What Is the Federal Poverty Level?

The Federal Poverty Level (FPL) is a measure of income issued annually by the U.S. Department of Health and Human Services (HHS) to determine eligibility for various government assistance programs. It serves as a guideline for assessing financial need and is used by federal and state agencies, as well as private organizations, to allocate aid and benefits. The FPL is a crucial benchmark for determining access to programs such as Medicaid, the Children's Health Insurance Program (CHIP), the Supplemental Nutrition Assistance Program (SNAP), and subsidies under the Affordable Care Act (ACA).

How the Federal Poverty Level Is Calculated

The FPL is based on household income and family size. The HHS releases updated poverty guidelines each year, adjusting for inflation and economic changes. The calculation originates from a methodology developed in the 1960s by Mollie Orshansky, an economist at the Social Security Administration, who based it on food expenditure data. The assumption was that food accounted for about one-third of a household’s budget, so the poverty threshold was set at three times the cost of a basic food diet.

Each year, the FPL is set at a base amount for a single-person household, with incremental increases for additional family members. While the federal government establishes a single baseline for the entire country, there are different poverty guidelines for the 48 contiguous states and Washington, D.C., versus Alaska and Hawaii. These variations account for the higher cost of living in those states.

For example, in 2024, the FPL for a single-person household in the 48 contiguous states and Washington, D.C., was $15,060. For a household of four, the threshold was $31,200. The figures are higher for Alaska and Hawaii to reflect regional cost differences.

Federal Poverty Level vs. Poverty Threshold

Although the terms “Federal Poverty Level” and “poverty threshold” are sometimes used interchangeably, they refer to different calculations. The poverty threshold, issued by the U.S. Census Bureau, is primarily used for statistical purposes, such as measuring the number of people living in poverty in the U.S. The FPL, on the other hand, is a simplified version of the poverty threshold used for program eligibility and policy decisions. The poverty threshold considers a more detailed measure of household composition and income, while the FPL is a straightforward guideline that programs can apply uniformly.

Use of FPL in Government Assistance Programs

Many federal and state assistance programs use the FPL to determine eligibility, often setting income limits as a percentage of the poverty level. Some common applications include:

• Medicaid and CHIP: Eligibility for these healthcare programs varies by state, but many states cover individuals and families with incomes up to 138% of the FPL under the ACA’s Medicaid expansion. CHIP, which provides health insurance for children in low-income families, often has higher income limits.
• Affordable Care Act (ACA) Subsidies: Under the ACA, individuals and families earning between 100% and 400% of the FPL may qualify for premium tax credits to help lower the cost of health insurance purchased through the marketplace.
• Supplemental Nutrition Assistance Program (SNAP): The federal food assistance program commonly sets income limits at or near 130% of the FPL, though some states adjust eligibility criteria.
• Head Start and Other Early Childhood Programs: Head Start, which provides early education and support services, generally serves children from families at or below the FPL.
• Low-Income Home Energy Assistance Program (LIHEAP): This program helps low-income households afford heating and cooling costs, with eligibility often tied to a percentage of the FPL.

State and local programs also use the FPL as a benchmark to determine eligibility for housing assistance, utility bill aid, and other social services.

Adjustments for Household Size and Regional Differences

Since the FPL is based on household income, the threshold changes depending on family size. Larger households require higher income levels to meet basic living needs. For example, while the FPL for a single-person household is relatively low, the threshold increases significantly for families with multiple dependents.

In addition to adjustments for family size, Alaska and Hawaii have separate poverty guidelines due to their higher cost of living. These states have historically had higher thresholds to reflect increased expenses for housing, food, and other necessities.

Criticism and Limitations of the FPL

While the FPL is widely used, it has been criticized for not fully reflecting modern economic realities. The methodology used to set the poverty threshold has changed little since it was first developed in the 1960s, even though household spending patterns have shifted. Housing, healthcare, childcare, and transportation costs now account for a much larger portion of a family’s budget than food, yet the FPL still relies on outdated assumptions about the cost of living.

Another limitation is that the FPL does not account for geographic cost differences outside of Alaska and Hawaii. The cost of living varies significantly between urban and rural areas, as well as between states with high housing costs like California and New York versus those with lower living expenses.

Because of these shortcomings, some researchers and policymakers have advocated for alternative measures, such as the Supplemental Poverty Measure (SPM), which considers additional factors like housing costs, tax credits, and government assistance. However, the FPL remains the primary benchmark for most assistance programs.

The Bottom Line

The Federal Poverty Level is a key measure used by the government to assess financial need and determine eligibility for social programs. It provides a simple, standardized way to allocate benefits based on income and household size. However, its limitations, including outdated cost assumptions and lack of regional cost adjustments beyond Alaska and Hawaii, have led to ongoing debates about how poverty should be measured. Despite its shortcomings, the FPL remains a widely used guideline for distributing assistance and ensuring that low-income individuals and families have access to essential resources.