Why Millionaires Get Food Stamps But the Poor Struggle: The Problem with Asset Limit Waivers

A legal loophole has made it possible for millionaires to get food stamps in certain cases. Currently, over 34 states have used this loophole that allows wealthier individuals to get access to these critical low income benefits.

In this article, we’ll explain what is happening, how millionaires get food stamps, and what needs to be done to fix it.

Meet Rob Undersander

I’d like to introduce you to Rob Undersander. He’s a millionaire from Minnesota who legally collected $6,000 in food stamps. That’s right – a millionaire on food stamps. Legally. 

Now here’s the interesting part: he didn’t want them. He just wanted to make a point. 

Rob was shocked to discover that in his state, SNAP benefits were based on how much money you’re bringing in, not how much money you already have. That didn’t seem right so he decided to test the system himself. He walked in, picked up an application, and hoped they would turn him down. 

They didn’t. 

They couldn’t. 

In his words, Rob said, “I begged him to find some reason to deny my application for food stamps. He said there is nothing he can do, because he doesn’t make policy.”

The office workers don’t make the rules. They had to follow the law, and the law said that Rob’s assets didn’t matter. He met the income limits so, just like that, he was approved for $278 a month in food benefits. 

Rob’s experiment shines a light on the complexities and loopholes in the system, sparking conversations about who benefits from SNAP and why. And naturally, those conversations are putting a spotlight on the role of asset limits in the food stamps program.

It’s All About Asset Limits

Asset limits get a lot of hate, usually because they are set so low… and as a result, a lot of states have removed them… but there’s a reason that asset limits are an important part of the food stamps eligibility requirements.

Income limits are based on how much money you’re bringing in but asset limits focus on how much money you have available to you.  Assets can include things like the value of savings accounts, stock options, vehicles, and other things that could be sold for cash. Very wealthy individuals tend to have more assets than income because their wealth is usually tied up in what we call “unrealized gains.”

According to the Center for Law and Social Policy, 34 states have eliminated the SNAP asset limits for most recipients… and that creates the opportunity for this program to be exploited by wealthier individuals who manipulate their wealth to look smaller than it actually is. 

SNAP Asset Limits Were Too Low

It’s a difficult situation because there are good reasons to waive or increase the asset limits for this program. The strict low limits in place at the federal level have created a definite hardship for many low income families. 

The standard federal asset limit for SNAP households is just $2,750, which means that a low income family that depends on these benefits can’t save up any money for emergencies or even scrape together enough to move into a new place without endangering their food benefits. 

Households that include someone who is elderly or disabled are allowed to save a little more, but that limit is still just $4,250. This means that they can’t save up for medical emergencies and often can’t even hold on to life insurance policies or prepaid burial plots. 

These asset limits were originally designed to ensure that food benefits only went to those who need them, but they’ve had the side effect of trapping people in endless poverty. 

Without the ability to save for emergencies, these households are left vulnerable to unexpected expenses, such as medical emergencies or car repairs. In the event of such an emergency, these families might have no other option than to go into debt, often borrowing money from predatory and expensive sources like payday loans or pawn shops. This obviously just makes a bad situation worse. 

In many cases, this asset limit test can hinder upward mobility, paralyzing a family in the lowest income brackets. Saving for a security deposit on a new rental property can push them over the limit, so low income families may find themselves stuck in substandard living conditions. They may be unable to get better jobs because they can’t save up enough to get a better vehicle, because amassing enough funds for the down payment could jeopardize their food assistance. These limits can get in the way of saving up for education, home ownership, retirement, or even starting a business. It can be disastrous for low income families. 

Eliminating Asset Limits Creates Other Problems

On the other hand, eliminating these asset limits comes with an entirely different set of risks. The biggest risk is the potential for abuse. Asset limits are designed to ensure that those with significant financial resources do not take advantage of a system intended for those in dire need.

Removing these limits could allow individuals who have considerable assets to get food assistance just because their income appears low. This could undermine public support for the program and fuel debates about welfare abuse, strengthening the arguments made by people who want to strip that assistance away from people who need it the most. 

Another primary concern is about the potential increase in program costs. Without asset limits, more individuals could qualify for SNAP benefits, potentially expanding the number of beneficiaries and thereby increasing the financial burden on the program. This could strain government budgets and might lead to challenges in sustaining the program long-term.

There’s also the question of prioritization. Without asset limits, the program might see an influx of applicants who are more financially stable, which could potentially divert resources away from those in most critical need.

We already have a massive backlog problem, where states can’t keep up with the paperwork that they already receive. It would be a challenge to balance the goal of providing assistance to those who need it while preventing the system from being overwhelmed by applicants who, despite low incomes, might have substantial assets to fall back on.

That’s why some states have simply decided to increase the asset limits instead of completely eliminating them. Texas recently increased the asset limit for vehicles in the state, which allowed more people to get and keep their food benefits. Several states, including Idaho, have increased their standard asset limit to $5,000 to give low income families in their area more flexibility. Nebraska has raised the asset limit to $25,000, allowing low income families to save even more. 

However, in some states like Michigan, the asset limit has been completely removed and some lawmakers are concerned. For example, then-House leader Matt Hall said, “Without this test measuring people’s wealth, even lottery winners and other millionaires could rake in food stamps paid for with our tax dollars that should be going to those who truly need help feeding their families. Offering food stamps to the rich does nothing to put food on the tables of Michiganders in need.” 

He’s not wrong. Without an asset limit, it’s possible that even billionaires like Elon Musk could qualify for food stamps because their substantial wealth is structured in a way that is not reflected as traditional income.

The Solution

Ultimately, balancing the needs of low-income families with safeguarding the integrity of the SNAP program requires thoughtful policy adjustments.

Instead of completely eliminating asset limits, here are five steps states could consider to achieve this balance:

1. Asset limits could be increased. Directly raising the overall asset limits for SNAP eligibility. This approach would acknowledge that current asset thresholds might be too low, especially in areas with a higher cost of living. By increasing these limits, states can ensure that families who have modest savings or assets, but still struggle with food insecurity, can access the support they need without being penalized for having minimal financial reserves.
2. States should implement graduated asset limits. States could consider introducing graduated asset limits, where the asset threshold increases with family size or other factors. This approach recognizes the varying financial needs of larger families or those with special circumstances, allowing them to save more for emergencies without losing SNAP eligibility.
3. Asset limits should be regularly adjusted for inflation. Asset limits could be modified to reflect the cost of living in different regions. This approach acknowledges that the cost of living varies significantly across states and even within states, ensuring that the limits are more realistically aligned with local economic conditions.
4. States could exclude certain assets from consideration. States could choose to   exclude certain types of assets from the eligibility calculation, such as retirement savings, educational savings accounts, or a primary vehicle. This would encourage low-income families to invest in long-term stability and mobility without the risk of losing their benefits.
5. Asset limits could be waived for specific criteria. When Michigan waived the asset limits, the Governor pointed out that the previous limit made it difficult for people who were just recently laid off to get food stamps. If that’s a concern that they want to address, they could theoretically implement a temporary waiver for people who were newly laid off. Such a waiver could be structured to last for a set period, like 90 days, or could be aligned with the duration of unemployment benefits. This targeted approach would provide immediate relief to those who have suddenly lost their income without opening up the program to people with very high amounts of assets. 

These steps will lighten the burden for low income families while also protecting these programs from exploitation by millionaires and other wealthy individuals who do not need them.

Take Action for Change

Your voice is crucial in shaping the policies that affect our communities. By reaching out to your local lawmakers, you can advocate for these necessary reforms to the SNAP program.

Reaching out to state lawmakers can seem daunting, but it’s a straightforward process that can have a significant impact on policy decisions. Here’s a general guide that can be followed by individuals across the United States to contact their state legislators:

• Find Your Lawmakers: Websites like USA.gov allow you to find your state legislators based on your address. Simply enter your zip code or state to retrieve the names and contact information of your state senator and representatives.
• Prepare Your Message: Be clear and concise. Whether you’re writing an email, making a phone call, or planning a visit, know exactly what you want to say. Prepare a brief message that includes your name, your address (to prove you are a constituent), and the specific issue or bill you’re concerned about. Be specific about what action you want the lawmaker to take, such as supporting or opposing a bill.
• Make It Personal: Share a personal story or explain how the issue affects you, your family, or your community. Personal stories can be more impactful than generic appeals.
• Stay Engaged: After sending your message, consider following up if you haven’t received a response in a week or two. A polite follow-up email or call can remind them of your concern.
• Encourage Others: Share the steps for contacting lawmakers with friends, family, and on social media. The more people voice their opinions on an issue, the more likely it is to gain attention.

Engage in discussions, share your insights, and express your support for policy adjustments that prioritize the welfare of low income families while maintaining the program’s integrity. Whether it’s through email, phone calls, or community meetings, your involvement can make a significant difference.

Remember, real change starts with informed and active participation. Contact your local representatives today and advocate for a SNAP program that truly reflects our community’s values of support, fairness, and compassion. Let’s work together to ensure that no family has to choose between saving for the future and having enough to eat today.

How Do Millionaires Get Food Stamps?

Some millionaires get food stamps when asset limits are removed. That’s because their wealth is mostly held in assets and is not reflected as traditional income. When states use the Broad-Based Categorical Eligibility Provision to stop performing asset tests, it makes it possible for wealthy individuals with high assets and limited incomes to get essential benefits.

That’s why asset limits, while annoying for users, are a critical component of the food stamps calculation. They protect the integrity of the program, ensuring that wealthier individuals with substantial assets are not able to receive these essential benefits for low income Americans. In this article, we explained the role of asset limits, how millionaires get food stamps when they are removed, and what states can do instead to protect and optimize this program.

Nicole Thelin

Nicole is the founder and lead researcher of Low Income Relief. After a personal experience with poverty and homelessness following her husband's sudden medical discharge from the U.S. Army, Nicole discovered the life-changing impact of community resources. This experience ignited her passion for empowering others to navigate similar crises. Nicole launched her writing career at age 16, working for various newspapers and publications. Her commitment to in-depth research and accessible content has been recognized by Google for Publishers and other industry leaders. For over 20 years, she has applied her investigative skills to uncover the most helpful, up-to-date information on benefits programs and community resources, ensuring Low Income Relief maintains the most extensive resource databases available.