News Story

Millionaires Eligible For Welfare? Proponents Of Rule Change Say It’s Technically Possible

Critic calls system ‘completely divorced from the original congressional intent’

A proposed federal rule change on food stamp eligibility could soon end benefits for tens of thousands of Michiganders who are enrolled in the program by virtue of having qualified for other forms of welfare.

The new regulation is aimed at “preserv(ing) the integrity of the program while ensuring that nutrition assistance programs serve those most in need,” Agriculture Secretary Sonny Perdue said in announcing the proposal in July.

It would revoke regulations and guidance issued during the Clinton and Obama administrations. Those changes had allowed states to grant “categorical eligibility” for food stamps to those already enrolled or eligible for other kinds of welfare programs, such as cash assistance or child care subsidies.

The Michigan Department of Health and Human Services estimates that about 144,000 people in the food stamp program (formally known as the Supplemental Nutrition Assistance Program, or SNAP) would be affected.

Critics of categorical eligibility for SNAP say the previous revisions created a loophole that undermines the core principle of the program — providing food security to the truly needy. Income thresholds required for eligibility for other forms of welfare are often higher (200% of poverty rather than 130% for food stamps), they say.

Asset limits are also less stringent for SNAP under current rules, making it hypothetically possible for a millionaire with little or no regular income to qualify, according to those who support the proposed change.

Only seven states used the categorical eligibility standard in 2006, but 43 (including Michigan) did so in 2017, said Scott Centorino, a senior fellow at the Foundation for Government Accountability.

Nationally, participation in the program rose sharply, peaking at 47.6 million in 2013. As a result, the food stamp program has been “completely divorced from the original congressional intent,” Centorino said.

In some circumstances, the act of applying for food stamps makes a person a recipient of welfare and therefore categorically eligible, he said. That’s because federal welfare funds are used to produce the application.

A spokesman for Michigan’s human services department defended the use of categorical eligibility as way to save time and money, adding that those who would lose benefits under a rule change are genuinely needy.

Spokesman Bob Wheaton said virtually all food stamp recipients in Michigan are subject to screening for income and assets. Applying for benefits does not make an applicant categorically eligible for food stamps in Michigan, he said, although applicants who are eligible for other programs but not receiving their benefits can still obtain food stamps.

Gov. Gretchen Whitmer has joined a coalition of governors opposing the proposed new rule, calling it an “attack on low-income Americans.”

The number of food stamp recipients in Michigan has fallen sharply since peaking at nearly 2 million in the wake of the Great Recession to under 1.2 million today.

The decline is attributed largely to gains in employment and household income. But the state also enacted work requirements for able-bodied adults on food stamps in 2018. Earlier in the decade, several well-publicized stories that provoked public outrage came out of Michigan. They involved six-figure lottery jackpot winners who continued to receive benefits. State lawmakers responded with legislation that authorized welfare administrators to purge lottery winners from the rolls.