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Data and Methods

This analysis reports poverty data for 2015-2017 using the 2016-2018 Current Population Survey March Annual Social and Economic Supplement (CPS ASEC) for the estimates of poverty under the official measure, and the Supplemental Poverty Measures (SPM) Public Use Research Files, which are derived from the CPS ASEC, for poverty estimates under the Supplemental Poverty Measure. The 2018 CPS ASEC was used for national estimates (data for 2017); the 2016-2018 CPS ASEC was used for state-level and subgroup estimates (averaged across the three years, 2015-2017). Standard errors were calculated using the replicate weights and a Fay’s adjustment. All reported estimates have a relative standard error below 30%. Any estimate with a relative standard error greater than 30% is considered unreliable and not reported.

The poverty rates presented in this brief apply to non-institutionalized people ages 65 and older, and not the total Medicare population, which includes both people ages 65 and older and younger people with permanent disabilities, and both facility residents and people living in the community. The CPS ASEC does not include older adults residing in institutions, such as nursing homes and other long-term care facilities. Rates of poverty among the total Medicare population would be larger than the estimates presented here because income levels are lower among both nonelderly beneficiaries with disabilities and those living in long-term care facilities. Based on our analysis of the Medicare Current Beneficiary Survey 2016 Survey File, 22% of Medicare beneficiaries under age 65 had incomes less than $10,000 in 2016, compared to 11% of those ages 65 and older; 26% of beneficiaries living in facilities (such as nursing homes) had incomes less than $10,000, compared to 12% of those living in the community.

This analysis compares the incomes of family units to poverty thresholds, consistent with the approach defined by the official measure and the SPM (although each measure defines families somewhat differently). Relying on a unit of measurement other than family units could produce different poverty rates. For example, health insurance units tend to be smaller than family units, and poverty rates may be much higher when based on the former. Finally, the Census Bureau poverty thresholds analyzed in this brief are different from the Health and Human Services (HHS) poverty guidelines (sometimes referred to as the “federal poverty level”) that are used to determine income eligibility for certain programs.

How the Official Poverty Measures Differs from the Supplemental Poverty Measure

The SPM differs from the official measure in several ways, thereby producing different estimates of poverty:

Differences between the Official and Supplemental Poverty Measures
  Official
Poverty Measure
Supplemental
Poverty Measure
BASIS FOR POVERTY CALCULATION 3 times subsistence food budget, 1963
Mean 30th-36th percentile of FCSU expenditures
THRESHOLDS Size of family
Ages of family members
Non-related cohabiters
RESOURCES Cash income before taxes
Public assistance (cash)
In-kind government benefits (non-cash)
Tax credits
Social Security income
Out-of-pocket medical expenses
Work expenses
Child support
ADDITIONAL FACTORS Basic necessities (FCSU)
Geography/cost of housing
Homeownership
UPDATES Annually for inflation using CPI-U
5 year average of real change in FCSU expenditures
NOTE: FCSU is food, clothing, shelter, and utilities, plus an allowance for basic personal and household needs.
SOURCE: KFF summary based on https://www.bls.gov/pir/spm/spm_twg_observations.pdf and https://www.census.gov/topics/income-poverty/poverty/guidance/poverty-measures.html.
  • Measuring poverty thresholds. The SPM bases poverty thresholds on patterns of expenditures on basic necessities that are more recent than 1963, and adjusts thresholds to reflect homeownership status and regional differences in housing prices. For example, under the SPM, the poverty threshold in 2017 was about $10,400 for a single homeowner without a mortgage living in Charlotte, North Carolina (about $1,400 less than the official poverty threshold for an individual age 65 or older), and about $18,400 for a single adult with a mortgage in San Jose, California (about $6,600 more than the official poverty threshold for an older adult). Unlike the poverty thresholds under the official measure, the SPM thresholds do not vary by age (i.e., thresholds are the same for people under age 65 as for those ages 65 and older), but they do vary by household size.
  • Measuring resources. In addition to monetary income, the SPM incorporates certain information about a household’s financial resources and liabilities. The SPM adds to monetary income the monetary value of tax credits and in-kind government benefits (such as food stamps) received for food, clothing, shelter, and utilities. Job-related expenses, taxes paid, and out-of-pocket expenses on health care, including premiums, are deducted from monetary income.

According to the Census Bureau, the national poverty rate for individuals ages 65 and older would not differ substantially under the supplemental and official measures if the former did not exclude medical expenses. The Census Bureau also notes that elderly poverty rates under the official and supplemental measures differ partially because the official poverty threshold is lower for families with seniors in some instances, while the supplemental poverty threshold does not differentiate between adults above and below age 65.

The following examples illustrate how the different approaches reflected under the official poverty measure and the SPM produce different rates of poverty:

  • John, age 70, lives alone and owns a home with a mortgage in Louisville, Kentucky. In 2017, John’s sole source of income was $17,500 in Social Security benefits and he incurred $8,000 in out-of-pocket medical expenses that year. Under the official poverty measure, John is not counted as living in poverty because his $17,500 income in 2017 was higher than the nationwide official poverty threshold of about $11,800 for an elderly individual who lives alone. Under the SPM, however, John IS counted as being in poverty, because his high medical expenses are deducted from his income, leaving resources of $9,500. This amount is less than the SPM poverty threshold for a homeowner with a mortgage living alone in Louisville (about $11,500).
  • Doris, age 85, is a widower and rents an apartment in Miami, Florida. In 2017, her sole source of income was $12,500 in Social Security benefits, and she spent $500 on out-of-pocket medical expenses. Under the official measure, Doris is not counted as living in poverty because her $12,500 income is higher than the $11,800 official poverty threshold for an elderly person living alone. Under the SPM, Doris IS counted as being in poverty because she lives in an area with a high cost of living. Doris’s resources under the SPM are $12,000 (deducting her medical expenses from her income), which is less than the SPM poverty threshold for single renters living in Miami (about $14,300).
Issue Brief Tables