Trump Admin Moves to Close SNAP Loophole

Changes to eligibility would remove three million recipients

Agriculture Secretary Sonny Perdue speaks at a Senate hearing / Getty Images
July 23, 2019

A new rule, announced Tuesday by the U.S. Department of Agriculture, seeks to close a long-standing loophole in the federal welfare system.

If implemented, the new rule would reduce the number of people receiving welfare benefits through the Supplemental Nutrition Assistance Program (SNAP, formerly referred to as "food stamps"). Specifically, it would affect the beneficiaries of "broad-based categorical eligibility" (BBCE), a policy linking SNAP to another federal welfare program, Temporary Assistance for Needy Families (TANF). According to the USDA, many of these people—including a Minnesota millionaire—are receiving federal dollars without actually being meaningfully in need.

Under the new rule, BBCE will be curbed such that only households that receive substantial TANF benefits—a minimum of $50 per month for at least six months—will be able to also qualify for SNAP. If the rule goes unchallenged in the next two months, that will exclude the three million current SNAP recipients who would not otherwise qualify, according to Rep. Dusty Johnson (R., S.D.), a member of the House Agriculture Committee.

"Every dollar spent on individuals with asset values above the limit or whose income is above the federal eligibility threshold is a dollar that cannot be preserved for those in need," Johnson said. "It's past time we get back in the business of waging a war on poverty through good governance, and that starts today."

There are two ways to qualify for SNAP. One is meeting SNAP-specific income and wealth requirements; the other is via "categorical eligibility," which qualifies an individual for SNAP simply by dint of having qualified for another welfare program, e.g. TANF or Supplemental Security Income.

Theoretically, families that are eligible for TANF are likely to also be eligible for SNAP, and so linking one to the other facilitates ease of access to welfare payments. As the Congressional Research Service puts it, "categorical eligibility eliminated the requirement that households who already met financial eligibility rules in one specified low-income program go through another financial eligibility determination in SNAP."

Historically, categorical eligibility was contingent on the receipt of actual welfare payments. But, with the 1996 welfare reform, states were given the opportunity to grant categorical eligibility to an individual based upon the receipt of any TANF benefit—which in practice can mean as little as providing a brochure or a telephone hotline number. This, according to the Congressional Research Service, is what the USDA has labeled broad-based categorical eligibility.

An individual who applies for SNAP the normal way needs to prove that they have both sufficiently inadequate income and assets to merit welfare payments. But in most of the states where BBCE is implemented, there is no asset-test requirement. This means that an individual can get on SNAP based only on falling below an income threshold (how much varies by state), even if he has substantial personal wealth.

One such case is Rob Undersander, a Minnesota man who qualified for SNAP under BBCE. Undersander and his wife, the Washington Free Beacon previously reported, lived primarily off of their social security income—which put them below the Minnesota eligibility threshold—but had a nest egg of roughly $1 million.

Undersander described how he "went down to the second floor of the Sterns County Courthouse, stood in line a little bit, handed in the application and three weeks later I'm getting food stamps, a balance on my EBT card."

Cases like this were what prompted the USDA to act.

"For too long, this loophole has been used to effectively bypass important eligibility guidelines. Too often, states have misused this flexibility without restraint," Secretary of Agriculture Sonny Perdue said. "The American people expect their government to be fair, efficient, and to have integrity—just as they do in their own homes, businesses, and communities. That is why we are changing the rules, preventing abuse of a critical safety net system, so those who need food assistance the most are the only ones who receive it."

This regulatory change comes following the failure of congressional reforms to SNAP in last session's farm bill. With Democrats now in control of the House, Republican priorities on federal welfare reform—especially the expansion of work requirements—have fallen squarely on the shoulders of the White House.