When David came home with the news that he had gotten a raise, his wife felt just as relieved as he did. That feeling did not last. Within weeks, the family lost access to SNAP and Medicaid. The raise did increase their pay, but it was nowhere near enough to replace what those programs had been covering.
For many working families, earning more does not always mean getting ahead. In a benefits system built around hard eligibility cutoffs, even a modest increase in income can trigger losses that outweigh the gain.
The cost of replacing lost benefits has risen. Healthcare, housing, education, and other core household expenses have become harder to absorb, especially in Orthodox communities with their unique financial needs and expenses. The loss of benefits is landing on families that often have less room than ever to take on new costs.
For millions across the United States, an increase in earnings triggers a unique and counterintuitive reality: a “benefits cliff” where more sometimes balances out to less.
Result: Benefits Cliff
The benefits cliff occurs when a small increase in income makes a household ineligible for public assistance programs. Families rely on these programs, such as the Supplemental Nutrition Assistance Program (SNAP) for food, Medicaid for healthcare, and housing subsidies to meet their basic needs. Eligibility thresholds for these programs are set at levels that are aimed at supporting the vulnerable and below poverty-line population. But they don’t always account for the actual cost of living. This is especially true for the religious Jewish community, where basic expenses like higher food costs and the necessity of private religious education are not considered in the standard support equation.
When income rises above these thresholds, benefits are often reduced or eliminated, and the consequences extend beyond benefits. Fear of falling off the benefits cliff discourages families from working more hours, going after better jobs, or accepting raises because they know that, perversely, moving ahead can actually set them back. Losing Medicaid alone can saddle a household with tens of thousands of dollars in new insurance costs, and losing SNAP can double a family’s monthly food bill. In a system that doesn’t reward progress, many families rationally choose to stay safe.
Rising Dependance on Medicaid
Over the last decade, Medicaid enrollment has risen from about 66 million people in 2015 to over 91 million in 2023. Although enrollment declined after pandemic-era protections expired and states resumed disenrolling ineligible members, 2025 levels remain well above pre-pandemic figures — reflecting a long-term upward shift in the share of Americans relying on the program for health coverage.
This sustained growth is heavily driven by state-level expansions under the Affordable Care Act, with states like North Carolina and Missouri recently opening eligibility to nearly all low-income adults. However, the transition has been rocky due to Medicaid churn, with millions of eligible individuals—particularly children—losing coverage due to “procedural” reasons, like missing paperwork, rather than a genuine change in income.
The increased reliance on Medicaid also reflects deeper demographic and economic shifts. Out-of-pocket costs in the private market have risen faster than household income over the last five years, with more “working poor” families finding employer-sponsored plans unaffordable. Currently, nearly two-thirds of adult Medicaid enrollees are employed in jobs that offer little to no health benefits, pushing the program to act as a critical safety net for the labor force. Participation among those eligible has climbed from 76.5% a decade ago to over 86% today. Medicaid has shifted from being a temporary fix to acting as a mainstay of health coverage for a broad segment of the population, making the benefits cliff even steeper.
Programs like Medicaid also shape how support is delivered at the school level. In many districts, when a large enough share of students relies on public health or nutrition assistance, schools can provide free lunches to all students, regardless of individual family income. When even a small number of families lose eligibility due to modest earnings gains, that balance can quickly shift. Schools may lose the ability to offer universal meals, reintroducing costs that affect every family—not just those who crossed an income threshold. For working parents, this can mean higher household food expenses and greater reliance on community support. The ripple effects of the benefits cliff now extend well beyond individual households and reshape access to support across entire classrooms and communities.
Combined, these factors lead many families to turn toward their local charities for help. In the Jewish community, where expenses are higher than average, studies show economic hardship rates as high as 67%. Nonprofits have become a major backbone and serve as a community support system. By providing emergency food, rent support, and childcare scholarships, charities have become a form of “gap aid” for families who are not quite impoverished, but not fully on their feet. Organizations like UJA and Tomchei Shabbos provide millions of pounds of food to tens of thousands of families, serving as critical gap support for those who fall outside traditional assistance thresholds.
Building Stability That Lasts
A 2024 Tulane/Rosov study found that benefits cliffs remain a significant driver of economic vulnerability among American Jewish families. More than a policy problem, the benefits cliff is a daily challenge that keeps families stuck. Fortunately, communities have recognized the need and already have a strong communal infrastructure to build on.
As long as eligibility cutoffs remain sharply defined, community‑rooted solutions have proven to be the most effective way to bridge the gaps the system leaves behind. By bolstering the services they already offer, organizations can help smooth out a system that, in practice, punishes advancement. By expanding services to help families navigate benefits like bridge loans, accessible food pantries, and financial coaching, communities can foster lasting stability rather than the dependency that current systems often encourage.
Jewish nonprofits and the funders who support them should direct philanthropic dollars toward helping families achieve independence from public assistance, thereby reducing financial hardship in their communities. By drawing on the Jewish community’s many strengths, nonprofits can create coordinated, practical solutions that help families move out of poverty without being pulled back down by the very systems meant to support them.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
