SNAP eligibility

Appendix B: SNAP: Implications of a Publicly Funded Guaranteed Income

Unless explicitly excluded, federal SNAP regulations include “payments from Government-sponsored programs, dividends, interest, royalties, and all other direct money payments from any source which can be construed to be a gain or benefit,” as unearned income that is counted during the eligibility determination.112 For privately-funded guaranteed income demonstrations, there are some SNAP provisions that have been used to exclude certain lump sum and recurring payments from consideration in SNAP.113 However, for publicly funded state programs, the analysis is more complex and depends on the state’s choices regarding implementation strategy and frequency of payment.

If states choose to implement a guaranteed income through expansion of a state EITC, federal law provides a strong case for exclusion of these payments from the income eligibility determination in SNAP, especially if paid as a lump sum. With respect to the federal EITC, 26 U.S. Code § 6409 provides “[n]otwithstanding any other provision of law, any refund (or advance payment with respect to a refundable credit) made to any individual under this title shall not be taken into account as income, and shall not be taken into account as resources for a period of 12 months from receipt, for purposes of determining the eligibility of such individual (or any other individual) for benefits or assistance (or the amount or extent of benefits or assistance) under any Federal program or under any State or local program financed in whole or in part with Federal funds.” The federal EITC is a refundable tax credit covered by this provision, and as such it is not counted as income in federal public benefits programs and is only counted as an asset after 12 months. However, state and local earned income tax credits that are paid in a lump sum are also exempted as income under 7 CFR 273.9(c)(8), which states that “money received in the form of a nonrecurring lump-sum payment, including, but not limited to, income tax refunds, rebates, or credits, is not counted as income.” Further, state and local earned income tax credits are explicitly excluded as a resource for purposes of the SNAP asset test in 7 CFR 273.8(e)(12). Accordingly, implementing a guaranteed income by expanding a state or local earned income tax credit would not jeopardize SNAP eligibility if paid out in a lump sum.

However, the income exclusion for state and local tax refunds seems to be predicated on the credits being non-recurring, so models that seek to deviate from lump sum in favor of periodic payments may put SNAP eligibility at risk.

For states choosing to implement a guaranteed income through dividend payments from a sovereign wealth fund, Alaska’s Permanent Fund Dividend provides the best example for how such payments could affect SNAP eligibility. Alaska counts the Permanent Fund Dividend as both unearned income for the month it was received, and a resource/ asset. The state of Alaska does not use broad-based categorical eligibility, and as such, its SNAP recipients are subject to the asset test laid out in federal law.114 However, it is unclear whether the payment’s consideration as unearned income flows from it being a payment from a “government-sponsored program”, its characterization as a “dividend” (which are expressly counted as unearned income under federal law), or both. Many types of non-recurring lump sum payments can be excluded as income for SNAP, but federal law does not define “non-recurring.” 7 CFR 273.9(c)(8). However, the express exemption of income tax refunds and other credits seems to suggest that even payments made on a predictable cycle once a year could still constitute “non-recurring.” Additionally, a lump sum “dividend” payment will likely count as a resource for SNAP recipients who are subject to an asset test, but for states that use SNAP broad-based categorical eligibility (BBCE)115 to increase or waive asset limits, this may not pose a concern. To mitigate the impact of the PFD on SNAP eligibility, Alaska set up a Hold Harmless Fund to pay benefits to families who lose eligibility because of dividend payments, and receives waivers116 from the federal government allowing them to temporarily suspend SNAP cases for up to four months until eligibility is regained, so the state does not have to terminate the SNAP case and force recipients to re-apply.

For states seeking to establish a new program with public funds, recurring payments will likely jeopardize SNAP eligibility. Some privately-funded demonstrations have been able to exclude payments from being included in SNAP income determinations, but the same provisions that relay this flexibility cannot be used for publicly funded programs. When the source of the payments is private, federal statute and corresponding regulations allow states to elect to exclude from consideration in SNAP certain payments that are excluded in TANF – where states maintain much more flexibility in defining income eligibility.117 States choosing to exclude payments under this provision “must specify in its [SNAP] State plan of operation that it has selected this option and provide a description of the resources that are being excluded.”118 State plans of operation are then subject to approval by USDA. However, both federal law and regulation explicitly forbid states from using this provision to exclude “regular payments from a government source,” with 7 CFR 273.9(c)(19) further specifying that payments or allowances a household receives from an intermediary that are funded from a government source are also considered payments from a government source, thus opening the door for recurring payments from private sources, but not government, or public sources. Accordingly, changes in federal law may be required to permit exclusion of recurring guaranteed income payments that are funded with public dollars. However, as discussed above, the interaction with lump sum payments made annually as part of a new program may depend on USDA’s interpretation of“non-recurring.”