Why Closing the Broad-Based Categorical Eligibility Loophole Will Not Bust State Budgets

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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. But states have used federal loopholes to virtually eliminate these requirements and expand food stamp eligibility to millions of individuals who do not otherwise qualify.

Regulations adopted by the Clinton administration—and expanded even further by the Obama administration— have allowed states to expand eligibility beyond the program’s intended purpose. These regulations allow states to deem anyone authorized to receive a welfare brochure as “categorically eligible” for food stamps, bypassing the federal asset test and the income eligibility limit.

The widespread use of this loophole, known as broad-based categorical eligibility or BBCE, has allowed more than five million people—including millionaires—to enroll in food stamps without meeting federal eligibility criteria for assets, income, or both.