One of the biggest issues with the benefits cliff is the abrupt nature in which recipients of benefits lose them, just as they begin to develop financial stability. Many families lose all the benefits they were once eligible for at one time, which leaves them continuously crippled despite their rising income. The effect of losing the benefits in this manner tends to nullify whatever increased income they are receiving. However, if the benefits were gradually phased out as monthly incomes rise, that can give families the ability to adjust.

Synchronizing Benefit Rules:

For a gradual decline off of benefits to work, benefit programs should coordinate with one another. One mechanism already in place that allows for coordination is known as Express Lane Eligibility (ELE).[1] ELE was designed to give states a mechanism to use information collected by other programs or agencies to determine an individual’s eligibility for Medicaid and The Children’s Health Insurance Program (CHIP). Using the ELE, states can adequately ensure that children “eligible for Medicaid or CHIP have a fast and simplified process for having their eligibility determined or renewed.”[2] Agencies that can be analyzed under the ELE are called express lane agencies, and they include Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Women, Infants, and Children (WIC) (a supplemental nutrition program for women and infants) among others. Essentially, after a family provides information that verifies them for one program, Medicaid or CHIP may use that data to verify eligibility for health coverage. Although ELE’s were traditionally used to assist with enrolling recipients of one program for others, ELE’s utility can also be expanded to counteract the benefits cliff. Scholars believe that by synchronizing eligibility rules and regulations, recipients will be better equipped at navigating programs and increase their financial decision-making.[3] Aligning eligibility determination procedures and timelines can help people so they do not lose their benefits at one time.[4]

Benefit Transition Navigators:

Many recipients of benefits are not as financially literate to determine how to sustain without benefits. Often, they lack the skills necessary to save and budget without additional assistance from the government. If the government could fund individuals (some refer to them as “benefits transition navigators”) who have the role of assisting recipients of benefits by helping them balance the consequences of losing some benefits, but also how to maintain their income and seek other community sources, recipients would be more secure as they phase out of benefits.[5] The resources are often provided to Medicaid beneficiaries who are transitioning from facility-based settings to community living.  These navigators support recipients for a year as they transition back into everyday life. Having similar counselors for financial benefits will indubitably be beneficial to recipients who also intend to transition back to adequate standards of living without benefits.

Tax Credits:

Lastly, expanding tax credits can be another way to cushion the transition off of benefits programs. The Earned Income Tax Credit (EITC) is known as one of the most successful anti-poverty programs that encouraged individuals to work and increased the resources of families in the United States.[6] Expanding the EITC while also implementing it with state EITC policy can effectively decrease the detriments of the benefits cliff as people slowly transition off of benefits.[7] For example, New York state and New York City provides supplemental EITC which has phase-out periods, that result in no benefits cliff for recipients.[8] The Child Care Tax Credit is another credit that has the potential to substantially decrease the impacts of the benefits cliff. Ultimately, refundable tax credits counter declining benefits as earnings rise, thus allowing recipients to phase out of government benefits assistance.

Ultimately, to counteract the Benefit’s Cliff, it is essential that the government creates new mechanisms that will make their current benefit programs serve their purpose of helping families achieve adequate living standards. This endeavor must be adopted both federally and within local and state governments in order for a widespread change to take effect.

[1] Medicaid.gov, Express Lane Eligibility for Medicaid and CHIP Coverage (Aug. 6, 2021) https://www.medicaid.gov/medicaid/enrollment-strategies/express-lane-eligibility-medicaid-and-chip-coverage/index.html

[2] Id. 

[3] Olanika Ojelabi and Susan Crandall, Mitigating the Benefits Cliff: A Linchpin for Economic Recovery, (Jan. 19, 2021), https://spotlightonpoverty.org/spotlight-exclusives/mitigating-the-benefits-cliff-a-linchpin-for-economic-recovery/

[4] Pedro Perez, Examining, understanding, and mitigating the benefits cliff effect,   ,https://www.ahaprocess.com/examining-understanding-and-mitigating-the-benefits-cliff-effect/

[5] Id.

[6] Olanika Ojelabi and Susan Crandall, Mitigating the Benefits Cliff: A Linchpin for Economic Recovery, (Jan. 19, 2021), https://spotlightonpoverty.org/spotlight-exclusives/mitigating-the-benefits-cliff-a-linchpin-for-economic-recovery/

[7] Id.

[8] FWPA, Pushed to the Precipice: How Benefits Cliffs and Financial Gaps Undermine the Safety Net for

New Yorkers, 31,  (Apr. 2021), https://www.fpwa.org/wp-content/uploads/2021/04/2104019_FPWA-benefitcliffs-rev2_FINAL_4.19.2021.pdf