The 2021 Poverty Guidelines were posted today at https://aspe.hhs.gov/poverty-guidelines and in effect as of January 13, 2021. The Federal Register notice for the 2021 Poverty Guidelines will be published the week of January 18 through January 22, 2021. Payers and Providers wait for the release of the poverty guidelines each year to update patient financial assistance and eligibility information within their systems and forms.

Poverty guidelines are issued each year in the Federal Register by the Department of Health and Human Services (HHS).  The federal poverty guidelines (FPG) are a simplification of the poverty thresholds, primarily for administrative use, like determining income eligibility for needs-based programs. Such programs include, but are not limited to, Medicaid, Children’s Health Insurance Program (CHIP, Supplemental Nutrition Assistance Program (SNAP), and Marketplace subsidies.

The poverty thresholds are the original version of the federal poverty measure.  They are updated each year by the Census Bureau. The thresholds are used mainly for statistical purposes. All official poverty population figures are calculated using the poverty thresholds.

Below is a table of the new 100 percent of federal poverty guidelines. Other guidelines can be easily calculated using multiplication. For example, 138 percent can be obtained by multiplying 1.38 by the 100 percent number for the family size needed.

 

 2021 POVERTY GUIDELINES FOR THE

 48 CONTIGUOUS STATES AND THE DISTRICT OF COLUMBIA

PERSONS IN FAMILY/HOUSEHOLD POVERTY GUIDELINE
1 $12,880
2 $17.420
3 $21,960
4 $26,500
5 $31,040
6 $35,580
7 $40,120
8 $44,600
 

For families/households with more than 8 persons, add $4,540 for
each additional person.

 

Consumer Price Index
The official poverty thresholds are updated annually for inflation using the Consumer Price Index published by the U.S. Bureau of Labor Statistics (BLS). “The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services,” according to the BLS. The all urban consumer group represents about 93 percent of the total U.S. population.

Two indexes are used to measure inflation for all urban consumers.

  1. Consumer Price Index for All Urban Consumers (CPI-U)
  2. Chained Consumer Price Index for All Urban Consumers (C-CPI-U)

 

Consumer Price Index for All Urban Consumers (CPI-U)
The CPI-U is currently in use for the Census Bureau’s annual poverty thresholds update. It is also the one most often used in the media. The weights assigned to the goods and services used in this index are based on expenditure surveys that are lagging by a few years, one of the drawbacks. The CPI-U is considered final when first issued.

 

Chained Consumer Price Index for All Urban Consumers (C-CPI-U).
The C-CPI-U more closely reflects current consumer behavior and spending. It uniquely captures and reflects how consumers respond to changes in relative prices, say beef and chicken for example. The C-CPI-U is designed to be a closer approximation of the cost of living index than the CPI-U. The C-CPI-U is subject to four quarterly revisions after it is first issued. A final version is not published until one year later. The drawback to this index is that over time it tends to increase at a slightly lower rate than other measures of consumer inflation, negatively impacting downline measures that rely on CPI.

 

Resources

 

Shanna Hanson, FHFMA, ACB
Manager, Business Knowledge
Centauri Health Solutions, Inc.