Asset Limits for Public Assistance

Rationale

Ironically, while public policies create a number of incentives for non-poor families to save, families on public assistance actually face disincentives to saving. In particular, low-income families receiving food stamps, Medicaid, Supplemental Security Income, and TANF face asset barriers. First, those on assistance are not allowed to accumulate assets beyond a federally or state specified level. Second, those seeking assistance must first spend down or deplete their assets to that level before qualifying for such assistance. In a review of the literature on asset tests, Orszag notes, The evidence that is available generally suggests that the asset tests act as a disincentive to saving among lower-income families. Orszag further concludes that, given the extremely low levels of assets allowed under most public assistance programs, an increase in the level of allowable assets is good policy.

About Measure

States that meet one or more of the following standards: 1) a countable asset limit for TANF recipients greater than or equal to $10,000 (a level equivalent to the asset limit established in the federal Assets for Independence Act); 2) exclusion of the value of at least one vehicle from the vehicle asset limit under TANF (as 26 states have done); 3) elimination of the asset test for Medicaid receipts (as 18 states have done); 4) exclusion of the value of all vehicles in determining the countable asset limit for food stamps (as 17 states have done). A state receives 0 points if it does not meet any of the standards, 0.25 points if it meets one, 0.5 if it meets two, 0.75 if it meets three, and 1 point if it meets all four.

FMV refers to Fair Market Value.

Source

TANF asset limits: Welfare Information Network State Plan Database [on-line]. TANF vehicle asset limits: the Urban Institute Welfare Rules Database [on-line]. Medicaid asset limits: Broaddus, M., Blaney, S., Dude, A., Guyer, J., Ku, L., and Peterson, J. (February 13, 2002). Expanding family coverage: States' Medicaid eligibility policies for working families in the year 2000 (Table 4). Washington, D.C.: Center on Budget and Policy Priorities. Vehicle asset policies in the food stamp program: Dean, S., & Horng, R. (February 13, 2002). States' vehicle asset policies in the food stamp program (Table 2). Washington, D.C.: Center on Budget and Policy Priorities.