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Policy Issues

Asset Limits

Many public benefit programs—including SNAP, TANF and SSI—limit eligibility to those with few or no assets. Asset limits in public benefit programs restrict a family’s economic mobility by creating barriers to save for those who need savings the most. If a family has assets over a certain threshold, it must “spend-down” their long-term savings in order to receive short-term assistance from public benefit programs. Asset limits discourage families from saving for emergencies, education, homeownership and retirement, and pose serious obstacles for low-income families or individuals trying to become financially self-sufficient.

Personal assets and savings are crucial resources that help families move off of assistance from public benefit programs and out of poverty. Since 1996, the federal government has given states some flexibility to raise or waive asset tests as part of their administration of these programs. Allowing for this flexibility to increase or eliminate asset limits for public benefit programs helps families by removing the barriers asset limits create.

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Asset Limits

Federal Policy
Most families do not remain on public benefits for years—they use it temporarily and then get out. Asset limits are a relic of a safety net approach that no longer exists. Asset limits needlessly prolong stays on welfare, delaying self-sufficiency and financial independence. Policymakers can ensure that working-class families are able to become financially secure without falling deeper into poverty by not punishing them for accumulating modest savings. Specifically, policymakers should:

  • Continue to preserve states’ flexibility to waive asset limits in TANF and SNAP as they have since 1996. States know that asset limits are bad policy and most have used existing federal flexibility to lift or eliminate asset limits. Congress should reject any proposal that threatens to take away this state flexibility.
  • Lift asset limits for SSI to $10,000 and offer greater flexibility for families. Adjustments could include indexing asset limits to inflation, or exempting illiquid assets, such as retirement accounts, health savings accounts or education savings accounts.
  • Federal Policy Resources:
    Federal Policy Brief: Lifting Asset Limits Helps Families Save

    Policy Memo: Rebuilding American Success: Savings and Opportunity for All

    State Policy
    States have discretion in setting or eliminating asset limits for Temporary Assistance to Needy Families (TANF) and the Children’s Health Insurance Program (CHIP), as well as the authority to waive asset limits for the Supplemental Nutrition Assistance Program (SNAP). While the best state strategy is to eliminate asset limits in all benefit programs, states can make incremental improvements by increasing asset limits or indexing them to inflation and by exempting certain types of assets from their asset tests, such as retirement accounts, education savings accounts, Individual Development Accounts and the worth of household vehicles.

    State Policy Resources:
    2014 Assets & Opportunity Scorecard Policy Measures: Lifting Asset Limits in Public Benefit Programs (Updated 2012)

    Assets & Opportunity Scorecard Resource Guide: Lifting Asset Limits in Public Benefit Programs (Updated 2012)

    State Stroke-of-a-Pen

    Local Policy
    While asset limits in public benefit programs are generally set at the federal and state levels, there are many actions local governments can take. First, in some states, eligibility decisions are devolved to the county level. In these, counties should explore their authority to remove asset limits. Second, local governments can ensure caseworkers and recipients of or applicants for aid have accurate information about amounts they can save. Third, local leaders can urge state legislators and agency officials to lift asset limits in public benefit programs over which the state has control, such as SNAP, TANF and Medicaid. Finally, local governments can also urge Congress to lift asset limits in federally controlled benefit programs such as SSI, SNAP and TANF, when each come up for reauthorization periodically.

    Local Policy Resources:
    Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment

    Local Assets & Opportunity Profiles

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