(761)

1For 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. 2This 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

Continued

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.

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

762

Federal Funds Report. This chapter classifies unemployment compensation (UC) as a FederalState 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

Rico

Virgin

Islands Guam NorthernMarianas

American

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

Program

Puerto Rico Virgin Islands Guam Northern Marianas Ame

Sam

Eligible Partici- pating Eligi- ble Partici- pating Eligi- ble Partici- pating Eligi- ble Partici- pating Eligi- ble 

Unemployment compensation:

Unemployment Compensation ........................................... Yes Yes Yes Yes No NA No NA No 

Public assistance and related programs:

Temporary Assistance for Needy Families ......................... Yes Yes Yes Yes Yes Yes No NA Yes Aid to the Aged, Blind, or Disabled .................................. Yes Yes Yes Yes Yes Yes Yes No No Child Support Enforcement ................................................ Yes Yes Yes Yes Yes Yes Yes No Yes Foster Care and Adoption Assistance ............................... Yes Yes Yes No Yes No No NA Yes 

Medical assistance:

Medicaid ............................................................................. Yes Yes Yes Yes Yes Yes Yes Yes Yes State Children’s Health Insurance Program ...................... Yes Yes Yes Yes Yes Yes Yes Yes Yes Maternal and Child Health Block Grant ............................ Yes Yes Yes Yes Yes Yes Yes Yes Yes 

Social and support services:

Child Care and Development Block Grant ........................ Yes Yes Yes Yes Yes Yes Yes Yes Yes Social Services Block Grant (title XX) ............................... Yes Yes Yes Yes Yes Yes Yes Yes Yes Older Americans Act .......................................................... 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 Nutrition Assistance Block Grant (Puerto Rico) and special grants for ‘‘food-stamp-like’’ programs (Northern

Marianas and American Samoa).

Yes Yes No NA No NA Yes Yes Yes 

Child nutrition .................................................................... Yes Yes Yes Yes Yes Yes Yes Yes Yes Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Yes Yes Yes Yes Yes Yes Yes No Yes 

Education and training:

Compensatory education for the disadvantaged .............. Yes Yes Yes Yes Yes Yes Yes Yes Yes 

TABLE 12–2.—FEDERAL-STATE SOCIAL WELFARE PROGRAMS IN THE TERRITORIES, FISCAL YEAR 1999—Continued

Program

Puerto Rico Virgin Islands Guam Northern Marianas Ame

Sam

Eligible Partici- pating Eligi- ble Partici- pating Eligi- ble Partici- pating Eligi- ble Partici- pating Eligi- ble 

Job Training Partnership Act ............................................... Yes Yes Yes Yes Yes Yes Yes Yes Yes 

Child protection:

Child welfare services (title IV–B part 1) ......................... Yes Yes Yes Yes Yes Yes Yes Yes Yes Promoting Safe and Stable Families ................................. Yes Yes Yes Yes Yes Yes Yes Yes Yes Child Abuse Prevention and Treatment Act ...................... Yes Yes Yes Yes Yes Yes Yes Yes Yes 

NA—Not applicable.Source: Congressional Research Service.

765

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]

Puerto Rico Guam Virgin

Islands

Northern

Marianas

American

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 2,136 3 1,306 3 586 3 984

Older Americans Act

Programs ............... 3 7,944 3 2,051 3 2,051 3 518 3 1,202

766

3Title 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.

TABLE 12–3.—FEDERAL FUNDING FOR SOCIAL WELFARE PROGRAMS IN THE

TERRITORIES, FISCAL YEAR 1998—Continued

[In thousands of dollars]

Puerto Rico Guam Virgin

Islands

Northern

Marianas

American

Samoa

Older Americans Act

Programs (Department of Agriculture

nutrition programs) 3 6,609 3 1,412 3 1,215 3 369 3 721

Nutrition assistance:

Food stamps ............ NA 35,952 24,595 NA NA

Nutrition Assistance

Block Grant (Puerto

Rico) and grants

for food-stamp-like

programs ............... 3 1,204,000 NA NA 3 5,100 3 5,300

Child nutrition .......... 157,617 5,101 6,873 3 3,550 3 7,945

WIC ........................... 3 145,908 3 5,902 3 6,043 NA 3 4,785

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.

767

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 ProVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00767 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.012 WAYS3 PsN: WAYS3
768

gram, bonuses for high performance and reductions in out-ofwedlock 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]

Territory TANF State family

assistance grant

Funds available for

adult assistance, child

protection, and

1108(b) matching

grants

Total funding cap

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

769

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

770

4Medicaid 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.

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

Fiscal year Puerto Rico Guam Virgin Islands Northern

Marianas

American

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.

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

771

5Presumptive 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.

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

772

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. 7This 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.

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.

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

773

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.

TABLE 12–6.—SCHIP FINANCIAL PROGRAM INFORMATION, FISCAL YEARS 1998 AND

1999

Territory

Total Federal allotment in dollars

Enhanced

Federal

medical

assistance

percentage

Required State

match for maximum Federal

dollars

Federal

dollars

for each

territory

dollar

Potential total

program expenditures (Federal

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.

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8See 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). 9For a general discussion of the application of Federal taxes in the territories see Brumbaugh

(1994).

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.

CERTAIN TAX PROVISIONS THAT AFFECT LOW-INCOME

FAMILIES WITH CHILDREN 9

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.

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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.