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Professional Judgment
Income Protection Allowance

The income protection allowance (IPA) is a modest allowance for basic living expenses. It barely addresses well-body care.

The US Department of Education has published guidance indicating the following breakdown for the IPA (see the Verification Guide and Dear Colleague Letter GEN-98-2):

16%clothing and personal care
11%medical care
12%other family consumption

The following is a breakdown for the composition of each category:

  • Food. Groceries, snacks, dining. This includes meals eaten at home and work/school.

  • Housing. Payment for rent or home ownership costs (including taxes, mortgage payments, insurance, and maintenance), heating fuel, water, electricity, gas, waste disposal, household textiles (sheets and towels), furniture, appliance replacement, housewares, cleaning supplies, paper products, services, telephone. This is all at basic rates, and a family living the life of luxury does not have grounds for an increase.

  • Transportation. This includes public transportation, basic cost of owning and maintaining a vehicle, motorbike or bicycle, cost of fuel, parking, and so on.

  • Clothing and Personal Care.
    • Clothing includes basic inner and outer clothing, undergarments, footwear, dress and work clothing, cleaning and pressing services, shoe repair, tailoring, and laundry costs.
    • Personal Care includes haircuts, hair dressing, toothpaste, shaving supplies, shampoo and other toiletries.

  • Medical Care. This includes medical and dental expenses not covered by insurance, health insurance premiums (medical, dental, vision), co-pays, and deductibles.

  • Other Family Consumption. This includes newspapers, magazines, entertainment, recreation (hobbies, sports), vacation, life insurance, and disability insurance.

Please note that these are for basic expenses, and it is not appropriate to make adjustments for ownership of a luxury vehicle, for example.

A good source of information on this topic is the BLS's biennial Consumer Expenditures Survey. Table B of the 2005 report shows the following breakdown:

5.7%medical care

The "other" category includes alcohol, personal care, reading, education, tobacco, charitable contributions and miscellaneous.

The categories don't match up with the ones used in the IPA, as this is a survey of how consumers spend their money, not the distribution of expenses for basic living expenses. Also, the IPA figures are old figures that have been adjusted annually for inflation and so do not recognize shifts in expenditures or faster-than-inflation increases in certain categories, such as medical care.


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