A means test is a determination of whether an individual or family is eligible for government assistance or

welfare Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...

, 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 Tertiary education, also referred to as third-level, third-stage or post-secondary education, is the educational level following the completion of secondary education. The World Bank, for example, defines tertiary education as including univers ...

), legal aid, and "

" (direct

transfer payments In macroeconomics and finance, a transfer payment (also called a government transfer or simply transfer) is a redistribution of income and wealth by means of the government making a payment, without goods or services being received in return. Th ...

to individuals to combat poverty). They are not generally used for primary 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 The ''Canada Health Act'' (CHA; ''french: Loi canadienne sur la santé'') is a statute of the Parliament of Canada, adopted in 1984, which establishes the framework for federal financial contributions to the provincial and territorial health in ...

of 1984 requires that all the provinces provide

universal healthcare Universal health care (also called universal health coverage, universal coverage, or universal care) is a health care system in which all residents of a particular country or region are assured access to health care. It is generally organized ar ...

coverage to be eligible for subsidies from the federal government. Means tests are also not used for pensions and seniors' benefits, but there is a

clawback The term clawback or claw back refers to any money or benefits that have been given out, but are required to be returned (clawed back) due to special circumstances or events, such as the monies having been received as the result of a financial crim ...

Old Age Security The Old Age Security (OAS) (SV; french: Sécurité de la vieillesse) program is a universal retirement pension available to most residents and citizens of Canada who have reached 65 years old. This pension is supplemented by the Guaranteed Income ...

payments for people making over $69,562 (in 2012). The Last Post Fund uses a means test on a deceased veteran's estate and surviving widow to determine whether they are eligible for federal funding to subsidize their funeral.

United Kingdom

Resentment over a means test was among the factors giving rise to the

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 G ...

in the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...

. Today, means-tested benefits—meaning that entitlement is affected by the amount of income, savings, capital and assets— is a central feature of the benefit system. Means testing is also part of the determination of legal aid in a magistrates court and for the higher Crown Court. The means test is based on income, family circumstances and essential living costs. The

Beveridge Report The Beveridge Report, officially entitled ''Social Insurance and Allied Services'' (Command paper, Cmd. 6404), is a government report, published in November 1942, influential in the founding of the welfare state in the United Kingdom. It was draft ...

of 1942 proposed a system of contributory benefits which would leave only a residual role for means-tested benefits which were then called

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 Ministry of Social Security Act 1966, which established the Supplementary ...

. The income limits are specified in relation to the needs of a household and for savings there are upper limits for some of the benefits. A couple who are not married may be treated as living together as a married couple. The main means-tested benefits in 2019 were: *

Income Support Income Support is an income-related benefit in the United Kingdom for some people who are on a low income, but have a reason for not actively seeking work. Claimants of Income Support may be entitled to certain other benefits, for example, Housin ...

* Income-based Jobseeker's Allowance * Income-related

Employment and Support Allowance Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...

* Pension Credit *

Universal Credit Universal Credit is a United Kingdom social security payment. It is means-tested and is replacing and combining six benefits for working-age households with a low income: income-related Employment and Support Allowance, income-based Jobseeker' ...

* Housing Benefit *

Working Tax Credit Working Tax Credit (WTC) is a state benefit in the United Kingdom made to people who work and have a low income. It was introduced in April 2003 and is a means-tested benefit. Despite their name, tax credits are not to be confused with tax cred ...

* Child Tax Credit Receipt of such benefits other than Housing Benefit and tax credits is a passport to other non-cash help such as

free school meals A school meal or school lunch (also known as hot lunch, a school dinner, or school breakfast) is a meal provided to students and sometimes teachers at a school, typically in the middle or beginning of the school day. Countries around the world ...

, free

prescription charges Charges for prescriptions for medicines and some medical appliances are payable by adults in England under the age of 60. However, people may be exempt from charges in various exemption categories. Charges were abolished by NHS Wales in 2007, Hea ...

, Legal Aid,

cold weather payment Cold weather payments are paid by the United Kingdom government to recipients of certain state benefits in the event of particularly cold weather in the winter. The Social Fund Cold Weather Payments (General) Regulations 1988 govern the system un ...

. The claimant, their partner and dependent children are covered. The rules for free NHS dentistry and optical charges have become more complex since the introduction of

and have led to many people facing financial penalties, often wrongly. People who are not entitled to any of the qualifying benefits may be able to qualify for help with health charges by a separate means test, the NHS Low Income Scheme. Defunct benefits include: *

Supplementary Benefit Supplementary Benefit was a means-tested benefit in the United Kingdom, paid to people on low incomes, whether or not they were classed as unemployed, such as pensioners, the sick and single parents. Introduced in November 1966, it replaced the ea ...

Family Credit Family Credit was a social security benefit introduced by the Social Security Act 1986 for low-paid workers with children in Great Britain that replaced Family Income Supplement. The benefit was designed for families with children if at least on ...

* Family Income Supplement *

Social Fund (UK) The Social Fund in the UK was a form of welfare benefit provision payable for exceptional or intermittent needs, in addition to regular payments such as Jobseeker's Allowance or Income Support. The United Kingdom coalition government has abolis ...

United States

Means testing is used to test for eligibility to

Medicaid Medicaid in the United States is a federal and state program that helps with healthcare costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and per ...

Temporary Assistance for Needy Families Temporary Assistance for Needy Families (TANF ) is a federal assistance program of the United States. It began on July 1, 1997, and succeeded the Aid to Families with Dependent Children (AFDC) program, providing cash assistance to indigent A ...

Section 8 housing Section 8 of the Housing Act of 1937 (), often called Section 8, as repeatedly amended, authorizes the payment of rental housing assistance to private landlords on behalf of low-income households in the United States. Fort Lauderdale, Florida H ...

, Supplemental Nutrition Assistance Program,

Pell Grant A Pell Grant is a subsidy the U.S. federal government provides for students who need it to pay for college. Federal Pell Grants are limited to students with financial need, who have not earned their first bachelor's degree, or who are enrolled i ...

, 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. 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 Title 11 of the United States Code, also known as the United States Bankruptcy Code, is the source of bankruptcy law in the United States Code. Chapters Title 11 is subdivided into nine chapters. It used to include more chapters, but some of them ...

Chapter 7 or Chapter 13 bankruptcy. During the Great Depression in the 1930s, the test was used to screen applicants for such programs as

Home Relief General Assistance (also known as General Relief) is a term used in the United States to denote welfare programs that benefit adults without dependents (single persons, or less commonly, childless married couples) as opposed to families with childr ...

, 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 Welfare, or commonly social welfare, is a type of government support intended to ensure that members of a society can meet basic human needs such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...

benefits be subjected to a means test; though this was hailed by some as a potential solution to a purported 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 Social stigma is the disapproval of, or discrimination against, an individual or group based on perceived characteristics that serve to distinguish them from other members of a society. Social stigmas are commonly related to culture, gender, ra ...

. In 2005, the US 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 . 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. 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 be rebutted only in the case of "special circumstances". 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 In economics, consumer debt is the amount owed by consumers (as opposed to amounts owed by businesses or governments). It includes debts incurred on purchase of goods that are consumable and/or do not appreciate. In macroeconomic terms, it is ...

, 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. The bankruptcy means test 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.

Other examples

Other examples of means testing include Medifund in SingaporeMeans Testing for Medical Subsidies
/ref> and Medical Cards in Ireland. Both are used in the healthcare sector. Australia uses a means test for its Age Pension.

References

External links