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[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Program Descriptions]
[Section 12. Social Welfare Programs in the Territories]
[From the U.S. Government Printing Office, www.gpo.gov]

 
         SECTION 12. SOCIAL WELFARE PROGRAMS IN THE TERRITORIES

                                CONTENTS

Coverage and Participation in Selected Programs
Expenditures for Selected Social Welfare Programs in the 
        Territories
Special Rules
  SSI Coverage
  Nutrition Assistance Block Grant for Puerto Rico and Programs 
            for the Northern Marianas and American Samoa
  Public Assistance Programs
Health Programs
  Medicaid
  State Children's Health Insurance Program
Consolidation of Certain Grants for Insular Areas Other than 
        Puerto Rico
Certain Tax Provisions that Affect Low-Income Families with 
        Children
References

            COVERAGE AND PARTICIPATION IN SELECTED PROGRAMS

     Most social welfare programs available to the 50 States 
and the District of Columbia are also available to the 
territories. The territories are: the Commonwealth of Puerto 
Rico, Guam, the Virgin Islands, the Commonwealth of the 
Northern Mariana Islands, and American Samoa.\1\ Social welfare 
programs discussed in this chapter provide retirement and 
disability benefits, financing of health care, unemployment 
compensation, public assistance for low-income persons or 
families, education benefits, job training, and social 
services.
---------------------------------------------------------------------------
    \1\ For an overview of how the territories are politically 
organized and their history see Brunno & Laney (1996). This section 
discusses the availability of social programs in the five major 
territories and provides an overview of special rules that apply there. 
It does not discuss Federal financial assistance for three areas that 
were formally part of the trust territories and are now independent in 
``free association'' with the United States: the Marshall Islands, the 
Federated States of Micronesia, and Palau. (The fourth area of the 
trust territories, the Northern Marianas, became a Commonwealth of the 
United States.) These areas remain eligible for some residual aid from 
the United States.
---------------------------------------------------------------------------
     Social welfare programs can be divided into two 
categories:
 1. Federal programs that make direct payments for 
        individuals.--These programs have Federal eligibility 
        and benefit rules and are administered directly by the 
        Federal Government.\2\
---------------------------------------------------------------------------
    \2\ This chapter's classification of programs as ``direct'' 
payments for individuals differs from that found in Federal budget 
documents and the U.S. Census Bureau publication Consolidated Federal 
Funds Report. This chapter classifies unemployment compensation (UC) as 
a Federal-State program because States administer and design their own 
programs within Federal guidelines. UC is not a grant-in-aid program, 
so that other documents classify it as a direct payment for 
individuals. Food stamps is also classified as a Federal-State program 
because it is administered by the States.
---------------------------------------------------------------------------
 2. Federal-State programs.--For these programs, States and 
        sometimes localities have a role in the design, 
        administration, and often financing of benefits and 
        services. For the territories to participate in the 
        joint Federal-State programs, Federal law must make 
        them eligible, but the territory's government must act 
        to meet conditions for Federal assistance.
     Table 12-1 shows the coverage of residents of the 
territories by selected social welfare programs directly 
administered by the Federal Government. With the exceptions of 
Supplemental Security Income (SSI), residents of the 
territories are eligible for social benefits on virtually the 
same basis as residents of the States.

  TABLE 12-1.--COVERAGE OF RESIDENTS OR WORKERS IN THE TERRITORIES FOR
 SELECTED SOCIAL WELFARE PROGRAMS MAKING DIRECT PAYMENTS FOR INDIVIDUALS
------------------------------------------------------------------------

           Program             Puerto   Virgin  Guam  Northern  American
                                Rico   Islands        Marianas    Samoa
------------------------------------------------------------------------
Social Security..............  Yes     Yes      Yes   Yes       Yes
Medicare.....................  Yes     Yes      Yes   Yes       Yes
Supplemental Security Income.  No      No       No    Yes       No
Guaranteed student loans.....  Yes     Yes      Yes   Yes       Yes
Pell grants..................  Yes     Yes      Yes   Yes       Yes
------------------------------------------------------------------------
Source: Congressional Research Service.

    Table 12-2 summarizes the availability in each territory of 
major social programs that are operated jointly by the Federal 
Government and the respective territory. Coverage of the 
Unemployment Compensation Program is determined in the Federal 
Unemployment Tax Act (FUTA), which applies to Puerto Rico and 
the Virgin Islands but not the other territories. Though 
coverage is determined in FUTA, program design is left to the 
territory. The Food Stamp Program itself operates only in the 
Virgin Islands and Guam, with a special block grant operating 
in Puerto Rico and special ``food-stamp-like'' grant programs 
in the Northern Marianas and American Samoa. The other 
nutrition programs, for which benefits are fully federally 
financed but administration is left to the States, generally 
apply in the territories.
     Most Federal-State social welfare programs other than 
those discussed above are grant-in-aid programs by which the 
Federal Government helps finance benefits and services in State 
or local programs. Territories, like States, may choose not to 
participate in grant programs. Participation in a program 
entails accepting Federal rules and guidelines and sometimes 
providing State or local dollars to match Federal dollars.
     Table 12-2 shows whether Federal law makes the territory 
eligible to participate and whether the area participated in 
the program in fiscal year 1999.

                                                     TABLE 12-2.--FEDERAL-STATE SOCIAL WELFARE PROGRAMS IN THE TERRITORIES, FISCAL YEAR 1999
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Puerto Rico                    Virgin Islands                       Guam                    Northern Marianas                American Samoa
              Program              -------------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Eligible      Participating      Eligible      Participating     Eligible     Participating     Eligible     Participating     Eligible     Participating
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unemployment compensation:
     Unemployment Compensation....  Yes           Yes                Yes           Yes               No           NA                No           NA                No           NA
Public assistance and related
 programs:
     Temporary Assistance for       Yes           Yes                Yes           Yes               Yes          Yes               No           NA                Yes          No
     Needy Families.
     Aid to the Aged, Blind, or     Yes           Yes                Yes           Yes               Yes          Yes               Yes          No                No           NA
     Disabled.
     Child Support Enforcement....  Yes           Yes                Yes           Yes               Yes          Yes               Yes          No                Yes          No
     Foster Care and Adoption       Yes           Yes                Yes           No                Yes          No                No           NA                Yes          No
     Assistance.
Medical assistance:
     Medicaid.....................  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     State Children's Health        Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Insurance Program.
     Maternal and Child Health      Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Block Grant.
Social and support services:
     Child Care and Development     Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Block Grant.
     Social Services Block Grant    Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     (title XX).
     Older Americans Act..........  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
Food and nutrition assistance:
    Food Stamp Program............  No            NA                 Yes           Yes               Yes          Yes               No           NA                No           NA
     Nutrition Assistance Block     Yes           Yes                No            NA                No           NA                Yes          Yes               Yes          Yes
     Grant (Puerto Rico) and
     special grants for ``food-
     stamp-like'' programs
     (Northern Marianas and
     American Samoa).
     Child nutrition..............  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Special Supplemental           Yes           Yes                Yes           Yes               Yes          Yes               Yes          No                Yes          Yes
     Nutrition Program for Women,
     Infants, and Children (WIC).
Education and training:
     Compensatory education for     Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     the disadvantaged.
    Job Training Partnership Act..  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
Child protection:
     Child welfare services (title  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     IV-B part 1).
     Promoting Safe and Stable      Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Families.
     Child Abuse Prevention and     Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Treatment Act.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NA--Not applicable.

Source: Congressional Research Service.

  EXPENDITURES FOR SELECTED SOCIAL WELFARE PROGRAMS IN THE TERRITORIES

     Table 12-3 shows Federal expenditures for selected social 
welfare programs in the territories. For some Federal-State 
programs, such as Medicaid, State Children's Health Insurance 
Program (SCHIP), child support, and the programs for the aged, 
blind, and disabled, the table shows the Federal share of 
expenditures. The territories are required to match Federal 
expenditures with their own funds. (The territory's match is 
not shown.) For programs that make direct payments to 
individuals such as Social Security and Medicare, Federal 
outlays represent the total amount spent by the program in the 
territories.

          TABLE 12-3.--FEDERAL FUNDING FOR SOCIAL WELFARE PROGRAMS IN THE TERRITORIES, FISCAL YEAR 1998
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                     Virgin   Northern  American
                                                             Puerto Rico    Guam     Islands  Marianas    Samoa
----------------------------------------------------------------------------------------------------------------
Social insurance:
     Social Security.......................................   $3,439,770   $69,121   $86,978    $6,989   $21,003
     Medicare..............................................    1,111,074     1,088    19,273     (\1\)     (\1\)
     Unemployment Compensation.............................      281,781        NA     4,653        NA        NA
Public assistance:
     Supplemental Security Income..........................           NA        NA        NA     2,979        NA
     Aid to the Aged, Blind, or Disabled...................       12,940     1,300       532        NA        NA
     Temporary Assistance for Needy Families...............           UA        UA        UA        NA        NA
     Child Support Enforcement.............................       18,170     3,021     1,608        NA        NA
     Foster Care and Adoption Assistance...................       \2\ NA        NA        NA        NA        NA
Health care for low-income persons and families:
     Medicaid..............................................      167,000     5,090     5,260     1,810     1,810
     SCHIP.................................................        9,836       376       279       118       129
Social and support services:
     Social Services Block Grants..........................   \3\ 12,310   \3\ 410   \3\ 410    \3\ 83    \3\ 89
     Child Care and Development Block Grants...............   \3\ 23,355  \3\ 2,13  \3\ 1,30   \3\ 586   \3\ 984
                                                                                 6         6
     Older Americans Act Programs..........................    \3\ 7,944  \3\ 2,05  \3\ 2,05   \3\ 518  \3\ 1,20
                                                                                 1         1                   2
     Older Americans Act Programs (Department of               \3\ 6,609  \3\ 1,41  \3\ 1,21   \3\ 369   \3\ 721
     Agriculture nutrition programs).......................                      2         5
Nutrition assistance:
     Food stamps...........................................           NA    35,952    24,595        NA        NA
     Nutrition Assistance Block Grant (Puerto Rico) and      \3\ 1,204,0        NA        NA  \3\ 5,10  \3\ 5,30
     grants for food-stamp-like programs...................           00                             0         0
     Child nutrition.......................................      157,617     5,101     6,873  \3\ 3,55  \3\ 7,94
                                                                                                     0         5
     WIC...................................................  \3\ 145,908  \3\ 5,90  \3\ 6,04        NA  \3\ 4,78
                                                                                 2         3                  5
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500 in reported expenditures.
\2\ Puerto Rico began participating in the Foster Care Program in fiscal year 1999.
\3\ Grant award or obligations rather than expenditures.

Note.--UA denotes unavailable data. NA denotes not applicable to the territory either because it is ineligible
  or eligible but not participating in the program (see table 12-2).

Source: For programs providing direct payments for individuals (Social Security, Medicare, and Supplemental
  Security Income) and Unemployment Compensation, U.S. Bureau of the Census, Consolidated Federal Funds Report:
  1998 (April 1999). Aid to the Aged, Blind, or Disabled, Child Support Enforcement, Social Services Block
  Grant, Child Care and Development Block Grant, Medicaid, SCHIP, and Older Americans Act data are from the U.S.
  Department of Health and Human Services. Nutrition assistance (and Older Americans Act Department of
  Agriculture nutrition programs) are from the U.S. Department of Agriculture.

                              SPECIAL RULES

                              SSI Coverage

     The Social Security Amendments of 1972 (Public Law 92-603) 
ended matching grant programs to the 50 States and the District 
of Columbia for assistance to needy adults who were aged, 
blind, or disabled and replaced them with Supplemental Security 
Income (SSI). The new SSI Program provided a Federal 
entitlement program of cash payments for individuals in these 
groups. However, SSI was not extended to Puerto Rico, Guam, and 
the Virgin Islands. The old grant programs for the needy, aged, 
blind, and disabled authorized under four separate titles of 
the Social Security Act \3\ continue there. The territories 
determine benefit amounts. In contrast, the regular SSI Program 
has federally determined benefits (though States may supplement 
them). SSI also is fully federally financed. SSI is available 
in the Northern Marianas.
---------------------------------------------------------------------------
    \3\ Title I, Grants to States for Old-Aged Assistance for the Aged; 
Title X, Grants to the States for Aid to the Blind; Title XIV, Aid to 
the Permanently and Totally Disabled; and Title XVI, Grants to the 
States for Aid to the Aged, Blind, or Disabled.
---------------------------------------------------------------------------

 Nutrition Assistance Block Grant for Puerto Rico and Programs for the 
                  Northern Marianas and American Samoa

     Among the territories, the regular Food Stamp Program 
operates only in Guam and the Virgin Islands. The Omnibus 
Budget Reconciliation Act of 1981 (Public Law 95-35) replaced 
the Food Stamp Program in Puerto Rico with a special Nutrition 
Assistance Block Grant. Puerto Rico was given a great deal of 
flexibility in program design. Funding is limited to an amount 
set in law, which for fiscal year 1998 is $1.204 billion, 
making it by far the largest Federal needs-tested program in 
the Commonwealth. The Northern Marianas and American Samoa are 
also given fixed grants with which they administer food-stamp-
like programs, though the program in American Samoa is limited 
to the elderly and disabled.
     The programs that operate instead of the regular Food 
Stamp Program in Puerto Rico, the Northern Marianas, and 
American Samoa were generally unaffected by the changes to the 
Food Stamp Program made in the 1996 welfare reform law. 
Additionally, the limits on food stamp eligibility for 
noncitizens does not apply in these programs. Instead, these 
territories are governed by the law's rules for public benefits 
that apply to needs-tested programs other than food stamps. 
That is, the territory may aid those who arrive after August 
22, 1996, after they have resided in the United States for 5 
years.
     Regular food stamp rules apply in Guam and the Virgin 
Islands, and many noncitizens are ineligible for food stamps in 
these areas. Guam and the Virgin Islands have higher food stamp 
benefits than are paid in the 48 contiguous States and the 
District of Columbia (higher food stamp benefits are also paid 
in Alaska and Hawaii), and households in these areas are also 
subject to special rules governing deductions from gross income 
when calculating countable income to determine food stamp 
payments.

                       Public Assistance Programs

     Combined Federal funding for public assistance programs 
for Puerto Rico, Guam, and the Virgin Islands is capped at a 
maximum dollar amount. The cap for the territories covers the 
combined Federal grants of Temporary Assistance for Needy 
Families (TANF); the grant programs discussed above that 
operate in these areas instead of SSI; and programs under title 
IV-E of the Social Security Act (Foster Care, Adoption 
Assistance, and Independent Living Programs).
     Table 12-4 shows the public assistance funding caps and 
the TANF Block Grant and the total public assistance funding 
caps for the territories. These caps are not subject to 
adjustment or increases under current law. Funds above the TANF 
State family assistance grant amount are available on a 75 
percent matching basis for adult public assistance, TANF, or 
title IV-E (Foster Care, Adoption Assistance, and Independent 
Living) Programs. This superblock feature of funding for the 
territories provides them with added flexibility in using 
Federal funds to attack social problems.
    Puerto Rico, Guam, the Virgin Islands, and American Samoa 
are also eligible for certain TANF funds in addition to these 
caps. They can receive additional funding for the Welfare-to-
Work Grant Program, bonuses for high performance and reductions 
in out-of-wedlock births, and evaluations.
     TANF operates in three territories: Puerto Rico, Guam, and 
the Virgin Islands. American Samoa is eligible to operate TANF 
but has declined to participate. All three territories failed 
to meet fiscal year 1998 TANF work participation standards for 
all families (the only jurisdictions to do so). Guam, the only 
territory of the three that assists two-parent families, also 
failed to meet fiscal year 1998 TANF work participation 
standards for two-parent families. All three territories have 
adopted the Federal 60-month time limit. They have retained 
many features of their former Aid to Families with Dependent 
Children (AFDC) Programs, including the former Federal AFDC 
earnings disregards. Puerto Rico, Guam, and the Virgin Islands 
operate adult assistance programs for the aged, blind, and 
disabled (the Northern Marianas are in the Supplemental 
Security Income Program). Only Puerto Rico claimed Federal 
funding under title IV-E for foster care.

                           TABLE 12-4.--PUBLIC ASSISTANCE FUNDING FOR THE TERRITORIES
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Funds available
                                                                  TANF State       for adult
                                                                   family      assistance, child   Total funding
                          Territory                              assistance     protection, and         cap
                                                                    grant       1108(b) matching
                                                                                     grants
----------------------------------------------------------------------------------------------------------------
Puerto Rico..................................................         $71,563            $35,692        $107,255
Guam.........................................................           3,465              1,221           4,686
Virgin Islands...............................................           2,847                707           3,554
American Samoa \1\...........................................               0              1,000          1,000
----------------------------------------------------------------------------------------------------------------
\1\ American Samoa is not eligible for grants under the adult public assistance programs.

 Source: Congressional Research Service.

 Puerto Rico
     Puerto Rico's TANF Program requires work within 24 months, 
lowered to 6 months for those judged work-ready. Exempt from 
work requirements are single parents caring for children under 
the age of 1; adults age 60 or older; pregnant women in their 
last quarter of pregnancy; and disabled persons. As of January 
1, 2000, the TANF resource limit for eligibility is $2,000 with 
the first $4,000 of the equity value of a vehicle excluded. The 
maximum monthly benefit for a family of three (including the 
maximum shelter allowance) is $180.
     Puerto Rico's programs of assistance to needy aged, blind, 
and disabled adults (that operate there instead of SSI) also 
have a resource limit of $2,000. The income eligibility limit 
for assistance for this program is $64 monthly, with a maximum 
benefit of $32 per person per month.
 Guam
     The TANF Program in Guam requires community service after 
2 months for those not exempt from work activities. Exempt from 
work requirements are single parents caring for a child under 
the age of 1; adults age 60 or older; or those ill or disabled. 
As of January 1, 2000, the TANF resource limit for eligibility 
is $2,000. The entire value of one licensed vehicle is excluded 
for one-parent households. The entire value of two licensed 
vehicles is excluded for two-parent households. The maximum 
monthly benefit is $240. Guam's program of aid to needy persons 
who are aged, blind, or disabled (that operates there instead 
of SSI) has an asset eligibility limit of $2,000. Income 
eligibility limits and maximum monthly benefits for a single 
aged person is $420 and for a couple is $537.
 Virgin Islands
     The Virgin Island's TANF Program requires work within 24 
months (as required by Federal law). Exempt from work are 
single mothers caring for a child under 6 months of age. As of 
January 1, 2000, the asset eligibility limit is $1,000 with 
$1,500 of the equity value of a vehicle excluded. The maximum 
monthly benefit for a family of three is $240. The Virgin 
Island's programs of aid to needy aged, blind, and disabled 
persons also have an asset eligibility limit of $1,000. Monthly 
income eligibility limits and benefits for these programs is 
$120 per month per person.

                            HEALTH PROGRAMS

                                Medicaid

Financing
     In the 50 States and the District of Columbia, Medicaid is 
an individual entitlement. There are no limits on the Federal 
payments for Medicaid as long as the State is able to 
contribute its share of the matching funds. In contrast, 
Medicaid Programs in the territories are subject to spending 
caps. Table 12-5 shows Medicaid caps for fiscal years 1983-2000 
for each of the territories. For fiscal year 1999 and 
subsequent fiscal years, these caps are increased by the 
percentage change in the medical care component of the Consumer 
Price Index (CPI-U) for All Urban Consumers (as published by 
the Bureau of Labor Statistics). The Federal Medicaid matching 
rate, which determines the share of Medicaid expenditures paid 
for by the Federal Government, is statutorily set at 50 percent 
for the territories.
 Administration of Medicaid Programs in the territories
    The territories operate their Medicaid Programs under rules 
different from those that apply to the 50 States and the 
District of Columbia. The territories are not required to cover 
the same eligibility groups and they use different financial 
standards (income and assets tests) in determining eligibility. 
For example, Medicaid requires States to cover certain 
mandatory eligibility groups such as poverty-related pregnant 
women and children, qualified Medicare beneficiaries, and 
specified low-income Medicare beneficiaries. For the 
territories, on the other hand, coverage of these groups is 
optional. Furthermore, because the territories must operate 
their programs under funding caps, the Health Care Financing 
Administration is more flexible in its oversight of Medicaid 
Program rules and regulations with regard to services required 
to be covered by the plan. Finally, the territories are exempt 
from the requirement to offer program beneficiaries freedom of 
choice of providers. However, the territories are required to 
meet certain rules that apply to the States. For example, with 
regard to rules about amount, duration, and scope of covered 
services, the territories must meet the same standards that 
apply to the States and the District of Columbia so long as 
they are using Federal matching payments for their services.

                       TABLE 12-5.--MEDICAID FEDERAL SHARE LIMITS, FISCAL YEARS 1983-2000
----------------------------------------------------------------------------------------------------------------
                                                                                Virgin     Northern    American
                   Fiscal year                     Puerto Rico      Guam       Islands     Marianas      Samoa
----------------------------------------------------------------------------------------------------------------
1983............................................   $45,000,000   $1,400,000   $1,500,000    $350,000    $750,000
1984-1987.......................................    63,400,000    2,000,000    2,100,000     550,000   1,150,000
1988............................................    73,400,000    2,320,000    2,430,000     636,700   1,330,000
1989............................................    76,200,000    2,410,000    2,515,000     693,350   1,390,000
1990-1992.......................................    79,000,000    2,500,000    2,600,000     750,000   1,450,000
1994............................................   116,500,000    3,685,000    3,837,500   1,110,000   2,140,000
1995............................................   122,200,000    3,870,000    4,030,000   1,160,000   2,240,000
1996............................................   128,100,000    4,060,000    4,220,000   1,220,000   2,350,000
1997............................................   133,000,000    4,210,000    4,380,000   1,270,000   2,440,000
1998............................................   167,000,000    5,090,000    5,260,000   1,810,000   3,010,000
1999............................................   171,500,000    5,230,000    5,400,000   1,860,000   3,090,000
2000............................................   177,500,000    5,410,000    5,590,000   1,930,000   3,200,000
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on data from the Health Care Financing
  Administration.

     Puerto Rico.\4\--Puerto Rico uses its own poverty level 
(the Commonwealth poverty level) to determine eligibility for 
the program. The Commonwealth poverty level of $8,220 per year 
for a family of four in 1998, is substantially lower than the 
mainland level. The Medicaid Program extends coverage to both 
the categorically needy (AFDC and TANF-related groups) and the 
medically needy. Puerto Rico does not have an SSI Program, but 
SSI-related eligibility groups such as Old-Age Assistance, Aid 
to the Blind, Aid to the Permanently and Totally Disabled, and 
so forth, do exist. The medically needy income level for a 
family of four is $8,220 with a resource level of $900. The 
yearly categorically needy income standard for a family of four 
is $1,536. Mandatory and many optional services are covered.
---------------------------------------------------------------------------
    \4\ Medicaid Program descriptions come from the U.S. Department of 
Health and Human Services, Health Care Financing Administration, 
Jurisdictional Summit, October 27-28, 1999, Bethesda, MD.
---------------------------------------------------------------------------
     In addition to their Medicaid Program, Puerto Rico 
provides Medicaid services to its medically indigent population 
with ``territory-only'' funding. One hundred percent of the 
Commonwealth's poverty level is the income standard used to 
determine Medicaid eligibility for federally supported 
applicants; 200 percent of that level is the income standard 
for the ``State-only'' Medically Indigent Program.
     Guam.--Guam's Medicaid Program claims Federal funds only 
for covered services to the categorically needy. The medically 
needy were included until October 1984, but now are covered 
with territorial funds only. Guam has chosen to cover certain 
optional categorical groups, and does pay Medicare premiums 
(i.e., buy-in) for individuals entitled to both Medicare and 
Medicaid. All mandated services, except rural health clinics 
and nurse-midwife services, are provided, as well as many 
optional services. When these services are not available on 
Guam, but are medically necessary, off-island services 
including transportation are provided. Almost all patients are 
sent to Hawaii, or occasionally to California. All off-island 
care, except emergency care, must be preapproved and is based 
on negotiated rates.
     Virgin Islands.--The Virgin Islands' Medicaid Program 
covers the categorically and medically needy. The Virgin 
Islands does not have an SSI Program, but the mainland 
eligibility classifications of Aid to the Blind, Old-Age 
Assistance, and Aid to the Permanently and Totally Disabled 
also exist. The Virgin Islands does not cover poverty-level 
eligibility groups, but their Medicaid does pay Medicare 
premiums (i.e., buy-in) for those eligible for both programs. 
The medically needy income level for a family of four is $8,500 
with a resource level of $1,800; the categorically needy 
standard for a family of four is $3,156. Mandatory and many 
optional services are provided. Medicaid beneficiaries 
requiring services not available within the islands are sent to 
Puerto Rico or the mainland for care.
     Commonwealth of the Northern Mariana Islands (CNMI).--CNMI 
is the only U.S. territory which has SSI, and its entire 
Medicaid Program is based on SSI requirements. All individuals 
receiving SSI cash payments are eligible for Medicaid simply by 
filling out an application. In addition, although CNMI does not 
have a medically needy program as such, anyone can spend down 
to become eligible for any month in which medical costs reduce 
income to the appropriate level. CNMI does pay Medicare 
premiums (i.e., buy-in) for dually entitled individuals. All 
mandated services, except rural health clinics and nurse-
midwife services, are provided, as well as several optional 
services. Within CNMI almost all health care, inpatient or 
outpatient, is provided by the Commonwealth Health Center on 
Saipan. Certain covered services, such as nursing facility and 
home health services are only available off-island. For 
medically necessary care which cannot be provided in CNMI, 
patients are sent to Guam, Hawaii, or occasionally the 
mainland--generally to California.
     American Samoa.--In American Samoa, Medicaid eligibility 
determinations are based on a system they call ``presumptive 
eligibility.'' \5\ Annually, American Samoa estimates the 
number of individuals who fall below an estimated-needs or 
poverty level. Individuals whose income falls below this level 
are determined to be poor and are thus eligible for the 
territory's Medicaid Program. The poverty level for American 
Samoa is computed by multiplying the poverty level for the 
United States, as determined by the Office of Management and 
Budget, by the lower of (1) the ratio of American Samoa's 
median income to the U.S. median income or (2) the ratio of the 
territory's median income to that of the State receiving the 
highest Federal match rate, and then adjusting this computation 
by a deflator factor. The number of ``presumed eligibles'' are 
determined by comparing census data, previous year tax returns, 
or survey data with the estimated poverty levels.
---------------------------------------------------------------------------
    \5\ Presumptive eligibility under Medicaid and SCHIP normally means 
a period of time for which a person is ``presumed eligible'' for 
Medicaid or SCHIP benefits. During this time, services may be rendered 
and billed to the Medicaid or SCHIP Program with the understanding that 
an official eligibility determination will be made and the beneficiary 
will be properly enrolled shortly after receiving services. American 
Samoa uses the term ``presumptive eligibility'' to refer to its process 
for setting its income eligibility limit for coverage under its 
Medicaid Program.
---------------------------------------------------------------------------
     All mandated services except rural health clinics, early 
and periodic screening, diagnosis, and treatment, and nurse-
midwife services are covered; however, nursing facility 
services and home health are not provided on-island. American 
Samoa also provides coverage for a number of optional services. 
Other practitioner services and private duty nursing are 
provided off-island. Off-island services are generally provided 
in Hawaii, or occasionally on the mainland.

               State Children's Health Insurance Program

Financing
     All of the territories have chosen to participate in the 
State Children's Health Insurance Program (SCHIP) created in 
the Balanced Budget Act of 1997 (Public Law 105-33). Each has 
an approved State plan and will match their Federal program 
dollars with territory funds. Except for a special rule for 
funding, SCHIP will operate in the territories on the same 
terms as in the States. The program provides funds at a 65 
percent matching rate to the territories up to a maximum cap. 
The cap for the territories is a special set-aside--0.25 
percent of the total available funding. Of this total Puerto 
Rico receives 91.6 percent of the set-aside, Guam receives 3.5 
percent, the Virgin Islands receives 2.6 percent, American 
Samoa's share is 1.2 percent, and the Northern Mariana Islands 
receives 1.1 percent (table 12-6).
     The fiscal year 1999 Omnibus Appropriations Act provided 
an additional $32 million in appropriations for the territories 
only for that year. These additional funds brought the fiscal 
year 1999 Federal share available to the territories for SCHIP 
to $42.69 million. In fiscal year 2000, the territories will 
share (as specified above) $44.89 million, consisting of their 
original fiscal year 2000 allotment plus an additional sum of 
$34.20 million provided by the fiscal year 2000 Omnibus 
Appropriations Act.
 Administration of SCHIP Programs in the territories
     All territories have opted to use their SCHIP funds to 
expand their Medicaid Programs. As noted above, the 
territories' Medicaid Programs operate under a cap on their 
regular Medicaid expenditures. Once those caps are reached, the 
territories provide coverage to eligible children with 
territory-only funds. \6\ Guam, American Samoa, the Northern 
Marianas and the Virgin Islands (not Puerto Rico) may use SCHIP 
funds to cover Medicaid eligible children after their Medicaid 
Federal caps have been exhausted. \7\ Puerto Rico may use SCHIP 
funds to insure eligible children between 100 and 200 percent 
of the Commonwealth poverty level. Finally, the territories are 
different from the 50 States and the District of Columbia in 
their reporting requirements for their SCHIP Programs. Under 
rules proposed by the U.S. Department of Health and Human 
Services (DHHS), the territories are exempt from the definition 
of a ``State'' for the purposes of the requirements of 
quarterly statistical reporting. In each of the territories, 
the benefit package for the title XXI program is the same as is 
offered by the Medicaid Program.
---------------------------------------------------------------------------
    \6\ Under an interpretation of the law by the U.S. Department of 
Health and Human Services, funds provided by SCHIP to expand Medicaid 
Programs do not count against the caps on Medicaid funding.
    \7\ This is under the Health Care Financing Administration's 
interpretation of section 2110(b)(3) of the Social Security Act that 
waives the rule that SCHIP funds can be used only for children 
ineligible for Medicaid or a group health plan if that coverage was 
provided by a health insurance program that was in operation before 
July 1, 1997, and received no Federal funding.

                   TABLE 12-6.--SCHIP FINANCIAL PROGRAM INFORMATION, FISCAL YEARS 1998 AND 1999
----------------------------------------------------------------------------------------------------------------
                                                                                                      Potential
                                                                Enhanced     Required     Federal       total
                                                     Total       Federal    State match   dollars      program
                   Territory                        Federal      medical    for maximum   for each  expenditures
                                                 allotment in  assistance     Federal    territory    (Federal
                                                    dollars    percentage     dollars      dollar      share +
                                                                                                    territories)
----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year 1998
                                                ----------------------------------------------------------------
Puerto Rico....................................    $9,835,550      65.00     $5,296,065      1.86    $15,131,731
Guam...........................................       375,813      65.00        202,361      1.86        578,289
Virgin Islands.................................       279,175      65.00        150,325      1.86        429,615
Northern Marianas..............................       118,113      65.00         63,599      1.86        181,828
American Samoa.................................       128,850      65.00         69,381      1.86       198,346
                                                                        Fiscal year 1999
                                                ----------------------------------------------------------------
Puerto Rico....................................    39,101,750      65.00     21,054,788      1.86     60,156,538
Guam...........................................     1,494,063      65.00        804,495      1.86      2,298,558
Virgin Islands.................................     1,109,875      65.00        597,625      1.86      1,707,500
Northern Marianas..............................       469,563      65.00        252,842      1.86        722,405
American Samoa.................................       512,250      65.00        275,827      1.86        788,077
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on data from the Health Care Financing
  Administration.

  CONSOLIDATION OF CERTAIN GRANTS FOR INSULAR AREAS OTHER THAN PUERTO 
                                  RICO

     Public Law 95-134 authorized any Federal agency to 
consolidate grants for the territories of Guam, the Virgin 
Islands, the Northern Marianas, and American Samoa. Each of 
these areas is permitted to submit a single application and are 
paid a single sum that could be expended on any purpose 
allowable under any of the programs in the consolidated grant. 
The areas are permitted to determine the proportion of the 
consolidated grant to be spent on various activities. Public 
Law 95-134 also permits the administering agency to waive 
matching and application or reporting requirements.
     The U.S. Department of Health and Human Services permits 
Guam, the Virgin Islands, the Northern Marianas, and American 
Samoa to consolidate up to 22 grant programs, including the 
Social Services Block Grant (title XX), Maternal and Child 
Health, child welfare services, and Child Abuse and Neglect 
State Grants.\8\ DHHS permits these areas to submit a single 
report in lieu of individual reports required for the 
individual programs.
---------------------------------------------------------------------------
    \8\ See regulations at 45 CFR 97.10-97.16. The regulations list 21 
programs that may be consolidated. In addition to these 21 programs, 
information from DHHS indicates that the territories can also 
consolidate the title IV-B subpart B program for family preservation 
(which is not listed in the regulations).
---------------------------------------------------------------------------

 CERTAIN TAX PROVISIONS THAT AFFECT LOW-INCOME FAMILIES WITH CHILDREN 
                                  \9\
---------------------------------------------------------------------------

    \9\ For a general discussion of the application of Federal taxes in 
the territories see Brumbaugh (1994).
---------------------------------------------------------------------------
     Residents of Puerto Rico are exempt from the Federal 
personal income tax, and hence are not eligible for tax 
provisions that affect low-income families with children such 
as the earned income credit (EIC) and the dependent care tax 
credit (DCTC). Residents of the other territories also do not 
pay Federal personal income taxes. However, residents of the 
Virgin Islands, Guam, and the Northern Marianas benefit from 
the EIC and the DCTC of the Federal Tax Code because their 
territorial tax systems ``mirror'' the Federal income tax. 
Territories generally use the Federal income tax system as 
their own, though residents pay their taxes to the territory 
and not the Federal Government. Federal law requires the Virgin 
Islands to use the Federal income tax system as the territorial 
tax system. Guam, the Northern Marianas, and American Samoa are 
also required to mirror the Federal income tax unless they 
execute an agreement with the Treasury Department meeting 
conditions required to establish an independent tax system. 
Only American Samoa has executed such an agreement.
     The corporate Tax Code includes two tax credits offered to 
employers who hire welfare recipients: the work opportunity tax 
credit and the welfare-to-work tax credit enacted in Public Law 
105-34. U.S. chartered corporations operating in the 
territories are eligible for these two credits because the 
Federal corporate tax is levied on their worldwide income. 
However, U.S. chartered corporations operating in the 
territories may already have their Federal tax liability 
eliminated or significantly reduced by the possession's tax 
credit, a special incentive provided to companies that operate 
in the territories.
     Corporations chartered in territories are considered 
``foreign'' corporations under the Federal Tax Code. Therefore, 
companies chartered in Puerto Rico would not benefit from 
Federal tax credits for employers that hire welfare recipients. 
However, companies chartered in the Virgin Islands, Guam, and 
the Northern Marianas that operate under mirror tax systems do 
benefit from these credits under territorial tax systems.

                               REFERENCES

Brumbaugh, D.L. (1994, June). Federal taxes and the 
        territories: An overview (CRS 94-498E). Washington, DC: 
        Congressional Research Service.
Brunno, A., & Laney, G.P. (1996). U.S. insular areas and their 
        political development (CRS Report 96-579 GOV). 
        Washington, DC: Congressional Research Service.
U.S. Bureau of the Census. (1999, April). Consolidated Federal 
        Funds Report. Washington, DC: U.S. Department of 
        Commerce.
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