In June 2024, the National Association of State Governors’ Children and Families team hosted a monthly Association of Human Services Policy Advisors call on Benefit Cliff Mitigation and Supporting Economic Uplift.
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Benefit cliffs occur when there is a gap between the income gained in a new occupation or job and the value of benefits lost due to the income increase. Benefit cliffs are often sudden and unexpected, and occur with small income increases that do not compensate for lost benefits. Such cliffs force families to choose between economic mobility and losing important support. Several policy solutions can mitigate the negative effects of benefit cliffs and ensure a smoother transition from benefit programs to economic mobility and independence.
Beth Hamm, Chair, Deputy Secretary, Maine Department of Health and Human Services
Key Takeaways
New England states are addressing the benefit cliff with “work that takes the whole family” to support the economic well-being of parents and caregivers, children, and families. The Atlanta Fed partnered with Maine to develop a benefit cliff tool customized for the state. Benefit cliff tools are beneficial when they are accessible and easy to understand. Participants who used the tool reported that their understanding of how wages affect benefits was improved, their financial independence was increased, and participants were provided with an informed opportunity to make long-term financial plans. Participants who used the tool reported that their understanding of how wages affect benefits was improved, their financial independence was increased, and participants were provided with an informed opportunity to make long-term financial plans.
Presentation: Highlights from Commissioner Hamm’s presentation on addressing Maine’s benefit cliff.
Maine formed a “whole family” team made up of state agencies, parents, businesses, legislators, philanthropies, and best practice organizations with the goal of analyzing the benefits cliff across the state and breaking down silos between state agencies. The team’s work resulted in bipartisan passage of two bills that expand state efforts to increase economic mobility for families. The team recognized that helping workers plan their future paths was a critical step in this process, in addition to helping workers understand how their benefits will change over time. Partnering with the Atlanta Fed, Maine customized a suite of tools for the state and became an early adopter of the benefits CLIFF tool. The tools included a calculator (short-term planning), a dashboard (long-term planning), a planner (with room for customization), and an employer version (not yet implemented). Maine is one of the few states evaluating the tool, with seven Maine organizations piloting the CLIFF dashboard and preparing to pilot additional tools soon. Maine learned through its implementation process that tools must be easy to use and informative and encouraging to users.
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