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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 Major Social Welfare Programs in the 
		Territories
Special Rules
	SSI Coverage
	Nutrition Assistance Block Grant for Puerto Rico and Grants 
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 in the 50 States and 
the District of Columbia are also available in the territories. The 
territories are: the Commonwealth of Puerto Rico, Guam, the Virgin 
Islands, the Commonwealth of the Northern Mariana Islands, and 
American Samoa.  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.
	Social welfare programs can be divided into two categories:
1.	Federal Programs that Make Direct Payments to Individuals-
These programs have Federal eligibility and benefit rules and are 
administered directly by the Federal Government. 
2.	Federal-State ProgramsCFor 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 exception 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

[GRAPHICS NOT AVAIABLE IN TIFF FORMAT]

	
	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 under 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 special grant programs operating in Puerto Rico, 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 2003.

TABLE 12-2--FEDERAL-STATE SOCIAL WELFARE PROGRAMS IN THE TERRITORIES, 
FY 2003

[GRAPHICS NOT AVAIABLE IN TIFF FORMAT]

EXPENDITURES FOR SELECTED MAJOR SOCIAL WELFARE PROGRAMS IN 
THE TERRITORIES

	Table 12-3 shows Federal expenditures for selected major 
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. Where 
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 SELECTED MAJOR SOCIAL WELFARE 
PROGRAMS IN THE TERRITORIES, FY 2002  

[GRAPHICS NOT AVAIABLE IN TIFF FORMAT]

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 are 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, although later 
extended to the Northern Marianas, 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  continue there. The territories determine 
benefit amounts. In contrast, the regular SSI Program has federally 
determined benefits (though States may supplement federally financed
benefits). 

NUTRITION ASSISTANCE BLOCK GRANT FOR PUERTO RICO AND GRANTS FOR 
THE NORTHERN MARIANAS AND AMERICAN SAMOA

	Among the territories, the regular Food Stamp Program 
operates only in Guam and in the Virgin Islands.  They are considered 
"States" for food stamp purposes, although some slightly different 
rules apply in calculating benefits (see the section of the Green 
Book covering the Food Stamp Program for these differences). Moreover, 
restrictions on the eligibility of noncitizens under the regular 
program apply in Guam and the Virgin Islands.
	The Omnibus Budget Reconciliation Act of 1981 (Public 
Law 97-35) replaced the regular Food Stamp Program in Puerto Rico with 
a special Nutrition Assistance Block Grant. Puerto Rico was given 
almost complete authority in designing its program within the funding 
provided by the block grant (an indexed amount standing at $1.395 
billion in fiscal year 2003): Puerto Rico's eligibility standards and 
benefit levels are lower than the regular Food Stamp Program; instead 
of requiring that all benefits be spent on food items, Puerto Rico 
earmarks 75 percent of benefits specifically for food; and 
restrictions on the eligibility of legally resident noncitizens 
established for the regular Food Stamp Program do not apply.
	The Northern Marianas and American Samoa also receive 
nutrition assistance grants.  The Commonwealth of the Northern 
Marianas receives a periodically negotiated grant ($7.1 million in 
fiscal year 2003) and operates a program much like the regular Food 
Stamp Program (although with lower eligibility standards and benefits 
and a requirement that a portion of benefits be spent on locally 
produced foods).  American Samoa gets an indexed grant ($5.6 million 
in fiscal year 2003) and operates a program limited to helping low-
income elderly and disabled persons.  Restrictions on the eligibility 
of legally resident noncitizens established for the regular Food 
Stamp program do not apply in the Northern Marianas and American 
Samoa.
	The section of the Green Book covering the Food Stamp Program 
provides some additional information on nutrition assistance in the 
territories.

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 for each jurisdiction. The cap for the territories 
covers the combined Federal grants for Temporary Assistance for 
Needy Families (TANF); 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 public assistance Federal funding caps 
and the estimated FY2002 expenditures in the territories. The caps 
are not subject to adjustment or increases under current law. 
		
TABLE 12-4--PUBLIC ASSISTANCE FUNDING FOR THE TERRITORIES, 
FISCAL YEAR 2002  

[GRAPHICS NOT AVAIABLE IN TIFF FORMAT]

	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, but has declined 
to participate.

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 1983-2004 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 Centers for Medicare and 
Medicaid Services (CMS) are more flexible in 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.
	Puerto Rico4- In 1994, Puerto Rico established a new public 
agency, the Puerto Rico Health Insurance Administration, for the 
purpose of implementing "Reforma," a privatized, island-wide, managed 
care delivery system.  Medicaid services in the Commonwealth of Puerto 
Rico are covered under Reforma.  Once the Commonwealth has spent all 
of its combined Medicaid and SCHIP capped allotments, care provided 
through the Medicaid program is completely funded by Reforma dollars.  
In addition, the Commonwealth utilizes a "Catastrophe Fund" 
(consisting of territory-only funds) to provide certain types of off-
island care for Reforma enrollees.
	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 is 
substantially lower than the mainland level5 and has not changed 
since 1998.  Medicaid eligibility determinations are made by the 
Office of Economic Assistance to the Medically Indigent, Puerto 
Rico Department of Health.  The Medicaid Program extends coverage to 
both the categorically needy (AFDC and TANF-related groups) and the 
medically needy.  Mandatory and many optional services are covered.  
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.

TABLE 12-5--MEDICAID FEDERAL SHARE LIMITS, FISCAL YEARS 1983-2004

[GRAPHICS NOT AVAIABLE IN TIFF FORMAT]

	The yearly categorically needy income standard in FY2002 for a 
family of four was $1,536.  The medically needy income eligibility 
standard for a family of four was $8,220.  The territory-only program 
covers individuals with annual income twice the Commonwealth poverty 
level (i.e., $16,440 for a family of four).
	Guam- Guam's Medicaid program is administered by the 
Department of Public Health and Social Services, Bureau of Health 
Care Financing.  Guam claims Federal funds only for covered services 
to categorically needy individuals that meet an income eligibility 
threshold of 100 percent of the FPL.  The medically needy were 
included until October 1984, but after that have been 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.  Guam 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.  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 is 
administered by the Bureau of Health Insurance and Medical Assistance 
under the Virgin Islands Department of Health.  The program covers 
categorically needy and medically needy individuals.  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 exist.  The Virgin Islands does 
not cover poverty-level eligibility groups, but Medicaid does pay 
Medicare premiums (i.e., buy-in) for these eligible for both programs.  
In FY2002, the medically needy income level for a family of four was 
$8,500; the categorically needy standard for a family of four was 
$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's 
Medicaid program has operated under a Section 1902(j) waiver of the 
Social Security Act since October 1, 19896.  The program is 
administered by the Department of Public Health and Environmental 
Services.  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.  Additionally, individuals with income 
below 150 percent of the SSI Federal benefit rate are eligible for 
CNMI's Medicaid program.  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 Commonwealth's 
Medicaid eligibility threshold.  CNMI pays Medicare premiums (i.e., 
buy-in) for dually entitled individuals.  All mandated services, 
except rural health clinics and nurse-midwife services, are 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-The Medicaid program in American Samoa has 
operated under a Section 1902(j) waiver since January 29, 1983.  In 
American Samoa, Medicaid eligibility determinations are based on a 
system they call "presumptive eligibility."7  Annually, American 
Samoa estimates the number of individuals who fall below an 
estimated-eeds 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 
(OMB), 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 deflector 
factor.  The numbers of "presumed eligibles" are determined by 
comparing census data, previous year tax returns, or survey data 
with the estimated poverty levels. 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, Guam receives 3.5 percent, the Virgin Islands 
receives 2.6 percent, American Samoa receives 1.2 percent, and the 
Northern Mariana Islands receives 1.1 percent.
	The fiscal year 1999 Omnibus Appropriations Act provided an 
additional $32 million in appropriations for the territories only 
for that year.8  These additional funds brought the fiscal year 1999 
SCHIP Federal share available to the territories to $42.67 million.  
P.L. 106-113 increased the territories' original appropriation for 
allotment (as specified in the Balanced Budget Act of 1997) to be 
shared (as specified above) by: $34.2 for each of FYs 2000 and 2001; 
$25.2 million for each of FYs 2002 through 2004; $32.4 million for 
each of FYs 2005 and 2006; and $40 million for FY 2007 (see 
Table 12-6).
	SCHIP funds not drawn down from a jurisdiction's Federal 
allotment by the end of each fiscal year continue to be available for 
2 additional fiscal years, providing each jurisdiction a total of 
3 years to draw down its allotment of Federal matching funds for a 
given fiscal year.  For example FY2002 allotments are available 
through FY2004.  A jurisdiction must draw down its entire allotment 
from a given fiscal year before it may access the next year's funding.  
Under SCHIP law as enacted in 1997, allotments not spent by the end 
of the applicable 3-year period will be redistributed by a method to 
be determined by the Secretary of Health and Human Services (HHS) to 
jurisdictions that have fully spent their original allotments for 
that year.  Redistributed funds not spent by the end of the fiscal 
year in which they are reallocated will officially expire.
	The Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA-2000), incorporated by reference into 
P.L. 106-554, created a special rule for the redistribution and 
availability of unused FY1998 and FY1999 SCHIP allotments. The rule 
decreased the amount available for redistribution to States that had 
spent all of their allotments by allowing States that had not spent 
all of their allotments to retain some of their unspent funds. Each 
territory that spent its original allotment (i.e., all territories) 
received an amount that bears the same ratio to 1.05 percent of the 
total amount available for redistribution as the ratio of its 
original allotment to the total allotment for all territories.  
Reallocated funds were made available through the close of FY2002. 
	Finally, SCHIP redistribution legislation has been addressed 
again by the 108th Congress because at the close of FY2002, the 
FY2000 unspent allotments were subject to reallocation. The 
legislation impacts the amount of Federal funds available for 
expenditure by the outlaying areas.
	On August 15, 2003, the President signed into law, 
P.L. 108-74, to extend the availability of FY1998 and FY1999 
reallocated funds through the end of FY2004, and to establish a new 
method for redistributing unspent allotments for FY2000 and for 
FY2001 among all jurisdictions.  The new reallocation method detailed 
in P.L. 108-74 builds on the BIPA-2000 reallocation rule. Under this 
new rule, 50 percent of the unspent funds for each of FY2000 and 
FY2001 will be distributed among States and Territories that spent 
their entire allotment for a given year, and the remaining 50 percent
of unspent funds will be retained and distributed among States that 
have not used their entire allotments.  Each territory is to receive 
an amount equal to 1.05 percent of the total amount available for 
redistribution for each of those years multiplied by that territory's 
proportion of the original allotment for all territories.  
P.L. 108-74 makes redistributed funds from the FY2000 reallocation 
available through the end of FY2004.  Redistributed funds from the 
reallocations for FY2001 are to be available through the end of 
FY2005. (Estimates of the Federal funds available to each of the 
outlaying areas based on the reallocation rule of P.L. 108-74 are 
detailed in Table 12-6).

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.9  Guam, American Samoa, 
the Northern Marianas, and the Virgin Islands (but not Puerto Rico) 
may use SCHIP funds to cover Medicaid eligible children after their 
Medicaid Federal caps have been exhausted.10  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 
promulgated by the U.S. Department of Health and Human Services 
(HHS), 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. 

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 is 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, Maternal and Child Health, child welfare services, and 
Child Abuse and Neglect State Grants.  HHS permits these areas to 
submit a single report in lieu of individual reports required for the 
individual programs.

TABLE 12-6--SCHIP FINANCIAL PROGRAM INFORMATION, FOR COMMONWEALTHS 
AND TERRITORIES FISCAL YEARS 1998-2004

[GRAPHICS NOT AVAIABLE IN TIFF FORMAT]

CERTAIN TAX PROVISIONS THAT AFFECT LOW-INCOME FAMILIES WITH CHILDREN

	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 also are 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. 
	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 
its for employers that hire welfare recipients. However, companies 
chartered in the Virgin Islands, Guam, and the Northern Marianas that 
operate under mirror tax systems 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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