The Case for Eliminating SNAP Asset Limits

Indiana has the dubious distinction of being one of 14 states that has not eliminated asset limits for the Supplemental Nutrition Assistant Program (SNAP), formerly known as food stamps. Under current law, prospective SNAP beneficiaries must prove they have fewer than $2,250 in assets – or $3,250 for households with a member who is 60 years old or older or is disabled – to qualify for the program. If a household’s assets exceed this amount, they must spend down savings or sell off assets to become SNAP eligible. Although some may argue low income families with savings do not deserve to receive government benefits, there are many good reasons for eliminating asset limits.

To begin with, food insecurity is endemic in Indiana. In 2013, over one million Hoosiers were food insecure, equaling about 15 percent of the population. Extensive research shows that food insecurity negatively impacts the economy and health, particularly for children. As a low cost intervention, with an average monthly benefit of $122 per individual, SNAP has been found to reduce food insecurity, alleviate poverty, and reduce obesity. Expanding SNAP eligibility is both good policy and the compassionate thing to do.

Not only do asset limits discourage saving, they also limit families’ ability to be self-sufficient. The SNAP program has a cliff effect, where benefits drop out after a family’s income exceeds 130% of the federal poverty line. Requiring families to have no more than $2,250 in savings or assets makes coming off of the SNAP program risky. According to CFED, a family of four with assets less than $5,963 was considered liquid asset poor in 2014. Clearly, there is a significant gap between the current asset limit and what is needed for a family to weather a three month period at the poverty level.

We know from other states that eliminating the asset test simplifies the application process, leading to administrative efficiencies. For example, Pennsylvania’s recent elimination of asset limits was estimated to save the state $3.5 million annually. Mathematica Policy Research recognizes the benefits of eliminating SNAP asset limits, writing “Eliminating the asset test simplifies the SNAP eligibility process, reduces State workloads, and reduces errors associated with collecting detailed asset and vehicle information.” And it is not as if eliminating the asset limit will flood the SNAP rolls. Only 897 out of 382,000 applications (0.23%) were denied due to assets in excess of state limits between December 2013 and November 2014.

So what can be done to reduce food insecurity, encourage household savings, and realize administrative efficiency? The solution is simple: implement broad based categorical eligibility (BBCE). States and the federal government share authority to set SNAP eligibility requirements. The Indiana General Assembly should pass a bill to adopt BBCE, allowing applicants to become SNAP eligible by receiving a service funded by the Temporary Assistance for Needy Families program, something as a simple as a brochure or notice on the application about their potential SNAP eligibility. Doing so would make more efficient use of Indiana’s SNAP program and allow it to provide nutrition assistance to Hoosiers who need it while allowing them to save for the day when they don’t.