P uerto Rico's financial circumstances, including uncertainty about its ability to service its large public debt, have drawn attention in recent months. As Congress examines Puerto Rico's finances, questions have arisen about how federal health care programs (Medicare, Medicaid, and the State Children's Health Insurance Program [CHIP]) and private health insurance reforms apply to Puerto Rico. Is Puerto Rico treated like a state, or is it treated differently? This report provides answers to frequently asked questions (FAQs) about how federal health care programs and requirements are implemented in Puerto Rico, including eligibility, coverage, program requirements, and payment rules. Examples provided in the FAQs illustrate that in many circumstances, health programs in Puerto Rico differ from programs in the 50 states and the District of Columbia (DC), while in other circumstances, Puerto Rico is treated the same as the states. As such, these questions and answers should be viewed as a discussion of the complexity of health care financing as it relates to Puerto Rico under current law. This FAQ begins with a brief background on the demographics and economics of Puerto Rico. It then examines Puerto Rico's treatment under Medicare, Medicaid, and CHIP and concludes with a look at how federal requirements for private health insurance apply to Puerto Rico. This report will be updated as additional relevant questions and answers arise. This section addresses questions about Puerto Rico's population and key economic features. These questions provide context for the federal health care program rules applied to Puerto Rico and their implications. Data used to answer these questions are drawn from several sources, and methodological differences should be borne in mind when interpreting the information. Although in many cases 2014 is the most recent data year for which data are available, some statistics represent outcomes in 2013 (e.g., national economic data) and 2016 (e.g., labor force data). According to the U.S. Census Bureau, Puerto Rico's resident population was approximately 3.55 million in 2014. Puerto Rico's population was slightly smaller than those of Connecticut (3.60 million) and Oklahoma (3.88 million) but slightly larger than those of Iowa (3.11 million) and Mississippi (2.99 million). Figure 1 presents annual population estimates for 2010-2014 and shows a steady decline over this period. Jaison R. Abel and Richard Dietz of the New York Federal Reserve Bank examine potential driving factors and consequences of the recent drop in population in Puerto Rico. Their analysis identifies a declining birth rate and a rising death rate, both of which put downward pressure on population growth. Out-migration, however, appears to be the primary driving factor for the recent population decline. Abel and Dietz estimate that the natural population increase —the difference between the birth rate and the death rate—contributed 0.3 percentage points to population growth in 2013, while net migration accounted for -1.3 percentage points (by their estimate, the annual population growth rate was -1% in 2013). The study finds that out-migrants are disproportionately young and less educated when compared to the overall population. The demographic makeup of persons leaving Puerto Rico has contributed to an aging population but has not reduced the share of the population that is college-educated. Puerto Rico's gross domestic product (GDP) was $103.7 billion in FY2014; in the same year, its gross national product (GNP)—which measures income earned by residents —was $69.2 billion. The difference between GDP and GNP indicates that a sizeable portion of Puerto Rico's GDP accrued to nonresidents and reflects the large presence of U.S. multinational firms operating in Puerto Rico. Manufacturing accounted for 47.6% of GDP in 2014, followed by finance, insurance, and real estate (19.7%) and by services (12.5%). Puerto Rico has been in an economic downturn since 2006. Figure 2 plots the percentage change in GDP from 1993 to 2013 and shows negative growth over the 2006-2013 period. Close linkages with the U.S. economy—which experienced its own recession from 2007 to 2009—and the 2006 expiration of certain tax benefits for U.S. businesses operating in Puerto Rico are thought to have contributed significantly to recent economic trends. Weak economic performance and other factors also have led to serious fiscal challenges in Puerto Rico, and the territory is deeply in debt. According to a New York Federal Reserve Bank analysis, Puerto Rico's outstanding public debt was $72.8 billion in March 2014. Median household income in Puerto Rico was $18,928 in 2014. Figure 3 provides a snapshot of the household-income distribution in that year and shows that a sizable majority of households in Puerto Rico reported incomes under $50,000. Relatively few households (0.8%) reported incomes over $200,000. A potentially sizeable informal economy in Puerto Rico is an important consideration when interpreting household-income statistics. If households underreport income from informal-sector work, particularly when responding to a government-sponsored survey (such as those conducted by the U.S. Census Bureau), income statistics may not fully capture income from all market sources. In 2014, median household income in Puerto Rico ($18,928) was lower than median household income in any U.S. state. Among the 50 states and DC, Mississippi had the lowest median household income at $39,680 in 2014. Information on local prices is needed to assess the extent to which income differences between Puerto Rico and the states and DC reflect true differences in purchasing power. Put simply, if prices are lower in Puerto Rico than in the states, then $1 in Puerto Rico has greater purchasing power (i.e., can buy more goods and services) than the same $1 in the states. The U.S. Bureau of Economic Analysis (BEA) measures spatial price differences within the United States, and its estimates reveal considerable price variation across the 50 states and DC. For example, in 2013, average price levels for consumption goods and services in DC were 17.7% higher than the national price average, whereas prices in Mississippi were 13.2% below the national price average. Puerto Rico was not included in the BEA analysis. It was, however, included in exploratory research on state prices conducted by BEA in 2007, which suggested that Puerto Rico ranked last (i.e., had the lowest prices) among all states. In 2014, 46.2% of the population in Puerto Rico had family income below the federal poverty threshold, representing approximately 1.62 million people. Children (under the age of 18) had a higher poverty rate (58.4%) than persons aged 18 to 64 (43.5%) or persons aged 65 and older (40.4%). A potentially large informal economy has implications for poverty statistics in Puerto Rico. If individuals omit informal-sector earnings when reporting their incomes in official surveys, family income may be undercounted, which may result in an overestimate of families with incomes below the official poverty threshold. That is, some families identified as being in poverty may have incomes that are above the federal poverty threshold when income from both formal- and informal-sector work is considered. In 2014, the poverty rate in Puerto Rico (46.2%) was higher than the U.S. national rate and higher than the poverty rate in any U.S. state. State poverty rates ranged from 9.2% (New Hampshire) to 21.5% (Mississippi) in that year. Relative price differences between Puerto Rico and the 50 states and DC are an important consideration when making poverty-rate comparisons. Poverty status is determined by comparing family income to a dollar threshold that varies only by family size and composition; federal poverty thresholds are not adjusted for local prices. For example, the federal poverty threshold for a two-adult, two-child family in 2014 was $24,008. This means that a two-adult, two-child family with an annual family income of $24,000 in 2014 would be considered to be living in poverty in both Puerto Rico and the states. However, if prices are lower in Puerto Rico than in the states, then a family with this income living in Puerto Rico would have greater purchasing power (i.e., could buy more goods and services) than the same family living in the states. The Bureau of Labor Statistics estimates that just over 1 million individuals were employed and nearly 133,000 individuals were unemployed in Puerto Rico in April 2016. Figure 4 plots the number of employed and unemployed workers from January 2005 to April 2016 and shows that the number employed fell by nearly 200,000 workers and the number unemployed rose by more than 10,000 workers over this period. The unemployment rate was 11.8% in March 2016. Although this figure was considerably higher than the U.S. national unemployment rate in that month, it was significantly below recent unemployment-rate peaks in Puerto Rico of 16.5% in March-April 2011 and 16.9% in April-May 2010 ( Figure 5 ). The potentially large informal sector in Puerto Rico has implications for official employment statistics if households report only formal sector-employment when surveyed. In 2004, María Enchautegui and Richard Freeman undertook a small-sample pilot study of informal-sector employment in an effort to better understand men's low labor force participation in Puerto Rico. The results of their exploratory study suggest that "a better counting of informal workers would increase the employment rate for men aged 18-64 [who are] not attending school." Medicare is a federal program that pays for covered health care services of qualified beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act (SSA) to provide health insurance to individuals aged 65 and older, and it has been expanded over the years to include permanently disabled individuals under the age of 65.