDC recipients ineligible. The overall
effect 
, sumarized in the following chart, is the addition of
30 persons to the .
welfare rolls. Appendix D provides a
further breakout of this information by State. 
SlJ 
OF DEFI  EFFECT (I SFU 
, Cases Revi  955 
, Cases SFU Effect 
Pre-DEFRA 
, AFDC .Recipients  665
# sanction Acilts 
# In Other SFUs to be Conol idated

Total  696 
Post-DEFRA 
, New AFDC Recipients

, AFDC Recipients Lose Eligibility

Total 
SUry 
Pre-DEFRA Recipients  696 
New Recipients 
Post-DEFRA Recipi ents  726 
A summary of this effect on the welfare caseload by type of

case follows. It should be noted that only two types of cases

eligibility: 
resulted in some loss of  (1) families with
members receiving SSA benefits and (2) minor mothers living at  -- 
conclude that the effects on the AFDC and Medicaid programs

are negligible at best. 

This is significant
light of the Department' s projected Federal A,F DhCo wseavveirn,g si
n

($143 million for FY 
1985). The 
our estimates of costs to the AFDCf oalnldo wMiendgi ctaaibdl ep rsougmrmaamrsi.z
es

ESTIMTm  COS OF SR ClS II
REGICI IX AI X 
HHS Share
 Total Costs

MAFeDdCi caid  989)  162 04)
985  116 
Total 
($5 217 329)  ($9 147 164) 
The estimate for the Fedral share is higher than

the estimate for the total cost beause the ad-
cost cases OCcur disproprtiontely in 
a higher Fedral  States with
Financial Participation (FFP). 
Even though the sample contained a mix of large and small

States with wide variations in grant levels

may not be representative of the country as,  aw ew hroelceo.g ni
 ze it

sample States are representative (Le. 
If the

situation), the following cost projecti,o nas  "wwohualtd  iafp"p
 ly:

tls
ESTIMTm 8I CO 
OF SR 
IATI(IIDE 
HHS Share  Total Costs

MAFeDdCi caid  ($ 3  000) 1  ($ 1 012 000)
( 29.602.000)  ( 56. 156.000) 
Total (132 
000) ($57 
168 000) 
The estimate for the Fedral share is higher than 
the estimate for the total cost beaue the ad-
cost case occur disproprtiontely in 
a higher Fedral  States with
Financial Participation (FFP). 
Precision is poor for the estimated child support payments 
available to the child support enforcement agency 
DEFRA), since few cases were identified in the  (post-
Given this caveat sample.
, the data suggest that for children

previously excluded from SFUs approximately $7

would be available to the child support agency a7n3n5 ua0l0l0y in
the eight States. 
000.  Projected nationally the total would be
$48  343 
This assumes aggressive collection of support
payments owed by absent parents throughout the year.
 households qualifying for only 1 AFDC grant. 
recommends that the Social Security Act should Tbhee  armeepnodretd to

recognize the economies of shared living arrangements by

all 
requiring that 
 AFDC families residing in the same house
hold be treated as a single filing unit for determining the

grant amount.

IMPACT: Expanding mandatory 
consolidation of multiple SFUs
would result in substantial savings to AFDC without incurring

additional costs to Medicaid. 
The OIG audit on economies of
shared 1 i ving arrangements proj 
ected that requiring all AFDC
families residing in the same household be treated as a

single filing unit could save the AFDC program at least

$147 million annually 
(Federal share: $73.
$735 million  5 million) or

(Federal share: $367.
5 million) over the next

5 years.
 APPENIX A

SUMY 
OF CAES AFFECTING STANDAR FILING UNIT 
(SFU)
POST-DEFR (N=45) 
PERSONS WITH SSA BENEFITS WHO MUST BE IN SFU 
(N=6) 
AFDC/SFU: One 
adult and one child: six Dersons in 
Four natural children excluded (i. 
home 
, one
who is on SSI and three who receive $672/month in 
SSA benefits). QC found that the three children 
receiving SSA benefits must be in the SFU and 
their income budgeted against the grant. Result: 
loss of AFDC and Medicaid eligibility for the 
entire family. 
AFDC/SFU: One 
adult and one child: three Dersons 
in home. A natural child, who receives $423/month 
in SSA benefits, excluded from the grant. 
QC found
that this child must be in the SFU and the SSA 
Result: 
benefit budgeted against the grant.  loss 
of AFDC and Medicaid eligibility for the entire
family. 
AFDC/SFU: Two adults and one child: seven Dersons 
in home  Four natural children excluded (collec
tively they receive $1045/month in SSA benefits) .
QC found that these four children must be in the

SFU and their SSA benefit budgeted against the

grant. Result: 
loss of AFDC and Medicaid 
eligibility for the entire family. 
AFDC/SFU: One 
adult and two children: five Dersons 
in home  Two natural children excluded (collec
tively they receive $318/month in SSA benefits) .
QC found that these two children must be in the SFU

and their SSA benefit budgeted against the grant.

Resul t: addi tion of these two children to the
family' 
s grant, which would be reduced by 
$120/month, plus the two children would become 
eligible for Medicaid. 
AFDC/SFU: One 
adult and one child: three Dersons 
in home. A second natural child, excluded from the
grant 
, receives $431/month in SSA benefits. 
found that this child must be in the SFU and the 
SSA benefit budgeted against the grant. Result: 
addition of this child to the family' s grant, which
would be reduced by $329/month. The child would 
become eligible for Medicaid. 
A- 1
 - ""
The consolidation has no effect on AFDC or Medicaid

eligibility, but would result in savings of

$66/month. 
III. 
CHILDRE WITH CHILD SUPPORT PAYMS WHO MUST BE IN SFU 
(N=5) 
AFDC/SFU: One 
adult and two children: four Dersons 
in home. A natural child, who receives $280/month 
in child support payments, is excluded. QC found 
that this child must be in the SFU. Because the 
support payments would not render the family ineli
gible, this child would be added to the AFDC grant 
(which would increase $44/month) plus become elig
gible for Medicaid. 
The child support payment 
with the exception of the $50 pass-through to the

mother, would go to the IV-D collection agency. 
AFDC/SFU: One adult and one child: three Dersons 
in home. A second natural child, excluded from the 
SFU, receives $200/month in child support payments. 
QC found that this child must be in the SFU. 
Because the support payments would not render the

family ineligible, this child would be added to the

AFDC grant (which would increase $53/month) plus

become eligible for Medicaid. The child support

payments , with the exception of the $50 pass-
through to the mother, would go to the IV-D agency.

AFDC/SFU: One adult and one child: four Dersons in 
home  Two natural children, excluded from the 
unit, receive $500/month in child support payments. 
QC found that these children must be in the SFU

sibling. 
with their mother and  Because the support 
payments would not render the family ineligible 
the two children would be added to the AFDC grant 
and be eligible for Medicaid. The family' s AFDC 
grant would increase $201/month. The child support
payment, with the exception of the $50 pass-through 
to the mother, would go to the IV-D agency. 
AFDC/SFU: One adult and two children: nine Dersons 
in home  Of five excluded household members, four 
are part of another AFDC unit which cannot be con
solidated under current law (e.g. mother is a child 
17). 
of the AFDC adult recipient, but over age  The 
fifth excluded member is a natural child of the AFDC 
adult recipient, who receives $100/month in child
support payments. 
QC found that this child must be 
in the SFU with his mother and two siblings. This 
child would be added to the AFDC grant and become 
eligible for Medicaid, resulting in an AFDC increase 
A- 3
 OT 
CHILDRE WHO MUST BE IN SFU (N=9) 
AFDC/SFU: Two adults and two children: eiaht 
Dersons in home  Four other natural children 
excluded. One of these children is over 18 and not
eligible for assistance. 
The other three recently
received their green cards (but prior to the review
month) and are 
, therefore, eligible for AFDC.
found that these three children must be in the SFU 
with their mother and other siblings and become
el igible for Medicaid. 
The family' 
s AFDC grant
would increase $255/month. 
AFDC/SFU: One 
adult and one child: six Dersons in 
home  One natural child, as well as a sibling to 
the mother and two nieces or nephews, excluded. 
found that the excluded natural child must be in the 
SFU with his mother and sibling. This child would 
be added to the AFDC grant and become eligible for
Medicaid. The family' 
s monthly AFDC grant would 
increase $53/month.

AFDC/SFU: One 
adult and two children: four Dersons 
natural child excluded. 
in home. A  Mother shares
j oint 
custody with the child' s father, who is not
living in the home. 
QC found that eligibility for
AFDC for this child would depend on the conditions
of the j oint 
custody agreement. Based on the 
information in the case file, the child probably is
eligible for AFDC and must be included in the 
SFU. 
Adding the child would increase the family'
s AFDC 
grant $85/month plus add Medicaid eligibility. 
AFDC/SFU: One 
adult and four children: six Dersons 
in home  Excluded child is a 17-year-old natural
child. QC found no evidence in the file why she 
ushnouiltd.  be excluded and determined she must be in the
Adding her increases the family' s grant
$72/month. She also 
becomes eligible for Medicaid. 
AFDC/SFU: One 
adult and one child: five Dersons in 
Three other natural children excluded. 
home  The 
case file indicates the mother has a common law 
husband 
(who is not in the home) and does not want
these three children on AFDC. 
QC suspects the
father is actually in the home, but neither the 
state nor the Federal reviewer has been able to 
prove this. Therefore, his status as an absent 
father must be accepted, which makes the three
children eligible for assistance. 
They must be
included in the SFU, increasing the family' s AFDC 
A- 5
 earnings of $450 during the review month, part of
which would be deemed to the SFU after removing the 
needs of the three people who do not quality for
AFDC. Since the 
need standard for three persons 
exceeds the stepfather' s income, there is no income 
to budget against the AFDC grant. Resul t: 
increase of $166/month plus Medicaid eligibility for 
the new recipient. 
DD.	 AFDC/SFU: One child: four Dersons in home. Child' 
natural mother, stepfather and a half-sibling 
excluded. QC found that the half-sibling was not 
otherwise eligible because there is no deprivation 
but AFDC child' s mother must be in SFU. Mother had 
no earned income. . Stepfather reported $127. 30 in
wages and $43. 40 in unearned income. 
This does not 
exceed the needs standard for the two persons not
eligible for 
AFDC, so none of his income would be 
budgeted against the grant. Result: an increase of 
$47/month plus Medicaid eligibility for the mother. 
EE.	 AFDC/SFU: Three children: five Dersons in home 
Child' s natural mother and stepfather excluded. 
found that the mother must be in the SFU. Step
income. 
father had no  Mother had unreported income 
of $119. 88, which would be budgeted against the 
grant without any work deductions (a penalty for
not reporting income). Result: an increase of 
$37/month plus Medicaid eligibility for the mother. 
FF.	 AFDC/SFU: One child: three Dersons in home 
Child' s natural mother and stepfather excluded. 
QC found that the mother must be in the SFU. Child 
receives SSA income of $205jmonth which has already
been reflected in grant computation. 
The stepfather
is self-employed. Since his expenses exceeded his

income, none of his income would be budgeted against

the grant. Result: an increase of $371/month plus

Medicaid eligibility for the mother. 
GG.	 AFDC/SFU: One child: three Dersons in home 
Child' s natural mother and stepfather excluded. 
QC found that mother and stepfather are receiving 
a total of $141/month in Bureau of. Indian Affairs
(BIA) funds. 
Nei ther adult has any earned income. 
Mother must be included in the SFU. This would 
reduce the BIA stipend, but not to a level that 
would allow budgeting any of it against the AFDC
grant. 
Result: an increase of $47/month plus 
Medicaid eligibility for the mother. 
A- 7
 excluded. QC found that the mother must be included
in the SFU. 
She reported an income of $393 for the 
review month, part of which was budgeted against the 
grant. Her income had been counted previously, but 
now she is entitled to earnings disregards, so the 
grant amount is changed. Result: an increase of 
$184/month plus Medicaid eligibility for the mother. 
NN.  AFDC/SFU: One child: five Dersons in home. Child' 
mother, a minor living with her own parents, and
another relative excluded. 
QC found that the minor
mother must be in the SFU with her child. Minor
mother' s father reported income of $400 during the 
review month, part of which would be budgeted

against the grant. Resul t: a decrease of

$95/month , but the minor mother would become 
eligible for Medicaid.

00.  AFDC/SFU: One child: four Dersons in home  The
child' 
s natural mother, a minor living with her own 
mother, and an older sibling excluded. QC found
that the minor mother must be in the SFU with her
child. 
The case record indicates that the grand
mother has Blue Shield insurance, which suggests she 
is employed, since she was under retirement age. No
income level was indicated, but we presumed her 
resources were adequate to meet the needs of her 
grandchild, since she and her children are not on 
AFDC. Result: loss of AFDC and Medicaid 
child. 
eligibility for the 
PP.  AFDC/SFU: One child: six Dersons in home. Child' 
natural mother, a minor living with her own mother,
and three other siblings excluded. 
QC found that
SFU. 
the minor mother must be in the  The minor 
mother' s own mother earned $736 in the review month, 
part of which would be budgeted against the AFDC
grant. Result: 
loss of AFDC and Medicaid 
eligibility for the child.

QQ.  AFDC/SFU: One child: four Dersons in home  The 
natural mother, a minor residing with her own
parents, and two siblings excluded. 
QC found that
the minor mother must be in the SFU. Since both of 
the natural mother' s parents work, QC presumed that 
their combined income, when budgeted against the 
t: 
grant, would be sufficient to meet the needs of 
their grandchild. Resul  loss of AFDC and 
child. 
Medicaid eligibility for the 
RR.  AFDC/SFU: One child: nine Dersons in home  The
child' 
s natural mother, a minor living with her own 
A- 9
 APPEND IX 8

ESTIMATE AVE IElcalD aJS 8Y STATE 
AR ClILD Al ADTS

(FY 198) 
State 
Ale 
Depet 
Ch i ldren ..21  289  531  477  381 300 
Total $ to Chi ldren ..1  342  $35, 951 104  S402, 325 ,  $16 636 
Average Cost per Chi ld  290  322 
# AFDC Adul ts  190  221 776  946 420 
Total $ to Adul ts  602  $15 410, 181  $513 09,919  $22, 334 161 
Average Cost per Adult  212  542  774 
State  Total 
Depnt 
Chi ldren ..1  318  10, 436  164 302  100  177 
Total $ to Ch i ldren ..21  448, 050  362 756  $18 33, 252  , 733 391  $520 691  243 
Average Cost per Child  312  514  311  394  306 
# AFDC Adul ts  835  416  110 091
Total $ to Adl ts  $6, 131  139  246 951  050,  $59 358 595  S63, 422 121 
Average Cost per Adl t  859  751  580 
1 Source: Data based on HCFA 208 form for FY 1984 (not avai lable for Arizona, du to

State' s atypical Medicaid program).

Source: Data based on informtion from Arizon State Meicaid officials for July 1984

to June 1985.

aI 
FSA ClITY  STAfF TIlE SP II CA REEW 
Region IX  Region X  Total 
Total Cases Review

Cases - F .U. Effect

Cases - No F. U. Effect

Minues - Staff Review  961  1621 
Minues - Suprvisory Review 
Total (Mir&tes)  1441  2101

Total (Hours)

Total (Person Days)

Average Time Per Case  21.  34.  28. 
(M i r&tes)  II  APPEND I X C 
SI 
PE 
Of  II  WICTH A8R I)E IPIElS 
th Pri8r 
(As Related to 
Cetea of 
Total I 
I.  AFDC ReciDients 
A. Acilts

Mothers

Fathers

Other Relatives

71X 
B. 
Children 
I I . Other Persons in Hom 
A. Adl t Caretakers of AFDC Chi ldren 
Recipients of SSI 
Recipients of SSA 
In Seprate AFDC SFU 
Other Mothers  180
Spoes
Relatives 
B. 
Chi ldren Affected by SFU Changes 
Recipients of SSI

Recipients of SSA

ld Suprt

Recipients of Chi 
Recipients of Other Incom

No Depivation (Inel igible)  249 
Ovr Age 18 
ing 
Hal f Sibl  (El igible) 
In Serate AFDC SFUs 
Other Reason 
Relatives 
Parents 
Sibl ings  132  434  11. 
Others  123 
Unrelated Adl ts & Chi ldren 
Acil ts

Chi ldren

II.  Total  in Houold  755  100X 
santion adlts.

Includs 18 
Excluds 34 natural chi ldren in seprate AFDC fi l ing units.
 .. 
APPEND I X D 
SRJ EFFECT CI AfI8ICAID CACM IT STATE 
PE 
EFFE OF  FK I  CI 
 ICAID CALCM 
ud 
Exc l  Person  Others Who  SFU Effect on

State  Cases  Total  oRffe mAFinDC   NAewFD Ct o  ElLiogsieb iAlF DiCt y  GaiCans eo lro ad(
Loss)

Alaska

Arizona

Cal ifornia

Hawaii

Idaho

Nevada

Oregon

Washington 
Total 
CII.I 
SR EFFE CI MU TS AI 
Aell ts  Chi ldren  Total
State  Cases  El ig. Gain or (Loss)  Elig. Gain or (Loss)  El ig. Gain or (Loss) 
Alaska 
Ari zona 
Ca liforni a

Hawaii 
Idaho 
Nevada 
Oregon 
Wash i ngtOf 
Total