SNAP Has an Eligibility Loophole. Congress Needs to Close It.

Romina Boccia and Tyler Turman

The Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, served 41.7 million Americans and cost taxpayers $100 billion in fiscal year 2024.

Congress established firm income and asset limits to target households with the greatest financial need. Yet, states have found a way around these rules.

Through a policy called broad-based categorical eligibility (BBCE), states can bypass federal eligibility standards and draw down more federal dollars. The result: Millions of people are receiving SNAP benefits that Congress never intended.

Congress has so far failed to close this loophole, so United States Department of Agriculture (USDA) Secretary Brooke Rollins is considering taking action. But only legislation can fully restore SNAP’s eligibility standards. Representative Ben Cline’s (R‑VA) No Welfare for the Wealthy Act (H.R. 416) would require all households on SNAP to meet the program’s federal income and asset requirements.

How States Exploit Categorical Eligibility

Federal law provides two pathways to qualify for SNAP:

• Statutory eligibility: gross income at or below 130 percent of the federal poverty level (FPL)—$2,292 for the average two-person household—net income (gross income minus deductions for certain expenses) at or below 100 percent of FPL, and countable assets under $3,000 ($4,500 for elderly or disabled households).
• Categorical eligibility: automatic qualification for households receiving or authorized to receive benefits from other welfare programs, such as Temporary Assistance for Needy Families (TANF).

Congress made categorical eligibility a permanent feature of SNAP to reduce paperwork. But over time, the USDA stretched this authority to broaden SNAP far beyond Congress’s intent. The USDA currently recognizes three types of categorical eligibility:

• Traditional categorical eligibility: Households receiving specifically cash benefits from programs such as TANF are SNAP-eligible. Federal law requires states to implement this form of categorical eligibility. Eligibility requirements for TANF cash assistance are more restrictive than SNAP in many states.
• Narrow categorical eligibility: States can confer categorical eligibility through noncash TANF benefits, but these are primarily limited to services such as childcare or counseling.
• Broad-based categorical eligibility: States can make most, if not all, low-income households categorically eligible for SNAP if they receive or are authorized to receive minimal noncash TANF benefits or services. The USDA’s 2000 regulation allowed states to raise gross income limits up to 200 percent of FPL when determining eligibility for noncash TANF benefits aimed at reducing out-of-wedlock pregnancies or promoting two-parent families. In 2009, the USDA added that even pamphlets and hotline referrals could qualify as noncash TANF benefits. Another memo clarified that states could, in addition to raising gross income limits, also increase or eliminate asset limits for these noncash benefits through BBCE. By 2011, even notices of eligibility could count as a benefit. States that use BBCE are not required to impose net income tests, but households would still be subject to the gross income limit.

As of 2025, 43 states and the District of Columbia have seized the opportunity to grow their SNAP rolls at federal taxpayers’ expense by adopting BBCE. The Foundation for Government Accountability recently estimated that 5.9 million people are on SNAP through BBCE despite not meeting federal eligibility criteria. This costs taxpayers almost $11 billion in annual benefits.

Setting the Rules Straight

Congress nearly took a step toward eliminating BBCE during debate on the One Big Beautiful Bill Act (OBBBA), but Representative Michael Cloud’s (R‑TX) amendment to close the loophole was excluded from the final legislation.

The USDA now appears ready to act through regulation. A preliminary notice indicates that the department would limit categorical eligibility to “ongoing and substantial” benefits from TANF-funded programs “designed to assist households and move them towards self-sufficiency.” This would eliminate states’ ability to use BBCE to trigger SNAP eligibility for those beyond SNAP’s gross income and asset limits with “token TANF” benefits.

This would be an improvement, but it is not enough. Any changes that the USDA makes through regulation can be undone through regulation. Case in point: Trump’s USDA proposed reining in BBCE in 2019, but Biden’s USDA withdrew it in 2021. The No Welfare for the Wealthy Act would align SNAP eligibility with federal law without loopholes and, more importantly, establish durable boundaries that can be reversed only by another act of Congress, unlike agency regulations that can flip-flop with every administration.

Aligning Authority with Accountability

States’ abuse of BBCE has allowed people with six-figure assets, millionaires, and lottery winners to receive SNAP benefits. It should be abolished.

Defenders of BBCE argue that it gives states the necessary flexibility to adjust income and asset limits to reflect their local economic conditions. But SNAP is a program funded almost entirely by the federal government. Asking Uncle Sam for more “flexibility” in spending taxpayers’ money is akin to a teenager asking Dad for the “flexibility” to use his credit card.

The states are free to experiment with eligibility rules for welfare programs as they please—if they’re willing to pay for them. Congress can further empower states by devolving welfare programs and having them take more fiscal responsibility for how they are run. This would align authority with accountability and give states the flexibility to tailor their programs to local needs but with the fiscal incentive to manage them judiciously. Additionally, devolution would eliminate the perverse incentive states have to maximize enrollment through loopholes such as BBCE because the federal government would no longer be footing the bill.

However, some states may be ill-equipped to pay for their share of more than 40 million people’s SNAP benefits. Additionally, starting in FY 2028, many states may be on the hook to pay for part of their SNAP benefits if they have payment error rates above 6 percent due to OBBBA’s matching fund requirements. Since SNAP participants eligible through BBCE have been tied to disproportionately high payment error rates compared to other households, eliminating this policy could help states lower their improper payments and meet OBBBA’s requirements. More importantly, SNAP’s devolution to the states should begin with rightsizing the program by removing those who do not meet its statutory eligibility requirements. Congress should establish firm eligibility standards for SNAP, as Representative Cline’s No Welfare for the Wealthy Act would do.