Closing the Door to Food Stamp Fraud: How ending broad-based categorical eligibility can protect the truly needy

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Federal law aims to preserve food stamps for the truly needy by limiting eligibility for individuals with significant financial resources. The food stamp statute sets income eligibility and requires that states check the financial assets of those applying for benefits.

The asset limits, which are indexed to inflation, generally apply only to liquid assets, such as cash or money deposited in bank accounts that is readily available. Most other types of assets are exempt, including the value of a home and the surrounding property, household and personal goods, life insurance, pension funds or retirement accounts, education savings accounts, and assets of enrollees receiving cash welfare or supplemental security income. All states also exclude at least one vehicle from the asset test, while 32 states exclude all vehicles.

But while asset tests are common in other welfare programs, including cash welfare and even Medicaid for long-term care enrollees, states have used federal loopholes to virtually eliminate the requirement in food stamps and expand eligibility to millions of individuals who do not otherwise qualify.