Have you ever wondered how food stamps are calculated? With so many families receiving assistance from the government in the form of food stamps these days, you may have wondered if you or someone you love is eligible. You may have applied and received a letter of determination with a table of numbers that looked confusing. I will walk you through the math as done in the state of New Hampshire (where I live) so you can better understand it and use that knowledge to your advantage.
Disclaimer: This is not a substitute for visiting your local DHHS office.
We start, of course, with the matter of your income. Unlike the IRS, the Department of Health and Human Services (DHHS) does care about child support received. You need to let them know about all money that comes into the household so they can determine how much assistance they think you need (which may be different than what you think you need). It is expected that everyone should budget 30% of their income towards food. Your initial determination is based on the total of all income coming into the house, your total income.
Income of children under the age of 18 needs to be reported, but is not counted. When my oldest was 16, she was able to have a job and buy her own car so she could drive back and forth to school herself without affecting our food stamp eligibility until she turned 18 and was considered an adult. If your income for your family size meets the eligibility requirements, you are on your way to determining how much you may receive. But different income is counted differently.
Earned vs. Unearned
First, there is the matter of earned income versus unearned income. Earned income is money that you trade your time for, such as wages from your job, the crafts you sell on Etsy or eBay, babysitting money. Unearned income is money that you get just because, such as dividends from the stock you were given as a baby, or child support (which some could argue is earned by the job of parenting, but DHHS doesn’t see it that way). Earned income has a certain percentage disregarded right off the top, called the Earned Income Disregard. I am not certain, but I suspect that this percentage is considered the cost of earning the income, such as gas money to get back and forth to work and other work related purchases (uniforms, or suits, etc.).
Unearned income has no disregard. That $45 dividend check you receive every quarter does indeed get counted as $15/month of income. There are three lines on my statement that I am not entirely clear on. These are Cash Grant Paid (I believe this refers to Temporary Assistance to Needy Families – TANF), Sanction Amount (really not sure), and Deemed Income (totally unsure). Whatever these are, I don’t have any, but they would be counted as income if I did.
The next step is to determine your adjusted income. Once your total income is tallied, certain expenses are deducted from it. First in the income test are Dependent Care Expenses, which are deducted from your available income, and mostly refer to the cost of child care so that you can work. Excess Medical Expenses are deducted and that refers to the cost of prescriptions and doctor bills that are above a certain expected reasonable limit. Child Support that you pay out also reduces your income. Then there is a Standard Deduction. This one is the most enigmatic to me since it does not seem to be based on either income or on family size. It does not seem to change when people move in or out of our household (kids moving away, then moving back in, etc.) or as income goes up or down (getting a raise, losing overtime hours). Next up is the Excess Housing Cost. This is based on what is considered to be a fair housing cost, and anything you pay over that amount is deducted from your income. I believe it is based on income, since all financial advice recommends that you pay no more than (usually) 40% of your income on housing costs, including mortgage, some utilities (electricity, yes; cable TV, no), and heat. If your housing costs are more than 40% of your income, the extra gets subtracted from your available income, at least up to a certain point. Moving to a more expensive house is not a strategy to get more food stamps. Once all of these expenses are subtracted from your total income, the final result is compared to the income limit for your family size. If your final number is above the income limit, you will be declined, but if it is below, you can move on to the next step.
Cost of feeding a family
Now that we know you are eligible for assistance, we need to determine how much assistance you need. This is where it gets a little tricky. The first line of the calculation is called Maximum FS Allotment. This is a number based on the number of people in your household, and their ages. The USDA has a nifty page where they list their calculations for grocery budgets. It comes in four levels: Thrifty, Low, Medium, High. These are how much you can expect to spend on groceries for any given person based on how frugal (or not) you are with your budget. DHHS expects you to be very frugal, and uses the Thrifty column. It is all organized by gender and age. Yes, teenage boys do eat more food, and this chart reflects that. You can look up each family member and see what is the least amount the government expects you to spend on groceries for them. You can look it up by week or by month. DHHS uses the monthly numbers, which occasionally are slightly different than the weekly numbers, due most likely to simple rounding errors. So when calculating our maximum allotment, they total up the numbers for one adult woman, one adult man, two teenage girls, one boy of 9 years old, and one girl of 5 years old. Each one is looked up and added to the total. For my family, that total is $925 per month.
The Benefit Total
We now know two things. How much income we have available for meeting all our costs of living (net income), and how much is the minimum we are expected to budget towards groceries (maximum FS allotment). We can certainly budget more if we like, but that will have to come out of our own pocket. If we are very frugal, we can manage to come in under budget. There have been a couple of times when I was frugal enough to be able to still have a few dollars left in food stamps when the next month’s installment arrived. We have just one more thing to determine. How much of that grocery budget can we afford on our income, and how much the government needs to kick in to help us out. It is not expected that we will spend our entire income on groceries. We still need to buy clothes as the kids grow, and buy soap and toothpaste, pay for car repairs as they arise, etc. According to DHHS, we are expected to spend up to 30% of our net income on groceries. This seems quite reasonable to me. So for financial advice, I hear 40% for housing costs, and 30% for groceries, leaving 30% for all other expenses. The next line of the calculation subtracts out that 30% of our net income from the maximum allotment. After that comes Recoupment Amount, which sounds to me like money you have to pay back if you were given too much in assistance for some reason (anyone can make mistakes). Finally, we come to Net FS Allotment, which is the difference leftover. So for my case, our maximum allotment is $925, we are expected to pay $542 (30% of net income), and the remainder is given to us as food stamps, being $383 each month. This month is my 6-month redetermination, so they will recalculate and my benefits will most likely change.
The final line of the benefit calculator is labeled NSWF Amount. This stands for Nutritional Supplement for Working Families. It applies to single parent families who also receive TANF and it is added to the food stamp benefit for those who qualify. Since I am married, I do not qualify. When I was single, I was living entirely on child support and not working, therefore also did not qualify.
There you have it. This is how food stamps are calculated for those who need assistance in feeding their families. There are plenty of people who may qualify for assistance and don’t take it because they are so thrifty that they don’t need it (such as the mother who feeds her family of 6 on $300/month ), and there are also those who struggle with either managing their grocery bill or managing their other expenses that believe they need the help but don’t qualify. Next time we will discuss what you can and cannot do with your food stamps. You might be surprised.
Did I answer all of your questions? Is there a line that you would like to see explained further? Ask me in the comments and I will do my best to answer it.