Proposed Changes to SNAP Would Punish Montanans for Working and Saving

Last week, the Trump administration announced its plan to take food assistance away from 3.1 million Americans by proposing a rule change to the Supplemental Nutrition Assistance Program (SNAP). If enacted, the proposed change would eliminate Broad Based Categorical Eligibility, and cause millions of people in working families, seniors, and people with disabilities to lose their benefits.

Broad-based categorical eligibility (known as expanded categorical eligibility, or ECE, in Montana) is a bipartisan, two-decades old policy which allows states to slightly raise the income eligibility and impose less restrictive asset tests for those seeking food assistance. Montana, along with 40 other states, uses ECE to support families living on low-incomes, as well as to encourage work and asset building.

It is still unclear how many Montana families will be impacted, but we know that at least 2,000 households (6,000 people) will lose their benefits if this rule change proceeds. This is the number of people who will lose eligibility due to the lower income cap, however, the number of additional people who will lose their benefits due to the lower asset test is yet to be determined.

How does it work?

There are two ways to qualify for SNAP. The first is having an income of less than 130 percent of the federal poverty level (FPL). For a family of four, this equals a monthly income of $2,720. The second way is by being categorically (that is, automatically) eligible by qualifying for another program, such as Temporary Assistance for Needy Families (TANF). In Montana, families who receive non-cash assistance through the TANF Information and Referral Services Brochure qualify for expanded categorical eligibility.

Families who qualify for SNAP through ECE must have a gross income of less than 200 percent of the federal poverty level. For a family of four, this equals an annual income of $50,208. Households qualifying through ECE are not required to pass a net income test. There is no asset or resource test for households qualifying through ECE. Households that qualify through ECE still have their monthly benefit calculated in the same manner as other SNAP households, so households with substantial assets will still not receive much in the way of SNAP benefits. But families with modest savings will also not be required to deplete them before receiving any assistance, allowing them keep moving out of poverty.

Why is this important?

ECE provides an essential gateway out of poverty for working families, by encouraging families to work and to build savings. Without ECE and under traditional SNAP rules, a household’s benefits would be cut off as soon as income or assets are increased. The rule change would sharply penalize people who work more hours, seek raises, or build their savings.

Consider these two examples:

Under traditional SNAP, a single mother of two making $12.50 an hour (125 percent of the poverty level) would receive $161 in SNAP benefits. If she receives a 50-cent hourly raise (an increase of $86 a month), she would be slightly above the 130 percent cut-off, and lose her $161 in benefits. In total, she loses $75 a month, effectively punishing her for working more.

Under ECE, however, the opposite happens. If the same mother receives a 50-cent raise, her SNAP benefits would be reduced, but not cut off. She would now still be receiving $130 in SNAP benefits ($31 less than before). With her $86 a month raise, she is $55 better off a month, rather than $75 poorer.

Cutting ECE would also harm families who are trying to save for emergencies. Under current rules, countable assets cannot exceed $2,500 ($3,500 for households with elderly members or members with a disability). Montana eliminates the asset test for households who qualify through ECE. SNAP households in states that have done away with or raised the asset test are more likely to have $500 in assets than states that maintain the federal asset limit, an Urban Institute study found. The rule change would force families to choose between moving out of poverty by saving for emergencies and for their future and doing without food assistance.

Who will be hurt?

 ECE allows households with slightly higher than poverty level incomes, but whose expenses put them at or near poverty level, to still qualify for SNAP benefits. Even with the increase in income limits, benefits still go to families struggling to make ends meet. Because benefits are calculated the same way for ECE households as traditionally eligible households, families only receive a sizeable benefit if they have high expenses, such as costly housing or childcare. In cities like Bozeman, where rent prices have increased by as much as 20 percent in the last five years, ECE can help working families facing skyrocketing rents.

Despite its importance in encouraging work and savings, only eight percent of SNAP participants nationwide qualify through Broad-based Categorical Eligibility, which accounts for only 4 percent of the federal SNAP budget. SNAP enrollment has already been on a downward trend as the economic recovery continues, with 115,000 Montanans receiving benefits in 2018 compared to 129,000 in 2013. Cutting food assistance from three million people would do little to address the deficit caused by the Trump administration’s tax cuts.

What we can do?

If the current administration decides to do away with states’ abilities to set their own income and asset limits for SNAP by getting rid of ECE, millions of people nationwide and thousands in Montana will lose their benefits. Members of the public can submit comments until September 23. Now is the time to let the administration know the importance of SNAP in Montana communities, so please take a moment to voice your concerns about the proposed rule change here.

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