Iowa lawmakers pass new asset test for SNAP benefits that could kick off thousands

Iowa lawmakers have approved a bill to require new asset tests for people receiving food assistance benefits, and regular eligibility checks on all public assistance recipients to make sure they qualify.

The Iowa House voted 58-41 Thursday evening to pass Senate File 494, with only Republicans voting in favor. Five Republicans joined Democrats in voting no after nearly four hours of debate.

The Senate passed the bill in March, so the House vote sends it to Gov. Kim Reynolds for her signature.

The bill culminates years of efforts from Iowa Republicans to place new requirements and identity verification on those receiving public assistance benefits, which supporters say will save taxpayer dollars and ensure benefits are going to those who need them.

"If you’re eligible for the benefit, you will receive the benefit," said Rep. Joel Fry, R-Osceola, the bill's floor manager. "It protects the program for those who need it most, and I would suggest to you that we are creating a safety net that is sustainable for the long term."

Democrats and a coalition of nonprofits and anti-hunger advocates have argued against the bill, pointing out that fraud is low, deserving families could lose benefits and food assistance like the Supplemental Nutrition Assistance Program (SNAP) is entirely federally funded.

More than 200 faith leaders across Iowa signed a letter to Reynolds and legislative leaders saying they oppose the bill "on moral, religious and humanitarian grounds."

"Quite simply, this bill takes food — nutrition — away from poor children, disabled people, the elderly, the most vulnerable members of our society, with absolutely no economic benefit to Iowa taxpayers," said Rep. Josh Turek, D-Council Bluffs.

House Republicans passed the bill without a provision they proposed in a previous bill to ban Iowans from using public assistance funds to buy candy and sugary soda.

What will the public assistance bill do?

The wide-ranging bill would require state agencies that deliver benefits, such as the Department of Health and Human Services and Iowa Workforce Development, to check new sources of information to determine if Iowans are eligible.

Before Iowans could be enrolled in benefit programs, they would need to verify their identity through a questionnaire that could be completed online, in person or by phone, but could not be done through a paper application.

The bill would require Medicaid recipients in Iowa to cooperate with child support services as a condition of receiving benefits through the program.

"That’s a critical piece of this bill in which young moms, young dads will have the opportunity to receive the benefits that are due to them from child support," Fry said.

Any Iowa households with liquid assets of more than $15,000 would not be allowed to receive SNAP benefits. The limit would not count the value of a home, the household's first car and up to $10,000 of the value of a second household car.

Democrats said the bill's asset test would discourage people from saving for college or a home or to guard against unexpected emergency costs.

"The idea that someone has to watch that they are not saving too much or they will lose their food is appalling to me," said Rep. Elinor Levin, D-Iowa City. "We do not pay for food with our emergency savings. We do not pay for food with our cars. We do not pay for food with funds we are saving for education. Why on earth would we ask the rest of Iowa to do so?"

How many Iowans receive SNAP benefits?

An average of 287,000 Iowans received SNAP benefits each month in fiscal year 2022, according to an analysis of the bill from the nonpartisan Legislative Services Agency.

Iowans statewide received an average of $60.4 million in SNAP benefits each month in fiscal year 2022. Those benefits are paid entirely by the federal government.

Iowa splits the cost of administering SNAP with the federal government. The state spent $2.2 million on SNAP administration in fiscal year 2022.

Through agency policy, Iowa currently offers SNAP benefits to households making less than 160% of the federal poverty level, which is $48,000 for a family of four. The bill would codify that amount into law.

The federal government requires SNAP benefits to be offered to those making at least 130% of the federal poverty level, or $39,000 for a family of four.

How many Iowans would lose their benefits?

The Legislative Services Agency estimates that, beginning in fiscal year 2026, about 1% of Iowans will have their benefits canceled "due to discrepancies."

That means about 8,000 Medicaid recipients and 2,800 SNAP recipients would be kicked out of the programs.

The agency estimates 600 people would be removed from the Children's Health Insurance Program (CHIP) and 100 would be removed from the Family Investment Program.

Fry disputed that any eligible Iowans would be kicked off their benefits.

"I’ve heard a lot of conversation about who will be removed from the benefits: only those who are ineligible," he said.

How much fraud is there in Iowa's SNAP and Medicaid programs?

A report from the Iowa Department of Inspections and Appeals said 195 SNAP recipients were disqualified from the program in fiscal year 2022 as a result of fraud investigations.

A Legislative Services Agency staffer calculated the fraud rate for SNAP at 0.07% based on the average 2022 enrollment of 287,000 and 195 removals.

The state's Economic Fraud Control Bureau, which investigates several public assistance programs, including SNAP, closed 4,568 cases that year, 2,761 of which were determined to be founded, 1,660 of which were unfounded and 147 others.

The state's Medicaid Fraud Control Unit, which investigates fraud in the Medicaid program, had 260 open cases at the end of fiscal year 2022, including 235 fraud cases and 25 criminal abuse or neglect cases, according to the state report. Of the 235 fraud cases, 188 were multi-state civil cases and 47 were criminal and in-state civil cases.

The unit recovered $1.3 million in Medicaid funds as a result of criminal and civil cases in fiscal year 2022.

The Medicaid program provides roughly $7 billion in health care to more than 800,000 Iowans who are lower income or have disabilities.

How much will it cost for Iowa to verify Iowans' identity and assets?

Passing the bill is expected to cost the state a total of $7.5 million over the program's first two years, according to the Legislative Services Agency analysis.

Much of the cost is due to the need to hire an estimated 218 state government positions to check Iowans' eligibility. More than 100 of those positions would be focused on child support recovery.

In the third year, state costs are projected to decrease by $200,000. And, beginning in the fourth year, state spending is expected to drop by $8.2 million.

Those estimates don't include federal spending. In total, by the fourth year of the program, the agency estimates $42.2 million in reduced spending, which would include the $8.2 million in state spending.

Democrats portrayed the reduced spending as a loss for Iowa, saying that Iowans will still pay taxes, but the benefits will flow instead to other states with more generous programs.

"Once implemented this bill would cost our state $42 million annually in federal money," said Rep. Monica Kurth, D-Davenport, "money that would stay right here in Iowa, would fund jobs, would help our farmers, would turn over within our communities and it would enrich all of us."

House Speaker Pat Grassley, R-New Hartford, told reporters Republicans want to be responsible stewards of both state and federal taxpayer dollars.

"This is about making sure that you qualify for these programs," he said. "I don’t think a state should just run around and want to be collecting all the money they can get their hands on if the program’s not being run efficiently."

Iowa could hire a private company to check public assistance eligibility

If the state hires a private company to run eligibility checks on public assistance recipients, the analysis estimates that would cost $7 million in fiscal year 2027, of which $3.3 million would be state funds.

The analysis assumes a contract with a private company would cost $500,000 annually, with a 10% contingency payment based on total savings.

One of the 18 amendments Democrats offered to the bill Thursday would have eliminated the option of a contingency fee, saying it would reward a company for kicking Iowans off the program.

"When we tell a company that we’re going to give them a 10% bonus, they’re going to work hard to make that bonus," said Rep. Timi Brown-Powers, D-Waterloo. "And to make that bonus you’re going to have to kick these families off."

The Democratic amendments were all voted down or ruled not germane to the bill.

Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.