Widespread hardship inflicted by the Great Recession has underscored the financial vulnerability of many families and the need for accessible resources that can help them meet their needs until they are back on their feet. Yet current policies convey conflicting messages about the value of saving. While higher income households are offered incentives to save through the tax code, many low-income families are actively discouraged from saving through policies that require them to choose between spending down their existing savings or foregoing the immediate assistance they need.
Nearly every means-tested public assistance program employs an asset test, which is a limit on the amount of savings and other resources a family can own and remain eligible for benefits. Though asset tests vary widely across programs and states, the limits typically hover around just $2000, thus requiring families to remain in both income poverty and asset poverty to receive benefits. To prove that their assets don’t exceed these limits, applicants often have to provide a burdensome amount of documentation, ranging from car titles to tax returns and funeral plans.
Aggregating data from surveys, interviews, and public reports, this report contributes to the existing literature on asset limits by identifying some of the impacts of both implementing and reforming asset limits on the administration of two key programs: the Supplemental Nutrition Assistance Program (SNAP/Food Stamps) and Temporary Assistance for Needy Families (TANF, formerly AFDC). While many states have chosen to eliminate their SNAP asset tests in recent years, recent developments signal we are entering a period of retrenchment, making this an important moment for examining the effects of asset tests on program administration.
The report includes key findings and considerations for states weighing reforms to their own asset limit policies, including:
- Asset limits pose a barrier to long-term self-sufficiency
- The percentage of applicants and participants denied because of excess assets was very low in every state that collected that data
- Lifting asset tests resulted in greater administrative efficiency, streamlined eligibility evaluations, and administrative savings
- Lack of policy coordination among programs can undermine the benefit of liberalizing an asset limit in one program alone
- A variety of political and resource barriers must be overcome to lift asset tests