Do I understand US food-stamp eligibility correctly?

Factual Questions
21

I posted my question here in GQ because I’m looking for factual information; I assume that opinions about fairness belong in IMHO. ***Fairness ***is a separate question.

This was my first information-gathering foray into public-assistance programs and I want to be sure I understand things correctly. I find government bureaucratese confusing and need help understanding the relevant info.

From what I’ve gathered, real property and retirement-plan savings are ***excluded ***when calculating one’s eligibility for food stamps [formally, “Supplemental Nutrition Assistance Program (SNAP)”]. Please correct me if I’ve misunderstood.

So consider two cases:

1–An unemployed 40-year-old man owns a house valued at $500,000, and has 401k and IRAs valued at $250,000. He has $2,000 in cash and non-retirement acct mutual funds. So his net worth is about $750,000.

2–An unemployed 61-year-old woman owns no real estate, and has 401k and IRAs valued at about $50,000. She has about $35,000 in cash and non-retirement acct mutual funds. So her net worth is about $85,000.

The unemployed 40-year-old man whose net worth is $750,000 is eligible for food stamps.

The unemployed 61-year-old woman whose net worth is $85,000 is not eligible for food stamps.

Is this correct?

—info:
What counts as an asset? Generally, amounts that could be available to the household to purchase food, such as amounts in bank accounts, count as assets. Items that are not accessible, such as the household’s home, personal property, and retirement savings, do not count. Most automobiles do not count. [5] States have the option to relax the asset limits, and many have done so.

Not all recources you own count. For example, your home and the land it is on do not count for food stamp eligibility.
http://www.ssa.gov/pubs/10101.html

22

Sorry if I came off as too hostile.

23

Yes, but it’s also possible that the funds given as food stamps will be recouped when the house is sold or from the estate of the 40 year old man when he dies. I know for sure that can happen with cash public assistance or Medicaid , but I don’t know about food stamps.

24

Instead of what if examples, did you use the this is the exact situation pre-screening tool? What did it tell you?

http://www.snap-step1.usda.gov/fns/

25

Seems there’s an obvious loophole of intentionally investing your money into an IRA or 401k, thus allowing you to use foodstamps, saving your money for later.

26

Somehow, I doubt that many people who are out of work will put all their money except $2000 in a retirement account that they won’t be able to touch for years, just so they can get food stamps. If they’re unemployed, even if they’re living frugally, that $2000 will only last a couple months at most, and then all the rest of their money will be locked up in the IRA/401K where they can’t touch it. Since the government apparently doesn’t include retirement savings when calculating your assets, they probably wouldn’t do this if there was widespread fraud related to this.

Might it not be better to help people out now with food stamps (when they’re not yet retired and hopefully can still get another job, and then earn even more towards their eventual retirement), rather than have them drain their small retirement account pretty quickly and then have absolutely no retirement savings (and thus need public assistance when they’re old enough that they can’t work anymore)?

A small amount of public assistance now seems like it might be better than setting up a situation where the government will have to help them out with more money later. But that’s just a WAG/question on my part - I’m not very familiar with how these programs work or how much they cost, or what types of government assistance is available for seniors who have no retirement savings or assets.

27

This reminded me of that old Simpsons line:

Bart: Can I have some beer, dad?
Homer: No, son, beer is for daddies and kids with fake IDs.

28

Absolutely. But it’s a loophole we WANT people to exploit - putting their money in an IRA or 401K where they are forced to save it or pay a stiff penalty for early withdrawal. SNAP doesn’t count that money because we do want people to save for retirement age, and this encourages IRA/401K savings rather than checking account savings. (Whether or not you think that’s a good thing probably depends on whether you are an investment industry lobbyist.)

But there are limits as to how much you can deposit each year, aren’t there? I think it’s something like $4000 for a 401K, so it’s not like a millionaire can hide too much all of the sudden just so she can get SNAP.

It also allows you, when life really hits you hard, to use your IRA/401K money for rent, as long as you don’t pull out too much in one month. Sadly, I had to do this…getting SNAP to buy food and paying my rent each month from my “portfolio”. Ended up with lots of taxes and fees to pay on it, but at least we had food in our bellies and a roof over our heads and I had a job to pay the taxes by tax day. Of course, now I have no retirement investments…

29

I know I’m posting to an old thread. I do so in case either the original poster or a random googler (such as myself) happen upon this and hope to glean some kernel of actual information.

T’is true, the SNAP program has a resource limit, slightly higher for elderly and/or disabled households, but a limit nonetheless. EXCEPT, there has been adoption of modified categorical eligibility rules, dependant upon the state, that allow for the exclusion from consideration of resources.

While the flamers queue up to lament the tax dollars flying out the door to feed those who could feed themselves if they only spent down everything they’ve saved, it should be noted it is to keep this from hapening that rules were changed.

So regarding the original question, they may very well be eligible despite the mutual funds.

30

There are the official requirements, and then there are the other requirements that nobody talks about. When I was a kid, Mom made little enough money (she was a Catholic school teacher) that, by the books, we should have been eligible for food stamps. But she kept getting turned down, because the folks at the welfare office couldn’t believe that an able-bodied person with a master’s degree could possibly be making little enough to need them.

31

These days I’m sure they’ve seen their fair share of legitimate applicants with advanced degrees.

32

The logic for the 40-year-old is simple -
If they make you drain your retirement savings, then they are just pushing the problem down the road. Instead of assistance at a time when it makes sense, the person can also get a job, they will need assistance when they are ready to retire, and have no savings, and cannot work.
If they make you sell your house, which may actually be paid for (yeah, right); altenatively, your mortgage payment from a while ago may be less than typical rental rates. All they are doing by orcing you to sell in a hurry in a dire situation, is substituting the need for rent instead of an asset. When the money runs out, you’ll need more than food assistance.

These stamps also help when the point is that you are working but not making enough. Presumably this may just be a bad patch, and you get back on your feet within a year or so. Why force you to sell the house for a short problem. If you cannot even make the mortgage, the problem “owns a house but collects food stamps” will correct itself shortly.

33

Just as an aside… I love discovering when a long-term poster has changed his username by being confused by the quotes.

34

Wait… So, if I have a huge pile of savings in retirement accounts, but very little else, I would qualify for food stamps? Am I reading that right?

Does the matter change depending on if I’m under or over 59½ years old? At that age, one could begin pulling money out of retirement accounts without that big early-withdrawal penalty. (Is that still the right age for this?) Once one reaches 59½, therefore, and can start spending that retirement money, THEN does the retirement savings begin to count as an asset when determining food stamp eligibility?

35

Medicaid expenses are recouped by seizing beneficiaries’ assets after their death?

36

Yes, for some people. Not for anyone with a surviving spouse, child under 21 or blind or disabled child of any age. There’s an appeals process if estate recovery would cause “undue hardship”.

37

Yes, in many but not nearly all cases. It’s no different than if the Medicaid recipient owed money to any other entity- my kids don’t inherit my house unless the mortgage is paid off, they only inherit the cash that’s left over after the estate pays my debts, etc

The Medicaid liens as far as I know are mainly for permanent nursing home care ( very expensive - $300/day in my area) or prolonged home care services.Health insurance generally doesn't cover nursing home care or non-medical home attendants  and even if someone has long-term care insurance (most people don't) , those benefits are limited. It's not done in the case of someone who uses Medicaid for ordinary medical expenses for a couple of years, and even in the case of nursing home care, the lien is often removed if the person eventually returns home without home care services.  

I'm sure it seems terrible to you - but it's a byproduct of the health care system we have.  As bad as it is, it seems worse to allow to allow Mr X's family to inherit a $250,000 house while renter Mr Y had to spend down his $20,000 in resources in order to be eligible for Medicaid to begin with. So what we end up with instead is that Mr X transfers his house to his children and hopes he doesn't need Medicaid for at least  five years ( because they "look back" at financial transactions for 5 years before an application for Medicaid for nursing home services and assess a penalty period for most below- market transfers.)