Asset Limits
Many states impose both income and asset tests in determining eligibility for public assistance. Although asset limits are intended to ensure that programs serve only those who truly need the benefits, asset limits create a barrier to financial security and upward mobility for public benefit recipients. Polices that restrict eligibility for public assistance programs to households with minimal assets discourage savings and encourage participants to “spend down” resources needed for long-term security in order to obtain short-term assistance. The following assets are typically counted against applicants and recipients in public benefit programs: savings accounts over $2,000, vehicles, and non-pension retirement savings, college savings plans.
States have authority to reform asset rules in state-administered assistance programs, including Temporary Assistance for Needy Families (TANF), Medicaid, the state children’s health insurance program (SCHIP), and, to a lesser extent, the Supplemental Nutrition Assistance Program (SNAP), to make the rules simple, efficient, and fair and to encourage saving and asset building.
There are three options for reforming asset limits:
States have authority to reform asset rules in state-administered assistance programs, including Temporary Assistance for Needy Families (TANF), Medicaid, the state children’s health insurance program (SCHIP), and, to a lesser extent, the Supplemental Nutrition Assistance Program (SNAP), to make the rules simple, efficient, and fair and to encourage saving and asset building.
There are three options for reforming asset limits:
- Eliminate asset limits in benefits programs
- Raise the asset limit
- Exclude categories of assets, such as retirement savings, education savings accounts, vehicles and health savings accounts.
Resources:
Asset LimitsToolkit
Description: This toolkit is for advocates and policymakers who seek to reform or
eliminate state asset limits. Administrative rules, bills, laws,
public comments, and other advocacy materials are
organized by state and by program.
"Do Asset Limits in Social Programs Affect the Accumulation of Wealth?" (August 2005)
Description: This Urban Institute paper describes current asset tests and discusses their role in reducing asset accumulation for low-income families.
