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

welfare Welfare may refer to: Philosophy *Well-being (happiness, prosperity, or flourishing) of a person or group * Utility in utilitarianism * Value in value theory Economics * Utility, a general term for individual well-being in economics and decision ...

, based upon whether the individual or family possesses the means to do with less or none of that help. Means testing is in opposition to universal coverage, which extends benefits to everyone.

Canada

In Canada, means tests are used for student finance (for

post-secondary education Tertiary education (higher education, or post-secondary education) is the educational level following the completion of secondary education. The World Bank defines tertiary education as including universities, colleges, and vocational school ...

legal aid Legal aid is the provision of assistance to people who are unable to afford legal representation and access to the court system. Legal aid is regarded as central in providing access to justice by ensuring equality before the law, the right ...

, and "

" (direct

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

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 Publicly funded healthcare is a form of health care financing designed to meet the cost of all or most healthcare needs from a publicly managed fund. Usually this is under some form of democratic accountability, the right of access to which are se ...

were once common but are now illegal, as the

Canada Health Act The ''Canada Health Act'' (CHA; '), adopted in 1984, is the federal legislation in Canada for publicly-funded health insurance, commonly called " medicare", and sets out the primary objective of Canadian healthcare policy. As set out in the A ...

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 right to health, access to health care. It is genera ...

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 money having been received as the result of a financial crim ...

Old Age Security The Old Age Security (OAS, ) 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 Supplement (GIS), which is added to the ...

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 at drawing attention to the plight of unemployed workers during the post-First World War slump, the 1 ...

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 Northwestern Europe, off the coast of European mainland, the 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

in a

magistrates court A magistrates' court is a lower court where, in several jurisdictions, all criminal proceedings start. Also some civil matters may be dealt with here, such as family proceedings. Courts * Magistrates' court (England and Wales) * Magistrates' court ...

and for the higher

Crown Court The Crown Court is the criminal trial court, court of first instance in England and Wales responsible for hearing all indictable offences, some Hybrid offence, either way offences and appeals of the decisions of magistrates' courts. It is ...

. 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'' ( Cmd. 6404), is a government report, published in November 1942, influential in the founding of the welfare state in the United Kingdom. It was drafted by the Lib ...

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 ( 11 & 12 Geo. 6. c. 29) and abolished by the Ministry of Social Security Act 1966, which establ ...

. 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 and Support Allowance (ESA) is a United Kingdom welfare payment for adults younger than the State Pension age who are having difficulty finding work because of their long-term medical condition or a disability. It is a basic income-rep ...

Pension Credit Pension Credit is the principal element of the UK welfare system for people of pension age. It is intended to supplement the UK State Pension, or to replace it (for example, if the claimant did not meet the conditions to claim a State Pension). I ...

Universal Credit Universal Credit is a United Kingdom based Welfare state in the United Kingdom, social security payment. It is Means test, means-tested and is replacing and combining six benefits, for working-age households with a low income: income-related Emp ...

Housing Benefit Housing Benefit is a means-tested social security benefit in the United Kingdom that is intended to help meet housing costs for rented accommodation. It is the second biggest item in the Department for Work and Pensions' budget after the state ...

Working Tax Credit Working Tax Credit (WTC) was a state benefit in the United Kingdom made to people who worked and received a low income. It was introduced in April 2003 and was a means-tested benefit. Despite the name, the payment was not a tax credit linked t ...

* Child Tax Credit Receipt of such benefits other than

and tax credits is a passport to other non-cash help such as

free school meals A school meal (whether it is a breakfast, lunch, or evening meal) 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 offer various kinds of schoo ...

, free

prescription charges In the United Kingdom most medicines are supplied via the National Health Service at either no charge, or for a fixed charge for up to three months' worth of any medicine. Charges for prescriptions for medicines and some medical appliances are pay ...

Legal Aid Legal aid is the provision of assistance to people who are unable to afford legal representation and access to the court system. Legal aid is regarded as central in providing access to justice by ensuring equality before the law, the right ...

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 u ...

. The claimant, their partner and dependent children are covered. The rules for free

NHS dentistry Dentistry provided by the National Health Service in the United Kingdom is supposed to ensure that dental treatment is available to the whole population. Most dentistry is provided by private practitioners, most of whom also provide, on a commerc ...

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 The NHS Low Income Scheme is intended to reduce the cost of NHS prescription charges, NHS dentistry, sight tests, glasses and contact lenses, necessary costs of travel to receive NHS treatment, NHS wigs and fabric supports, i.e. spinal or abdom ...

. 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 (FC) was a social security benefit introduced by the Social Security Act 1986 (c. 50) for low-paid workers with children in Great Britain that replaced Family Income Supplement. The benefit was designed for families with children ...

* 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 Cameron–Clegg coalition, United Kingdom coali ...

United States

Means testing is used to test for eligibility to

Medicaid Medicaid is a government program in the United States that provides health insurance for adults and children with limited income and resources. The program is partially funded and primarily managed by U.S. state, state governments, which also h ...

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 Ame ...

Section 8 housing Section 8 of the Housing Act of 1937 (), commonly known as Section 8, provides rental housing assistance to low-income households in the United States by paying private landlords on behalf of these tenants. Approximately 68% of this assistan ...

Supplemental Nutrition Assistance Program In the United States, the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, is a federal government program that provides food-purchasing assistance for low- and no-income persons to help them maintai ...

, Pell Grant,

Federal Supplemental Educational Opportunity Grant The Federal Supplemental Educational Opportunity Grant, more commonly known by its acronym SEOG, is a federal assistance grant reserved for college students with the greatest need for financial aid to attend school. To be eligible for this grant ...

Federal Work-Study Program The Federal Work-Study Program, originally called the College Work-Study Programhttp://www.ed.gov/programs/fws/index.html The Department of Education : Federal Work Study and in the United States frequently referred to as just "Work-Study", is a ...

, 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 th ...

Chapter 7 Chapter Seven refers to a seventh Chapter (books), chapter in a book. Chapter Seven, Chapter 7, or Chapter VII may also refer to: Albums * Chapter Seven (album), ''Chapter Seven'' (album), a 2013 album by Damien Leith. * Chapter VII (album), ''Ch ...

Chapter 13 bankruptcy Title 11 of the United States Code sets forth the statutes governing the various types of relief for bankruptcy in the United States. Chapter 13 of the United States Bankruptcy Code provides an individual with the opportunity to propose a plan o ...

. During the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

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 chil ...

, 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 Henry Ross Perot ( ; June 27, 1930 – July 9, 2019) was an American businessman, politician, and philanthropist. He was the founder and chief executive officer of Electronic Data Systems and Perot Systems. He ran an Independent politician ...

proposed that future

Social Security Welfare spending 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 specifically to social insurance ...

benefits be subjected to a means test; though some viewed it as a potential solution to the program's potential insolvency, few other political candidates since Perot have publicly made the same suggestion, which would require costly investigations, might associate accepting those benefits with

social stigma Stigma, originally referring to the visible marking of people considered inferior, has evolved to mean a negative perception or sense of disapproval that a society places on a group or individual based on certain characteristics such as their ...

, may worsen the

poverty trap In economics, a cycle of poverty, poverty trap or generational poverty is when poverty seems to be inherited, preventing subsequent generations from escaping it. It is caused by self-reinforcing mechanisms that cause poverty, once it exists, to ...

, and demotivate people from saving or otherwise improving their conditions.

Bankruptcy

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. 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 ...

, 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 Social security, in Australia, refers to a system of social welfare payments provided by Australian Government to eligible Australian citizens, permanent residents, and limited international visitors. These payments are almost always administer ...

References

External links

U.S. Bankruptcy Courts information on means testing

LSC (UK) means-tested eligibility calculator
{{DEFAULTSORT:Means Test Welfare economics United States bankruptcy law Social security Welfare reform Poverty law