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Under section 5(a) of the Food and Nutrition Act of 2008, households in which all members receive benefits under a State program funded by the Temporary Assistance to Needy Families (TANF) program are categorically eligible to participate in the Supplemental Nutrition Assistance Program (SNAP). This proposal would change the regulations at 7 CFR 273.2(j)(2) pertaining to categorically eligible TANF households by limiting categorical eligibility to households that receive cash TANF or other substantial assistance from TANF. Categorical eligibility conferred by any non-cash assistance would be limited to substantial ongoing assistance or services, such as child care, that have an eligibility determination process similar to cash TANF. This rule would not alter categorical eligibility for Supplemental Security Income (SSI) households or General Assistance (GA) households.

Statement of Need:

This proposal would change current regulations by limiting categorical eligibility to households that receive cash assistance or other ongoing or substantial assistance from TANF, such as child care, and that have an eligibility determination process similar to cash TANF. These stricter requirements would ensure that categorical eligibility is appropriately targeted toward low-income households most in need while maintaining administrative streamlining across Federal benefits programs. 

Summary of the Legal Basis:

Section 5 (a) of the Food and Nutrition Act of 2008.

Alternatives:

(1) No change to current regulations retain the scope of existing expanded categorical eligibility;

(2) Finalizing as proposed;

(3) Income limit set at 130% of the Federal poverty guidelines; no resource test

(4) Income limit set at 185% of the Federal poverty guidelines; no resource test

(5) Resource test only (SNAP Federal limits); assume all non-cash programs qualify

(6) Modifying proposal based on priorities identified and comments provided during public review.

Anticipated Costs and Benefits:

The Department has estimated the net reduction in Federal spending associated with the proposed rule to be approximately $9.4 billion over the five years 2019-2023.  Included in this is an estimated reduction in Federal transfers of approximately $10.543 billion over the five-year period as well as a $1.157 billion increase in Federal administrative costs.  The Department estimates an additional $1.157 billion in administrative costs to State agencies (for a total of $2.314 billion in additional administrative costs).  The Department estimates that approximately 9 percent of currently-participating SNAP households will lose eligibility for SNAP because their incomes or resources exceed Federal SNAP eligibility standards (an estimated 1.7 million households in FY 2020, containing 3.1 million individuals).  In addition, the Department estimates that households that remain eligible for SNAP (approximately 17.2 million households containing 34.7 million individuals) and new SNAP applicants will face additional burden associated with the application process, at a cost of approximately $5 million annually.  We would expect that the changes in the final rule to be roughly at that order of magnitude, but a precise estimate is pending final policy decisions.

The projected benefit of the rule is to create a more consistent nationwide policy that limits categorical eligibility to households that have sufficiently demonstrated need by qualifying for ongoing and substantial benefits from TANF-funded programs designed to assist low-income households and help them move towards self-sufficiency.  In addition, the revisions would help ensure that receipt of nominal, one-time benefits (such as a brochure) does not confer categorical eligibility.

Risks:

As noted above, the purpose of the rule is to create a more consistent nationwide policy that limits categorical eligibility to households that have sufficiently demonstrated need by qualifying for ongoing and substantial benefits from TANF-funded programs designed to assist low-income households and help them move towards self-sufficiency.  If not pursued, there is a risk that these benefits would not be realized.