Means test

A means test is a determination of whether an individual or family is eligible for government assistance, based upon whether the individual or family possesses the means to do without that help.

Canada

In Canada means tests are used for student finance (for post-secondary education), legal aid, and "welfare" (direct transfer payments to individuals to combat poverty). They are not generally used for primary education and secondary education which are tax-funded. Means tests for public health insurance were once common but are now illegal, as the Canada Health Act of 1984 requires that all the provinces provide universal healthcare coverage to be eligible for subsidies from the federal government. Nor are means tests used for pensions and seniors' benefits, although there is a claw-back of Old Age Security payments for people making over $69,562 (in 2012). The Last Post Fund uses a means test on their estate and surviving widow to determine whether a deceased veteran is eligible for federal funding to subsidize their funeral.[1]

United Kingdom

Resentment over a means test was among the factors giving rise to the National Unemployed Workers' Movement in the United Kingdom.[2] Today, means-tested benefits—meaning that entitlement is affected by the amount of income and savings—is a central feature of the benefit system.[3] October 2006 saw the introduction of means testing as part of the determination of legal aid in a magistrates court. Similar ideas have been made by the Ministry of Justice for the higher Crown Court in November 2008 with a consultation paper proposing the introduction of Crown Court means-tested legal aid. As of 29 January 2009 the consultation is closed and awaiting a decision.[4]

United States

Means testing is used to test for eligibility to Medicaid, Temporary Assistance for Needy Families, Section 8 (housing), Supplemental Nutrition Assistance Program, Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study Program, direct subsidized student loans as well as the eligibility for relief for debtors who have sufficient financial means to pay a portion of their debts."[5] The means test is perhaps best recognized in the United States as the test used by courts to determine eligibility for Title 11 of the United States Code Chapter 7 or Chapter 13 bankruptcy.

During the Great Depression, the test was used to screen applicants for such programs as Home Relief in the United States, and starting in the 1960s, for benefits such as those provided by Medicaid and the Food Stamp Program.

In 1992, third-party Presidential candidate Ross Perot proposed that future Social Security benefits be subjected to a means test;[6] though this was hailed by some as a potential solution to an impending crisis in funding the program, few other political candidates since Perot have publicly made the same suggestion, which would require costly investigations and might associate accepting those benefits with social stigma.

In 2005, the United States substantially changed its bankruptcy laws, adding a means test to prevent wealthy debtors from filing for Chapter 7 Bankruptcy. The most noteworthy change brought by the 2005 BAPCPA amendments occurred within 11 U.S.C. § 707(b). The amendments effectively subject most debtors who make an income, as calculated by the Code, above the median income of the debtor's state to an income-based test.[7] This is referred to as the "means test." The means test provides for a finding of abuse if the debtor's income is higher than a specified portion of their debts. If a presumption of abuse is found under the means test, it may only be rebutted in the case of "special circumstances."[8]

Debtors whose income is below the state's median income are not subject to the means test. Notably, the Code-calculated income may be higher or lower than the debtor's actual income at the time of filing for bankruptcy. This has led some commentators to refer to the bankruptcy code's "current monthly income" as "presumed income." If the debtor's debt is not primarily consumer debt, then the means test is inapplicable.

Thus, the means test is a formula designed to keep filers with higher incomes from filing for Chapter 7 bankruptcy. These filers may use Chapter 13 bankruptcy to repay a portion of their debts, but may not use Chapter 7 to wipe out their debts altogether.[7] Many think the bankruptcy means test is complex but generous and most debtors seem to have no trouble meeting its requirements, while others have suggested that the means test is not all that fair or equitable, and have somewhat cynically pointed out that the reference to consumer protection in the bankruptcy act is ironic at best, since those with primarily consumer debt are required to pass a means test while businesses are not. What is undeniable is that it is complex, and the terms that govern many parts of it - including those terms that control whether it applies at all - are of unsettled definition.[9]

Other examples

Other examples of means testing include Medifund in Singapore[10] and Medical Cards in Ireland. Both are used in the healthcare sector. Australia uses a means test for its Age Pension.

Criticism

Means-testing has been criticized on a number of grounds, the most fundamental of which is the distinction between a social program, which helps all equally or in proportion to their taxation, and a poverty program, which disproportionately helps the poor. For example, William Beveridge, in the Beveridge Report (blueprint for the UK's post-war social system) was opposed to means-testing, due to the poverty trap (below). Issues of a poverty program versus a social program include the following:

Stigma
A program benefiting only the poor may carry a stigma on its use and be demeaning; compare poverty food.
Political support
A program benefiting only the poor may lack broad-based political support, in contrast to programs that all share in. This can make it easier to reduce the benefits later.[11]
Redistribution
Poverty programs purportedly transfer money from the rich to the poor, as they benefit the poor only but are paid for by both rich and poor taxpayers.

Further objections to means-testing include the following:

Poverty trap
Means tests, particularly sharp cut-offs, create high effective marginal tax rates and can serve to keep people in poverty, both by removing social support as the person tries to escape poverty, and by discouraging such attempts by high costs. For example, asset-based limits, such as requiring an individual to have little or no savings to qualify, not only discourage saving (because of the cost of being disqualified from such savings) but also require a person to become completely destitute to qualify, thus meaning that they do not have any much-needed savings when attempting to escape poverty.
Access
Means tests, particularly complicated ones and ones that differ between programs and between different levels of government, complicate access to programs: individuals cannot easily know whether they qualify, and may qualify for some programs but not others. In the absence of centralized outreach, the added complication of means tests means that some, perhaps many people who qualify for programs do not benefit from them.
Administrative costs
Means tests increase administrative costs (overhead), due to the work of verifying that the tests are satisfied. Some argue that these costs can offset or more than offset the savings by reduced payouts under means-testing.
Entitlement/promises
If means-testing is implemented in an existing program, particularly for which people have paid taxes but not benefited, as in pensions or medical insurance, the reduction in benefits can be seen as a breach of promise and entitlement of the program.

See also

US specific:

References

  1. ^ Brewster, Murray (4 November 2013). "Veterans burial fund has more money, but access still restricted: budget office". Macleans. The Canadian Press. Retrieved 29 November 2014.
  2. ^ http://www.wcml.org.uk/contents/protests-politics-and-campaigning-for-change/unemployment/national-unemployed-workers-movement/
  3. ^ D'Arcy, Cliff (2009), The Financial Times Guide to Managing Your Money, Financial Times, p. 159, ISBN 0-273-71703-0
  4. ^ Consultation Paper CP27/08 Archived 2009-01-12 at the Wayback Machine
  5. ^ Understanding Bankruptcy. Second Edition. Jeff Ferriell and Edward J. Janger. LexisNexis. 2007. p. 28.
  6. ^ McSteen, Martha. "Fifty Years of Social Security". Social Security Administration. Retrieved 9 September 2014. It should be supplemented by effective private pensions, individual insurance, savings, and other investments; and it should be undergirded by effective means-tested programs.
  7. ^ a b Pyles, Sean (18 July 2016). "Why the bankruptcy means test matters". Christian Science Monitor. Retrieved 16 December 2017.
  8. ^ 11 U.S.C. § 707(b)(2)(B)
  9. ^ Abanet.org
  10. ^ Means Testing for Medical Subsidies
  11. ^ New Fear For State Pensions, October 30,2010, Alison Little

External links

1932 Wednesbury by-election

The Wednesbury by-election, 1932 was a by-election held on 26 July 1932 for the British House of Commons constituency of Wednesbury in Staffordshire. The by-election was triggered by the elevation to the peerage of the sitting Conservative Member of Parliament (MP) Viscount Ednam.

The seat had been held by Labour since 1918, but had fallen to the Conservatives with a majority of over 4,000 as part of the 1931 election landslide less than a year earlier. The election was dominated by the continuing effects of the Great Depression. Labour, whose candidate was William Banfield, General Secretary of the Amalgamated Union of Operative Bakers and Confectioners, fought on the issue of the means test for unemployment benefit. The Conservative candidate was Captain Rex G. Davis, whose election address focused on the economy, employment and the Empire.The Labour party had every reason to hope to regain the seat, normally a safe one for the party. 'There will be acute surprise and disappointment if Mr Banfield is not elected,' according to a report in The Times, which pointed out that the constituency had 12,000 unemployed and several factories had closed down. The newspaper felt that Davis had the better of the argument, but the contest 'had resolved itself into a fight between the Socialist and Conservative machines'.The result was a victory for Labour, as expected, with a majority of well over 3,000. Captain Davis accused the party of misrepresenting the facts about the means test and complained that in the three weeks of the campaign he 'had not had the time to dispel the fears created in the minds of the local unemployed'. The seat continued in Labour hands until its abolition in 1974.

Bankruptcy

Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor.

Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, such as the United Kingdom, bankruptcy is limited to individuals; other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings. In France, the cognate French word banqueroute is used solely for cases of fraudulent bankruptcy, whereas the term faillite (cognate of "failure") is used for bankruptcy in accordance with the law.

Bankruptcy Abuse Prevention and Consumer Protection Act

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) (Pub.L. 109–8, 119 Stat. 23, enacted April 20, 2005), is a legislative act that made several significant changes to the United States Bankruptcy Code. Referred to colloquially as the "New Bankruptcy Law", the Act of Congress attempts to, among other things, make it more difficult for some consumers to file bankruptcy under Chapter 7; some of these consumers may instead utilize Chapter 13. Voting record of S. 256.It was passed by the 109th United States Congress on April 14, 2005 and signed into law by President George W. Bush on April 20, 2005. Most provisions of the act apply to cases filed on or after October 17, 2005.

Basic Income Earth Network

The Basic Income Earth Network (BIEN; until 2004 Basic Income European Network) is a network of academics and activists interested in the idea of a Basic Income. It serves as a link between individuals and groups committed to or interested in basic income, and fosters informed discussion on this topic throughout the world. BIEN's website defines a basic income as "a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement."

Bursary

A bursary is a monetary award made by an institution to individuals or groups of people who cannot afford to pay full fees. In return for the bursary the individual is usually obligated to be employed at the institution for the duration as the bursary. According to The Good Schools Guide, a bursary is "usually for helping out the impoverished but deserving and those fallen on hard times".According to The Hobsons UK Boarding Schools Guide, numerous independent schools have bursary capability, namely grants from the school to help pay education fees. These are usually awarded after a "means test" of family income and are not necessarily dependent on examination performance, although some account of academic ability will be taken. Bursaries may be awarded in addition to scholarships where financial need is demonstrated and the prospective student would otherwise be unable to enter the school.To obtain such a bursary, it is customary for parents to be asked by the school's bursar to fill in an application form, giving details of their financial circumstances, supported by documentary evidence, including capital assets. The application will be considered by the school in accordance with its bursary policy. The award will often only remain in force until the pupil has sat the next relevant public examination. Most schools will review bursaries annually to ensure that the justification for an award remains. In Britain any award made before GCSE will not necessarily continue to the A-level stage.

There are two types of bursary awarded by institutions (such as universities). The first is a means-tested bursary which is available for all students whose parents earn under a threshold value per annum. It is often given out using a sliding scale, with people at the lowest end of the scale receiving a full bursary and the monetary award decreasing in value with proportion to the parental earnings.

The second type of bursary, also known as a "scholarship" or "prize", is one based on performance. These awards are generally given for good performance in the exams preceding university or college entrance in which the student achieves grades above the standard entry. These can be awarded by the university or, sometimes, by companies.

Chapter 7, Title 11, United States Code

Chapter 7 of the Title 11 of the United States Code (Bankruptcy Code) governs the process of liquidation under the bankruptcy laws of the United States (in contrast, Chapters 11 and 13 govern the process of reorganization of a debtor in bankruptcy). Chapter 7 is the most common form of bankruptcy in the United States.

Department of Employment Affairs and Social Protection

The Department of Employment Affairs and Social Protection (Irish: An Roinn Gnóthaí Fostaíochta agus Coimirce Sóisialaí) is a department of the Government of Ireland, tasked with administering Ireland's welfare system. It oversees the provision of income support and other social services. It is led by the Minister for Employment Affairs and Social Protection who is assisted by two Ministers of State.

Guaranteed minimum income

Guaranteed minimum income (GMI), also called minimum income, is a system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by citizenship, a means test, and either availability for the labour market or a willingness to perform community services. The primary goal of a guaranteed minimum income is to reduce poverty. If citizenship is the only requirement, the system turns into a universal basic income.

Law of Hong Kong

The law of Hong Kong is based on the rule of law and the independence of the judiciary. The constitutional framework is provided by the Hong Kong Basic Law, which is a national law of the People's Republic of China (PRC).

Under the principle of ‘one country, two systems’, Hong Kong has its own legal system, distinct from the Law of the People's Republic of China, and based on the combination of English common law (developed in local cases) and local legislation codified in the Laws of Hong Kong. Hong Kong has a common law system, whereas the PRC has a civil law system with socialist roots. Only a small number of PRC laws apply in Hong Kong by virtue of stipulations in Article 18 and Annex III of the Basic Law. The separation of the Hong Kong legal system from the PRC is guaranteed constitutionally until at least 2047.

The Hong Kong judiciary has had a longstanding reputation for fairness and was rated as the best judicial system in Asia by one survey in 2008.

Means-tested benefit

A means-tested benefit is a payment available to people who can demonstrate that their income and capital (their 'means') are below specified limits. It is a central part of the welfare state in the United Kingdom.

National Assistance

National Assistance was the main means-tested benefit in the United Kingdom from 1948 to 1966.

It was established by the National Assistance Act 1948 and abolished by the Supplementary Benefit Act 1966.

It replaced earlier provisions under the Poor Law. The Beveridge Report of 1942 proposed a system of contributory benefits which would leave only a residual role for means-tested benefits.

"Assistance will be available to meet all needs which are not covered by insurance. It must meet those needs adequately up to subsistence level, but it must be felt to be something less desirable than insurance benefit; otherwise the insured persons get nothing for their contributions."The National Assistance Board was established to direct the scheme, taking over from the Unemployment Assistance Board. There were close similarities between the National Assistance regulations of 1948 and the pre-war Unemployment Assistance regulations, and many of the same officials were involved. A key difference was that the Means Test no longer extended to the earnings of sons and daughters.During the 1950s, inflation meant that national insurance benefits fell below the official poverty line, and increasing numbers turned to national assistance.

National Hunger March, 1932

The National Hunger March of September–October 1932 was the largest of a series of hunger marches in Britain in the 1920s and 1930s.

National Insurance Fund

The three British National Insurance Funds hold the contributions of the National Insurance Scheme, set up by the Government of the United Kingdom in 1911. It was reformed in 1948 and assumed broadly its current form in 1975, when the separate National Insurance (Industrial Injuries) and National Insurance (Reserve) Funds were merged with it. In the Beveridge Report this was the basis of a universal insurance system for all British people. "first and foremost a plan of insurance – of giving in return for contributions benefits up to subsistence levels, as of right and without means test, so that individuals may build freely upon it".There are the National Insurance Fund of the United Kingdom, for Great Britain (England and Wales and Scotland), the National Insurance Fund of Northern Ireland, and the Isle of Man National Insurance Fund.

National Unemployed Workers' Movement

The National Unemployed Workers' Movement was a British organisation set up in 1921 by members of the Communist Party of Great Britain. It aimed to draw attention to the plight of unemployed workers during the post First World War slump, the 1926 General Strike and later the Great Depression, and to fight the Means Test.

Old Age Allowance

Old Age Allowance, colloquially known as fruit money, is a Hong Kong government programme introduced in 1973 which provides monthly payments of $1,290 to elderly Hong Kong residents. There is no means test for the Higher Old Age Allowance given to recipients of age 70 or above. The Normal Old Age Allowance for elderly residents between the ages of 65 and 69 was only offered to people who fell below certain income and asset thresholds, but since 2013 such people are now covered by the similar but separate Old Age Living Allowance scheme instead.

Ransom v. FIA Card Services, N.A.

Ransom v. FIA Card Services, N. A., 562 U.S. 61 (2011), is a decision by the Supreme Court of the United States involving the means test in Chapter 13 of the United States Bankruptcy Code. The means test had been adopted by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and Ransom is one of several cases in which the Supreme Court addressed provisions of that act.

The means test determines how much disposable income debtors have to pay back their creditors, and permits debtors to shield some income from creditors for expenses based on cost tables prepared by the Internal Revenue Service. The Court ruled in Ransom, primarily in reliance on supplemental commentary authored by the IRS, that a car-ownership cost allowance was available only to debtors who made loan or lease payments on a vehicle. This judgment resolved a circuit split regarding the allowance between the Ninth Circuit, which the Supreme Court affirmed in this case, and three other circuits that had all ruled the allowance applied even to debtors who owned their cars outright.

The Court's opinion was delivered by Justice Elena Kagan, who was confirmed to the Court on August 7, 2010. The opinion was not only her first as a Supreme Court justice but also as a judge, and her participation in the case's oral argument, which was held on the first day of the Court's 2010 term, had also been her first. Justice Antonin Scalia, the sole dissenter, criticized the Court for using the supplemental commentary on the tables when the Bankruptcy Code only incorporated the tables but not the commentary.

Social pension

A social pension (or non-contributory pension) is a stream of payments from state to an individual that starts when someone retires and continues in payment until he/she dies. It is a part of a pension system of most developed countries, specifically the so called zero or first pillar of the pension system, which is a part of state social security system. The social pension is different from other types of pension since its eligibility criteria do not require former contributions of an individual, but his citizenship or residency and age or other criteria set by government.

Strict scrutiny

In American constitutional law, strict scrutiny is the highest and most stringent standard of judicial review, and results in a judge striking down a law unless the government can demonstrate in court that a law or regulation: one, is necessary to a "compelling state interest"; two, that the law is "narrowly tailored" to achieving this compelling purpose; and three, that the law uses the "least restrictive means" to achieve the purpose. It is part of the hierarchy of standards that courts use to determine which is weightier, a constitutional right or principle or the government's interest against observance of the principle. The lesser standards are rational basis review and exacting or intermediate scrutiny. These standards are used to test statutes and government action at all levels of government within the United States.

The notion of "levels of judicial scrutiny", including strict scrutiny, was introduced in Footnote 4 of the U.S. Supreme Court decision in United States v. Carolene Products Co. (1938), one of a series of decisions testing the constitutionality of New Deal legislation. The first and most notable case in which the Supreme Court applied the strict scrutiny standard and found the government's actions constitutional was Korematsu v. United States (1944), in which the Court upheld the exclusion of Japanese Americans from designated areas during World War II.

Walter Brierley (writer)

Walter Brierley (1900–1972) was an English novelist active in the 1930s and one of the Birmingham Group of writers. His first book Means Test Man has been called “one of the most powerful and original novels of that decade.”Born in Waingroves, Derbyshire, to a family of miners, Brierley left school at 13 and started work at the local colliery. Following Workers’ Educational Association night classes he applied through the Miners Welfare Scholarship to study at Nottingham University College, but later returned to mining until made redundant in the early 1930s.Following encouragement from Birmingham Group writers John Hampson and Walter Allen, Brierley became a full-time writer and his first novel, Means Test Man, was published in 1935, drawing on first-hand experience of unemployment and poverty. It is regarded as a key work of 1930s working-class literature, and has been reprinted twice. His second novel Sandwichman followed in 1937 and has also been reprinted. Further writing included two more novels, as well as radio plays, but Brierley was unable to make a living as a writer and worked full time as an education welfare officer until retirement in the 1960s.

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