It is estimated that almost three-quarters of adults in the United States own a smartphone. Having a cell phone can provide several benefits, including a greater sense of security and the ability to connect with jobs, emergency services and family. 

If you are part of a low-income household, you may qualify for a free cell phone and a discount on your cellphone bill through Lifeline. In addition to the discounts that Lifeline provides, it is important to learn more about affordable phone services, cheap cell phone service providers and how to save more on cell phone plans. 

What is Lifeline?

Lifeline is a federal program that is administered by the Universal Service Administrative Company (USAC) in order to ensure that all Americans are afforded the same opportunities that cell phone service provides. Established in 1985, Lifeline offers discounts on phone services for qualifying low-income customers throughout the United States. Through Lifeline, customers can gain access to a free smartphone as well as a monthly discount that is applied directly to cellular phone service bills through participating carriers. 

Exploring Lifeline Benefits

Lifeline provides several benefits to qualifying consumers, including: 

  • A free smartphone that is capable of WI-FI. 
  • A monthly $9.25 discount on cellphone bills through participating carriers. 
  • The opportunity to connect with emergency services, job opportunities and family. 

As of March 31st, 2016, the Lifeline program has extended benefits to broadband services. However, households may only receive either a discount on broadband services or cellular services. 

Understanding Lifeline Eligibility Requirements

In order to qualify for Lifeline benefits, you must meet eligibility requirements. Eligibility requirements are primarily centered upon income-related guidelines. Therefore, benefits can only be offered to low-income households that are at or less than 135 percent of Federal Poverty Guidelines. 

The Lifeline program can only provide one discount per household regardless of the number of adults living within your household. However, if you are already receiving assistance through certain income-based state and federal assistance programs, you may automatically qualify for Lifeline. These income-based state and federal programs include: 

  • Supplemental Nutrition Assistance Program (SNAP). 
  • Supplemental Security Income (SSI). 
  • Medicaid. 
  • Federal Public Housing Assistance. 
  • Temporary Assistance for Needy Families (TANF). 
  • Certain tribal-specific programs, including TTANF, FDPIR and Head Start.

Reviewing the Different Types of Cellphone Plans

When determining how to save money on your cell phone bill, regardless of whether or not you qualify for Lifeline, it is important to learn more about the different types of cell phone plans that may be available to you. Below are the three primary types of cellphone plans: 

  • Contract plans 
  • Month-to-month plans 
  • Prepaid plans

Contract plans require you to commit to keeping your plan for a set period, generally two years. Contract plans offer several benefits, including a guarantee that the price of your plan will not change within the contract period. 

Most providers also subsidize the cost of a newer model phone upon enrollment. While low-income households can obtain a free cell phone through the Lifeline program, these smartphones are generally much older models. 

Contract plans are not without their potential drawbacks. Generally, carriers will require customers to pay an activation fee upfront and, should a contract be canceled before the contract has expired, customers can receive an early termination fee. 

Month-to-month plans are a popular choice among consumers that do not wish to have a contract for their cellular services and, therefore, require less commitment. Carriers that offer month-to-month plans often provide several types of these plans, many including different features, such as unlimited texting, unlimited data and hotspot functionality. 

Typically, the more features that you wish to include on your plan, the more expensive your monthly bill will become. While month-to-month plans do not require a contract, they also do not gain the benefits of having a contract, such as a free phone that is of a newer model or additional services and perks. 

Prepaid plans, also commonly referred to as pay-as-you-go plans, are cell phone plans that do not include contracts, commitment or monthly bills. These types of plans allow you to purchase a certain number of minutes, texts or data to be used over a certain length of time, such as over a 30-day period. 

These plans are simple and may be ideal for those who have poor credit or do not intend to use their phone often. While these plans often have fewer features and add on services, they are commonly cheaper in comparison to contract or month-to-month plans.  

The Benefits and Drawbacks of MVNO Cellphone Plans

Mobile Virtual Network Operators (MVNOs) are smaller phone carriers that offer less expensive phone services than big-name providers. These companies lease their cell phone services from larger networks or are owned by major carriers. 

There are several benefits and drawbacks to obtaining an MVNO carrier. Cell phone plans provided by MVNOs do not typically require (or offer) contracts, so consumers do not need to meet credit eligibility requirements to subscribe. Additionally, fees are often far cheaper than that of a well-known cellular service provider. 

However, there are a few drawbacks of MVNO carriers. Depending on the area you live in and the carrier you have, you may not receive the same quality of service that larger carriers offer. You may experience slower data speeds or service interruptions, especially when traveling to a different area. 

How to Save More on Cellphone Plans

In order to save the most money on your cellular phone bill, it is important to shop around and compare the prices of cell phone companies that offer service within your area. Depending on your preferences, this may include larger carriers as well as MVNOs. 

When reviewing pricing options, it is also important to note any discounts that you may qualify for, such as student, employee or veteran discounts, as these discounts can save you as much as between 10 and 20 percent off of your bill. If you qualify for Lifeline, you should also look for a provider that is approved for the Lifeline program. 

Take time to review promotional offers that different carriers in your area may have, especially around the holiday season. It is common for cellphone companies to offer substantial discounts to new customers, especially those willing to sign a contract. However, if you currently have a cellphone provider that you like, you should also contact the carrier’s customer service department before switching in order to see if you qualify for any additional discounts or if a cheaper plan may fit you better.