"On August 22, 1996, Clinton signed the Personal Responsibility and Work Opportunity Act, which ended the welfare entitlement and replaced it with a new block grant providing $16.5 billion per year to states to assist the needy."
The new program, called Temporary Assistance for Needy Families (TANF), differed from its predecessor in a number of important ways, including:
* Eliminating the Welfare Entitlement: Recipients are no longer guaranteed welfare benefits based on eligibility. The 1996 law also eliminated a child care guarantee for welfare recipients, but provided increased funding ($13.9 billion over six years) for child care through a newly created Child Care and Community Development Block Grant. The 1996 law did not affect Medicaid or food stamp eligibility, though critics contend that links between these programs have resulted in numerous recipients being denied Medicaid and food stamp assistance.
* Establishing Work Requirements: TANF requires recipients to be working within two years of receiving benefits. This general mandate is reinforced by rules requiring states to reach fixed and rising work participation thresholds. By 2002, 50 percent of families receiving assistance in every state must be engaged in work-related activities.
* Establishing a Five Year Lifetime Limit on Assistance: To address long-term welfare dependency, TANF placed a five year lifetime limit on assistance, but allowed states to exempt up to 20 percent of such cases for hardship reasons. States are allowed to reduce this lifetime limit below 5 years, and almost half of the states have done so.