STATE OPTION TO STATE OPTION TO SET THE ASSET AND SET THE ASSET AND

GROSS INCOME TESTS GROSS INCOME TESTS

Stacy DeanStacy DeanDecember December

20082008

USING CATEGORICAL USING CATEGORICAL ELIGIBILITYELIGIBILITY

Since 1999, states have been able to Since 1999, states have been able to set their own asset and gross income set their own asset and gross income policy via categorical eligibility. policy via categorical eligibility.

Asset option – 20 statesAsset option – 20 states

Gross income option – 9 statesGross income option – 9 states

SAVING POLICY FOR ALLSAVING POLICY FOR ALL

Asset policy has focused on building wealth Asset policy has focused on building wealth through the tax system – doesn’t help people through the tax system – doesn’t help people with low incomes.with low incomes.

Policies for low income actually create savings Policies for low income actually create savings disincentives through asset tests -- get by but disincentives through asset tests -- get by but not ahead.not ahead.

Growing bi-partisan support to develop asset Growing bi-partisan support to develop asset building policy that includes all Americans.building policy that includes all Americans.

All States Have Expanded All States Have Expanded Asset Limits for Child Asset Limits for Child

Health CoverageHealth Coverage

AK

AL

ARAZ

C A C O

CT

D CD E

FL

G AH I

IA

ID

IL IN

KSKY

LA

M A

M D

M E

M I

M N

M O

M S

M T

N C

N D

NE

N H

NJ

N M

N V

NY

O H

O K

O R

PA

R I

SC

SD

TN

TX

U T

VA

VT

W A

W I

W V

W Y

N o C hild H ealth Asset Test for M edicaid or SC HIP (46)

No asset test for M edicaid, but has an asset lim it for SC HIP (1)

N o asset test for SCH IP , but hasan asset lim it for M edicaid (2)

R aised asset lim it for bothSCH IP and M edicaid* (2)

*Texas has a significantly h igher asset lim it for SC H IP than for M edicaid

As of January 2008

31 States Have Expanded 31 States Have Expanded Asset Limits for Parent Asset Limits for Parent

Health Coverage Health Coverage

A K

A L

A RA Z

C A C O

C T

D CD E

F L

G AH I

I A

I D

I L I N

K SK Y

L A

M A

M D

M E

M I

M N

M O

M S

M T

N C

N D

N E

N H

N J

N M

N V

N Y

O H

O K

O R

P A

R I

S C

S D

T N

T X

U T

V A

V T

W A

W I

W V

W Y

N o P a r e n t H e a l t h A s s e t T e s t ( 2 2 )

A s s e t l i m i t i s g r e a t e r t h a n $ 3 0 0 0 ( 9 )

A s s e t l i m i t i s $ 3 0 0 0 o r l e s s ( 2 0 )

A s o f J a n u a r y 2 0 0 8

20 States Have Expanded 20 States Have Expanded Food Stamp Asset LimitFood Stamp Asset Limit

A K

A L

A RA Z

C A C O

C T

D CD E

F L

G AH I

I A

I D

I L I N

K SK Y

L A

M A

M D

M E

M I

M N

M O

M S

M T

N C

N D

N E

N H

N J

N M

N V

N Y

O H

O K

O R

P A

R I

S C

S D

T N

T X

U T

V A

V T

W A

W I

W V

W Y

N o F o o d S t a m p A s s e t T e s t ( 1 6 )

R a i s e d a s s e t l i m i t o r c h a n g e d a s s e t p o l i c y t o e x p a n d p r o g r a m e l i g i b i l i t y ( 4 )

REQUIRED ASSETS REQUIRED ASSETS CHANGES in ‘08CHANGES in ‘08

Farm Bill excluded:Farm Bill excluded: All retirement and educational savings All retirement and educational savings

accounts from the asset test,accounts from the asset test, Indexed the $2,000 and $3,000 limits Indexed the $2,000 and $3,000 limits

Required new policy, new forms, staff Required new policy, new forms, staff training.training.

These mandatory changes are a good These mandatory changes are a good opportunity to consider state options on opportunity to consider state options on assets.assets.

STATES CAN SET THEIR STATES CAN SET THEIR OWN ASSET LIMIT WITH OWN ASSET LIMIT WITH

CAT ELCAT EL States can make households that States can make households that

receive a receive a TANF funded benefitTANF funded benefit categorically eligible for Food Stamps. categorically eligible for Food Stamps.

7 CFR 273.2(j)(2)7 CFR 273.2(j)(2)

Under cat el, the asset test of any Under cat el, the asset test of any TANF-funded benefit that a food stamp TANF-funded benefit that a food stamp household receives or is authorized to household receives or is authorized to receive is valid for food stamps.receive is valid for food stamps.

HOW DOES IT WORK?HOW DOES IT WORK?

A household applying for food A household applying for food stamps is first screened for eligibility stamps is first screened for eligibility for a TANF-funded benefit.for a TANF-funded benefit.

If eligible for the TANF-funded If eligible for the TANF-funded program, the asset and gross income program, the asset and gross income test for food stamps is satisfied. test for food stamps is satisfied.

LIMITS ON THE OPTIONLIMITS ON THE OPTION The household must be recertified for the TANF-The household must be recertified for the TANF-

funded benefit at least every 12 months (consistent funded benefit at least every 12 months (consistent with food stamp rules).with food stamp rules).

The TANF-funded benefit must have a gross-income The TANF-funded benefit must have a gross-income limit.limit.

The TANF funded benefit must meet purposes 3 or The TANF funded benefit must meet purposes 3 or 4 of TANF in order to serve all food stamp 4 of TANF in order to serve all food stamp households.households.

FNS must approve the option if states use benefits FNS must approve the option if states use benefits funded with less than 50% TANF/MOE.funded with less than 50% TANF/MOE.

WHAT TANF FUNDED WHAT TANF FUNDED BENEFITS ARE STATES BENEFITS ARE STATES

USING?USING? Want to find a TANF-funded benefit that Want to find a TANF-funded benefit that

will reach the entire caseload or your will reach the entire caseload or your target group.target group.

Examples:Examples: ND – TANF Information and Referral ND – TANF Information and Referral

Services (Brochure)Services (Brochure) DE – Pregnancy prevention information.DE – Pregnancy prevention information. MI – Domestic Violence BrochureMI – Domestic Violence Brochure MD – Family Preservation Services MD – Family Preservation Services

Brochure.Brochure.

CHOICES WITHIN THE CHOICES WITHIN THE OPTIONOPTION

What TANF-funded benefit will confer What TANF-funded benefit will confer categorical eligibility?categorical eligibility?

What asset limit should you use?What asset limit should you use?

Will the new resource limit apply to the Will the new resource limit apply to the entire caseload?entire caseload?

How will you promote the change?How will you promote the change?

WHY ADOPT CAT EL?WHY ADOPT CAT EL? It is good policy. It is good policy.

Encourages savings and supports working families and Encourages savings and supports working families and seniors who save.seniors who save.

This option simplifies the program and is easy to This option simplifies the program and is easy to implement. Asset tests are complicated!implement. Asset tests are complicated!

This option reduces errors. Not many asset QC This option reduces errors. Not many asset QC errors, but they are large when they occur. errors, but they are large when they occur.

Food stamps benefits are 100% federal funds!Food stamps benefits are 100% federal funds!

State administrators who have done it, love it – talk State administrators who have done it, love it – talk to them.to them.

ISSUES TO CONSIDERISSUES TO CONSIDER

USDA has proposed eliminating this USDA has proposed eliminating this option. Congress hasn’t shown much option. Congress hasn’t shown much interest.interest.

States fear it might results in big caseload States fear it might results in big caseload increases without the needed increases without the needed administrative resources to manage.administrative resources to manage.

Some policy makers do not support Some policy makers do not support liberalizing the asset test.liberalizing the asset test.

MAKING MORE WORKING MAKING MORE WORKING FAMILIES ELIGIBLE FOR FOOD FAMILIES ELIGIBLE FOR FOOD

STAMPSSTAMPS States also have flexibility to set the gross States also have flexibility to set the gross

income test via categorical eligibility.income test via categorical eligibility.

Under cat el, the Under cat el, the gross income testgross income test (up to (up to 200% of poverty) of any TANF -funded 200% of poverty) of any TANF -funded benefit that a food stamp household benefit that a food stamp household receives or is authorized to receive is valid receives or is authorized to receive is valid for food stamps.for food stamps.

Extends more generous treatment of gross Extends more generous treatment of gross income to non-elderly/disabled households.income to non-elderly/disabled households.

GROSS INCOME TESTSGROSS INCOME TESTS

AK

AL

ARAZ

CA CO

CT

DCDE

FL

G AHI

IA

ID

IL IN

KS KY

LA

M A

M D

M E

M IM N

M O

M S

M T

NC

ND

NE

NH

NJ

NM

NV

NY

O H

O K

O R

PA

RI

SC

SD

TN

TX

UT

VA

VT

W A

W I

W V

W Y

G ross Incom e Lim it is 200% of Poverty G uidelines (8)

G ross Incom e Lim it is Betw een 130% and 200% (5)

U pdated 10 Novem ber 2008

WHY RAISE THE WHY RAISE THE GROSS INCOME TEST?GROSS INCOME TEST?

Allows the state to provide more financial Allows the state to provide more financial support to low-wage working families and support to low-wage working families and individuals.individuals.

States that have taken the option have increased States that have taken the option have increased their non-elderly, non-disabled caseload by an their non-elderly, non-disabled caseload by an average of 6%, (ranging from 5 to 13%).average of 6%, (ranging from 5 to 13%).

Can improve QC with respect to income Can improve QC with respect to income reporting rule.reporting rule.

Note: this does not increase benefit levels.Note: this does not increase benefit levels.

Mostly Helps Households Mostly Helps Households Under 165% of PovertyUnder 165% of Poverty

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

131-140% 141-150% 151-165% 166-185% 185-200% 201%+

Gross Income as a Share of Poverty

Sh

are

Wh

o B

enef

it f

rom

Rai

sin

g t

he

Gro

ss

Inco

me

Tes

t

Source: QC FY2006 the following states who have raised their gross income test: DE, ME, MD, MA, MI, ND, OR, TX, and WI

90% of Benefits Go to 90% of Benefits Go to Those Those

Between 130% and 165% of Between 130% and 165% of PovertyPoverty

0%

10%

20%

30%

40%

50%

60%

131-140% 141-150% 151-165% 166-185% 185-200% 201%+

Gross Income as a share of poverty

Sh

are

Wh

o B

enef

it f

rom

Rai

sin

g t

he

Gro

ss

Inco

me

Tes

t

Source: QC FY2006 the following states who have raised their gross income test: DE, ME, MD, MA, MI, ND, OR, TX, and WI

Many Households Get $10, Many Households Get $10, but Majority Qualify for but Majority Qualify for

MoreMore

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

10 or less $11-50 $51-90 >$90

Monthly HH benefit

Sh

are

Wh

o B

enef

it f

rom

Rai

sin

g t

he

Gro

ss

Inco

me

Tes

t

Source: QC FY2006 the following states who have raised their gross income test: DE, ME, MD, MA, MI, ND, OR, TX, and WI

WHO ARE THESE WHO ARE THESE HOUSEHOLDS?HOUSEHOLDS?

96% are households with earnings.96% are households with earnings. 84% are households with children.84% are households with children. They have higher earned income and They have higher earned income and

dependent care deductions than dependent care deductions than those below 130%:those below 130%: Earned income Earned income

96% receive it at $359 vs. 47% at $17796% receive it at $359 vs. 47% at $177 Dependent care Dependent care

31% receive it at $214 v. 8% at $17531% receive it at $214 v. 8% at $175

KEY CHOICES WITHIN THE KEY CHOICES WITHIN THE OPTIONOPTION

What gross income limit should you use?What gross income limit should you use? Most benefits go to those < 165% of the poverty Most benefits go to those < 165% of the poverty

line.line. Most of those who benefit are < 165% of the Most of those who benefit are < 165% of the

poverty line.poverty line. Alignment with another program?Alignment with another program?

Treatment of $0 benefit cases?Treatment of $0 benefit cases? What does $0 benefit cases get you?What does $0 benefit cases get you? There is a state option to make these cases There is a state option to make these cases

ineligible.ineligible.

KEY CHOICES (cont)KEY CHOICES (cont)

Will you keep the net income test?Will you keep the net income test? CBPP strongly recommends retaining the test.CBPP strongly recommends retaining the test. Makes more households eligible — many for Makes more households eligible — many for

$10, but also is vulnerable to attack.$10, but also is vulnerable to attack. Can reduce administrative burden and cost of Can reduce administrative burden and cost of

managing more $10 cases.managing more $10 cases.

These details raise important trade-offs — These details raise important trade-offs — Helping more families vs. administrative Helping more families vs. administrative costs and political concerns.costs and political concerns.