Calculating Family Expenses
The Family Resource Simulator provides users with flexibility in determining the cost of basic family expenses. Users can either:
- Use the Simulator cost estimates for housing, food, child care, transportation, health insurance, and other necessities. See details below.
- Use their own values for these expenses (on Steps 5, 6, and 7), and they can enter a monthly debt payment amount in Step 3.
In addition, costs of certain expenses—housing, child care, and health insurance—may be offset by in-kind work supports. This depends on user choices in Step 4 and on the family’s eligibility for work supports (for more information about how the Simulator determines eligibility, see Assumptions for Determining Work Support Eligibility).
Family Expenses: Family Resource Simulator Estimates
Rent and utilities
- The cost of housing is estimated based on the Fair Market Rent determined by the U.S. Department of Housing & Urban Development. This value varies based on state and city (or county) and number of children; the Simulator assumes a 2-bedroom unit for families with 1 or 2 children and a 3-bedroom unit for families with 3 children. This number includes the cost of all tenant paid utilities except telephones, cable or satellite television service, and internet service.
- For the 2015 Ohio Simulator, the cost of rent is adjusted with the Percentage of Income Payment Plan, a part of Ohio’s LIHEAP program, for eligible families.
- The cost of food is estimated based on the Low-Cost Food Plan developed by the U.S. Department of Agriculture, which varies based on family size and the ages of family members. Cost estimates are updated for inflation when applicable.
- The Simulator provides cost estimates for multiple child care settings based on data from the state’s most recent child care market rate survey, using 75th percentile rates (updated for inflation when applicable) for unsubsidized child care costs.
- Cost estimates for subsidized child care costs are based on copayment tables published annually by each state and standard payment rates to child care centers participating in the state’s CCDF program.
- Cost estimates in Simulators dated 2003 to 2005, however, are based on the maximum provider payment rates used by the state's CCDF subsidy program. In general, where states offer multiple rates depending on quality and other factors, the basic rate is used.
- Values vary based on state and city (or county), child's age, and child care setting. Cost also varies depending on parent(s)' employment status. For more information, see Estimating Family Child Care Needs.
- For most cities (and counties), the cost of transportation reflects the assumption that parents commute to work by car and is estimated using the Economic Policy Institute’s Basic Family Budget methodology. Most recently, this methodology relies on data from the 2009 National Travel Household Survey and the IRS cost-per-mile rate. Cost varies based on state and city (or county) and parent(s)’ employment status.
- In cities with extensive public transportation systems, the estimate is based on the cost of public transportation, as reported by the local transportation authority. To determine the adequacy of public transportation, the Simulator relies on the local Self-Sufficiency Standard developed by Diana Pearce for the Center for Women’s Welfare (for more information, see selfsufficiencystandard.org/about.html). Cost varies based on state and city (or county) and parent(s)’ employment status.
- The Simulator provides estimates for premiums under two different types of private health insurance coverage: employer-based and individual/nongroup plans. Employer-based plan estimates are based on the average employee contribution for employer-based coverage in the state’s private sector, according to the Medical Expenditure Panel Survey (MEPS) conducted by the federal Agency for Healthcare Research and Quality in 2013 (for more information, see meps.ahrq.gov/mepsweb/data_stats/quick_tables.jsp). These estimates vary by state and by the number of parents and children covered, reflecting yearly state averages for “single coverage” for a single parent and “family coverage” for a family plan that includes children. For 2011 simulators, “employee-plus-one coverage” is used for single parents with one child. For 2015 simulators, non-group costs are market-rate data collected from the state or federal health insurance exchange for each family size and structure in every locality from the 2015 QHP Landscape Individual Market Medical data file. The simulator lists the second-cheapest silver plan for each locality, for each family member, following the “benchmark” methodology employed by the federal government, as well as the Kaiser Family Foundation’s Health Insurance Marketplace Calculator. Also beginning in 2015, the Simulator models the receipt of premium tax credits for eligible families by reducing health insurance costs. Unlike other tax credits, the premium tax credit is calculated by the Simulator as a reduction in costs, not as a monetary increase in net resources.
- For simulators prior to 2015, non-group plan estimates are based on the lowest quotes provided by www.ehealthinsurance.com for a preferred provider organization (PPO) plan or point-of service (POS) plan with a $500 deductible, 20% coinsurance, and copayments of no more than $25. Estimates for Massachusetts, New York, or Vermont, however, are derived from www.bluecrossma-directpay.com, www.ins.state.ny.us/ihmoindx.htm, and the Catamount Full Premium health insurance plan, respectively. Estimates vary based on state and city (or county), as well as by the number of parents and children covered.
- The cost of other necessities is estimated using the Economic Policy Institute’s Basic Family Budget 2013 methodology, which relies on data from the 2011 Consumer Expenditure Survey (for more information, see http://www.epi.org/publication/wp297-2013-family-budget-calculator-technical-documentation). It equals 25.6 percent of the sum of the family’s (unsubsidized) housing and food costs. In Vermont and 2015 simulators, the cost of other necessities reflects the federal Lifeline Telephone Service Credit.
- The cost of payroll taxes is calculated following federal tax regulations.
Income taxes (excluding credits)
- The cost of income taxes is calculated following federal, state and local tax regulations and reflects the family's income tax liability excluding the value of credits, which are counted as family resources (see Calculating Family Resources).
- For Simulators dated 2003 to 2005, however, the Federal Child Tax Credit, Federal Child and Dependent Care Tax Credit, nonrefundable state (and local) earned income tax credits, and nonrefundable state (and local) child care tax credits are reflected in tax calculations.
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