Understanding Welfare Programs and Their Impact

Discover the range of government assistance programs designed to support individuals and families in need, from financial aid to housing and medical care.

The term welfare refers to a range of government programs that provide financial or other aid to individuals or groups who cannot support themselves. Welfare programs are typically funded by taxpayers and allow people to cope with financial stress during rough periods of their lives. In most cases, people who use welfare will receive biweekly or monthly payments. The goals of welfare vary as it looks to promote the pursuit of work, education, or, in some instances, a better standard of living.

Key Takeaways

  • Welfare refers to federal government-sponsored assistance programs for individuals and families in need.
  • Welfare programs are typically funded through federal taxation.
  • In the U.S., the federal government provides grants to each state through the Temporary Assistance for Needy Families program.
  • Eligibility for benefits is based on several factors, including income levels and family size.
  • Welfare beneficiaries receive monthly SNAP payments in the form of direct payments to an EBT card.

How Welfare Works

Social welfare systems assist individuals and families through health care, food assistance, unemployment compensation, housing assistance, and child care assistance. In the U.S., a caseworker is assigned to each individual or family applying for housing benefits to determine and confirm the applicant’s needs.

The benefits available to an individual vary by state. Eligibility is determined based on factors surrounding the person’s financial status and its relation to the minimum acceptable levels within a particular state. Factors can include family unit size, current income levels, or an assessed disability.

Social welfare systems may go by different names within each state, but they often serve similar functions. This can cause confusion when attempting to compare one state’s program to another. Additionally, the requirements to qualify also vary, depending on the poverty line in a particular state. This allows for adjustments based on the cost of living that isn’t based on one standard.

Special Considerations

Welfare programs are initiatives set up by the government to support poor, developmentally challenged, and disadvantaged groups. Compared to other developed countries, the U.S. provides a relatively small social safety net and has fewer welfare programs available, with greater restrictions.

The history of welfare programs in the United States is complex and controversial in some circles of politics. In the 1960s, President Lyndon Johnson created programs like Head Start, food stamps, and Medicare. All of these programs were designed to fight what he called “the war on poverty” in America. Former President Richard Nixon was responsible for spearheading the Family Assistance Plan.

Fast-forward to the 1980s, former president Ronald Regan slashed welfare budget programs designed to help families and created “welfare to work” programs instituted in 40 states during that decade. In 1996, welfare reform legislation focused on shifting responsibility to welfare participants and advocating work over general assistance. In the 21st century, welfare reform and assistance programs continue to expand and change under President Joe Biden’s leadership.

There are seven major welfare programs in America, they include:

  • Medicaid
  • Supplemental Security Income (SSI)
  • Supplemental Nutrition Assistance Program (SNAP)
  • Child’s Health Insurance Program (CHIP)
  • Temporary Assistance to Needy Families
  • Housing assistance
  • Earned Income Tax Credit (EITC)

The U.S. federal government does not give out grants to individuals or families in need. If someone offers to help you get one, do not give that individual any personal information; it is a scam.

Types of U.S. Welfare Programs


Medicaid is a health insurance program for people with income below federal poverty standards and aging adults. Pregnant women, children, people with disabilities, and aging adults who fall below a certain income threshold are guaranteed coverage under the Medicaid program.

Medicaid is only offered to those that meet a specific low-income threshold, and children who do not qualify for Medicaid have their own special welfare assistance program called the Child’s Health Insurance Program (CHIP). When the Affordable Care Act (ACA) went into effect, data found that both forms of health care assistance, CHIP and Medicaid increased under the ACA.

Supplemental Security Income (SSI)

Supplemental Security Income is administered by the Social Security Administration (SSA) and provides public assistance to children and adults living with disabilities like blindness, neurological challenges, respiratory disease, and failure to thrive. The full list of disabilities that qualify can be found on the SSA’s website.

According to statistics from the SSA, about 7.6 million people receive approximately $622 in disability income in the form of SSI each month.

Supplemental Nutrition Assistance Program (SNAP)

Supplemental Nutrition Assistance Program, previously known as the Food Stamp Program, is run by each state and provides vouchers to low-income households to buy nutritious and low-cost foods. Millions of Americans use SNAP vouchers every year to buy food for their households.

Two other programs designed to help children and families are the Special Supplemental Food Program for Women, Infants, and Children (WIC) and the Child Nutrition Program. WIC’s offering includes nearly everything a mother and young child need to thrive up until the age of five. WIC’s services include food, educational classes and support, vouchers, and health referrals for pregnant, breastfeeding, and postpartum services.

The Child Nutrition Program is an umbrella that shelters the National School Lunch Program, the School Breakfast Program, and the Summer Food Service Program. All of these programs are designed to ensure kids get free or reduced-cost breakfast and lunch when school is in session, and also when it is closed for the summer.
In 2022, over 41 million households benefited from SNAP vouchers.

Child’s Health Insurance Program (CHIP)

The Child’s Health Insurance Program is administered by the US Department of Health and Human Services (HHS). It provides low-cost health care to children in households that wouldn’t otherwise qualify for Medicaid.

This program covers all benefits for children including dental care, plus special needs assistance like physical, speech and language, and occupational therapy providing a strong safety net for children in low-income homes.

Temporary Assistance to Needy Families

The US government provides welfare assistance through Temporary Assistance to Needy Families. Congress created the program to prevent recipients from abusing the welfare program by mandating that all recipients find a job within two years or risk losing their welfare benefits.

The government provides an annual welfare grant of $16.5 billion to all states under this program. The states use their allocated funds to operate their own welfare programs. However, to receive the federal grant, states must also use some of their own money to fund their programs.

Housing Assistance

The housing choice voucher program is a federal program designed to help families with income below federal poverty standards, people with disabilities, and aging adults have access to affordable, liveable rental homes in safe neighborhoods in the private market. These vouchers are given out by local public housing agencies that receive the funding for these vouchers from the federally run U.S. Department of Housing and Urban Development (HUD) office.

Individuals and families who qualify for vouchers may live anywhere. These vouchers are not limited to subsidized housing projects but can be used in any residential neighborhood that meets PHA’s health and safety requirements. Voucher recipients must find their own housing under this program, and the housing subsidy is directly paid to the landlord of the rental by the PHA.

The family or individual is responsible for paying out of pocket the difference between the market price of the rent and the amount subsidized by the voucher program. In rare instances and under specific requirements, a family could use vouchers to purchase a modest home in an affordable neighborhood. However, the transaction would have to be authorized by the PHA, according to the HUD website.

Earned Income Tax Credit (EITC)

The EITC is designed to help low to moderate income individuals and families get a tax break. The maximum tax credit for 2023 for qualifying taxpayers is $7,430.

  • The phaseout amount for married couples filing jointly in 2023 is $63,398.

Welfare vs. Entitlements

Entitlements are social or economic programs promised by the government to all of its citizens. Unlike welfare, entitlements do not typically have specific criteria or qualifications attached to them. For instance, Social Security income and Medicare are federal entitlement programs offered to older Americans regardless of income or wealth (although the amounts of the entitlement may be affected by these factors).

Who Qualifies for Welfare

Government welfare is primarily aimed at people with little to no income, aging adults, and people with disabilities. Welfare can include grants, food stamps, vouchers, Medicaid, health care, and housing assistance. The subsidized program is only available for legal citizens and permanent residents of the United States. Federal law bans states from using grants to assist most legal immigrants unless they have resided in the country for five years or more.

A valid Social Security Number (SSN) is needed to apply for welfare. In households with more than one member, all members must have an SSN. In addition to meeting the requirements postulated by the federal government, individuals applying for welfare must also meet their states’ requirements. For example, some states require that the applicant be a resident of that state and live there continuously.

People’s desired outcomes on welfare will depend primarily on the circumstances that caused them to apply for aid:

  • A mentally or physically disabled person may not be expected to assume independence after a period of time, so a welfare program would provide ongoing aid to better their standard of living.
  • A person lacking education, or who cannot currently provide for themselves, also might be provided welfare. In this case, the person would be expected to receive training or take steps toward financial independence.

Ongoing welfare is not a desirable outcome for this individual, according to those giving it.

What Is Considered Welfare?

Any federal or state government program that provides financial or other assistance for housing, food, and healthcare to individuals and families who meet specific guidelines (such as having a low to moderate income) is considered welfare.

What Makes You Eligible for Welfare?

Different welfare programs have their eligibility requirements, including meeting income limits, offering proof that you are a U.S. citizen or eligible non-citizen, and providing information about family size.

What Can Welfare Help Me With?

The goal of welfare is to support families and individuals in need as they work towards a more secure financial life. Welfare programs are designed to help individuals and families secure safe and clean housing, get access to neonatal, health, and medical care, purchase food, provide financial assistance for daily living, and take advantage of tax breaks.

What Welfare Programs Does the United States Have?

The following welfare programs are offered in the U.S.: Medicaid, Supplemental Security Income, Supplemental Nutrition Assistance Program, Children’s Health Insurance Program, Temporary Assistance for Needy Families, housing assistance, and the Earned Income Tax Credit.

What Is Social Welfare?

A social welfare system provides assistance to those in need whether they are individuals or families. There are various types of welfare available and how much welfare you are eligible for depends on factors like the country, region, or state you live in. For example, in the U.S., the federal government provides money to each state, and the welfare programs operate on a state-by-state basis. However, in certain countries like Canada, some social welfare programs send money directly to the individual or family in need as long as they qualify.

The Bottom Line

Welfare encompasses a range of government programs designed for individuals and families who do not make enough money to have a decent standard of living. Housing, food, medical care, and financial assistance for daily life are all provided by different social welfare programs.

Welfare programs are funded by taxpayers and help those in need cope with financial stress and hardship. Recipients often receive biweekly or monthly payments in the form of food stamps, vouchers, or, in some cases, direct payments. The goal of welfare is to support families and individuals in need as they work towards a more secure financial life.

Related Terms: Medicaid, SNAP, SSI, CHIP, TANF, social welfare system.


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Get ready to put your knowledge to the test with this intriguing quiz!

--- primaryColor: 'rgb(121, 82, 179)' secondaryColor: '#DDDDDD' textColor: black shuffle_questions: true --- ## What does the term "welfare" refer to in economics? - [x] Government programs designed to help individuals and families in need - [ ] Investments designed to benefit the wealthy - [ ] Strategies for increasing employee productivity - [ ] Tax incentives for corporations ## Which is a common form of welfare assistance? - [ ] Corporate tax breaks - [ ] Business grants - [ ] Stock options - [x] Food stamps ## What is the primary goal of welfare programs? - [ ] Increasing corporate profits - [x] Providing financial aid and support to people who cannot sustain themselves - [ ] Enhancing international trade relations - [ ] Funding for private-sector research ## Which of the following typically manages welfare programs? - [x] Government agencies - [ ] Private companies - [ ] Multinational corporations - [ ] Venture capital firms ## How are welfare benefits mainly funded? - [ ] Corporate donations - [ ] Private investments - [ ] Lottery funding - [x] Tax revenues ## Which is an often-cited benefit of welfare programs? - [ ] Higher stock market volatility - [ ] Reduced government intervention - [x] Alleviating poverty and reducing inequality - [ ] Increasing corporate wealth ## Which of these is an example of a direct welfare benefit? - [ ] Interest rate hedging - [ ] Trade tariffs - [ ] Public transportation subsidies - [x] Unemployment compensation ## What kind of policy would likely include welfare funding? - [ ] Trade policy - [ ] Foreign policy - [ ] Tax policy - [x] Social policy ## Which agency is often responsible for administering welfare programs in the U.S.? - [x] The Department of Health and Human Services (HHS) - [ ] The Federal Reserve - [ ] The U.S. Treasury - [ ] The Environmental Protection Agency (EPA) ## What is a common critique of welfare programs? - [ ] They create excessive wealth - [ ] They encourage excessive spending on luxury goods - [x] They might discourage beneficiaries from seeking employment - [ ] They destabilize market economies