The Federal Communications Commission (FCC) administers the Lifeline Program, which provides low-income individuals and families with a monthly phone or broadband internet subsidy The monthly subsidy is restricted at $9.25 per family. When it comes to phone service, the subsidy can be utilized for either fixed line or mobile phone service. Many states enhance the federal program in order to give additional advantages to members.
The program began in 1985, but saw a substantial increase in user numbers under the Obama administration (see graph to the left), and is hence commonly referred to as the Obama Phone. The program is one of four overseen by the Universal Service Administrative Company (USAC) inside the FCC, and it also subsidizes phone service in high-cost areas, rural areas, schools, and libraries. Overall, the federal government spent $1.1 billion on the Lifeline Program in the fiscal year 2019, with the same amount expected to be paid in the fiscal year 2020.
Individuals must either have an income equal to or less than 135 percent of the federal poverty line or be enrolled in one of the following assistance programs to be eligible for the program. .
- Supplemental Nutrition Assistance Program (SNAP)
- Supplemental Security Income (SSI)
- Medicaid
- Federal Public Housing Assistance
- Bureau of Indian Affairs General Assistance
- Tribally-Administered TANF, Food Distribution, or Head Start
- Veterans Pension and Survivors Benefit Programs
Lifeline Participation Over the Years
The graph above depicts the number of people who have enrolled in the Lifeline Program since its start [iii]. In 2019, the Lifeline program has 8.1 million members, which equates to 6.5 million families and 11.3 million unrelated people living in poverty in America (see Poverty Gap Page).
Program Summary and Qualification
The USAC is supported through assessments levied on telecommunications firms, which subsequently pass the costs on to customers in the form of a fee on their phone bills. The tax is normally shown at the bottom of the phone bill as a tax or, in certain cases, as a USAC fee. Overall, USAC taxes account for approximately 7.8 percent of overall telecommunications firm retail sales [iv]. The Lifeline element of the tax accounts for approximately 12% of the entire USAC tax [v].
Waste, Fraud, and Abuse
The Office of Management and Budget predicts a 13.8 percent Improper Payment rate for the Lifeline Program - check the Welfare Fraud Page for additional details. Compliance with qualifying criteria and the one-subsidy-per-household restriction has proven difficult for the FCC and telecommunications carriers to enforce.
Lifeline Equals Less than 1% of the Poverty Solution
Lifeline's maximum assistance to a poor person is around $111 per year ($9.25 per month). This corresponds to a poverty level of $13,011 for a single person. Despite the program's complexities in qualifying, taxes, compliance, and cooperation with telecommunications carriers, it provides less than 1% of the answer to poverty for an individual and significantly less for a family. If the SNAP Program were boosted by $9.25 per month per family, participants would be economically comparable.
Lifeline Expenditures Over the Years
The graph below depicts Lifeline Program expenses per year (federal government fiscal year), adjusted for inflationary effects (expressed in 2020 dollars) [ix]. Lifeline expenditures have decreased in recent years as a result of a decrease in the number of households participating in the program, owing in part to the above-mentioned 2012 Reform Order.
