Sort by

Getting Rid of Asset Tests

Ilana Novick

Much like the back catalog of our favorite bands, the Obama administration has a collection of policy proposals that have never gotten much attention, much less become legislative greatest hits. As he embarks on a series of economic speeches over the next few months, Obama would do well to examine his own policy back catalog. 

One proposal the administration has been touting for four years now (first laid out in "A New Era of Responsibility,” Obama’s 2009 economic plan) is a reform of asset tests for benefits such as TANF, SNAP, and Medicaid. It’s a proposal that seems particularly welcome in the wake of recent legislation, like Pennsylvania's harsh limits on assets for SNAP benefits, which I've previously written about.

Asset tests, which limit the amount of money an applicant for various benefits can have in savings, as well as the value of their cars or homes, often determine whether or not an applicant is eligible for government benefits. It seems almost fair at first: If applicants for government benefits have some wealth, shouldn't they tap that before asking for public help?

But rather than eliminating fraud or overuse, however, these policies serve to discourage savings and asset building -- which are “key parts of ending poverty," according to many experts, including the Center for Budget and Policy Priorities and the Center for Enterprise Development.

The problem is, as the White House noted back in 2009, "Current asset rules across a variety of programs are antiquated, inconsistent, and present obstacles for low-income individuals who aspire to achieve self-sufficiency." 

Pennsylvania's assets tests set the limit at $5,550 for SNAP benefits. Eleven other states retain the test for a combination of SNAP, TANF, and Medicaid benefits, though Pennsylvania remains among the worst. Prior to recent legislation that eliminated the tests, Illinoians were limited to $3,200. 

Still, state level changes in other areas offer some hope. According to a study of asset tests from CFED, 24 states have eliminated Medicaid asset limits entirely; six states have eliminated TANF asset limits; and 36 states have eliminated SNAP asset limits, and 36 states have excluded important categories of assets (like cars or homes) from these limits in one or both programs. 

Promoting self-sufficiency is a goal that both political parties can agree on. It was George W. Bush, after all, who coined the phrase "ownership society." 

If the research clearly shows that asset tests conflict with building self-sufficiency, you'd hope that scrapping those tests would be a proposal President Obama could easily enact in his second term.