110 HR 3172 IH: Freedom To Save Act of
U.S. House of Representatives
2007-07-25
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.
(a)This Act may be cited
as the Freedom To Save Act of
2007
.
(b)Congress
finds the following:
(1)Under current law applicable to the food
stamp program, a household may not have assets that exceed $2,000 (or $3,000 in
the case of a household that includes an elderly or disabled member). The
program is federally funded, but States can modify or eliminate assets through
categorical eligibility (automatic benefits through qualifications for other
assistance programs). Benefit levels can be reduced by unearned income, which
arise from interest on past savings accounts, retirement accounts, or
educational accounts. States count the amount that exceeds the fair market
value of $4,650 of a household vehicle, unless they follow TANF rules. States
have the discretion to exclude some assets that are excluded in TANF or
Medicaid.
(2)For low-income families who may need to
rely on government assistance in the face of an emergency, saving is actively
discouraged by asset limit policies, especially in formal financial
institutions. Recent qualitative research indicates that asset limits serve to
discourage low-income families from saving, especially in formal financial
institutions. These men and women realize that saving is penalized in the
current welfare system and if they choose to save, their benefits will be
reduced or eliminated.
(3)Without a safety net of personal savings,
it is more difficult for low-income families to graduate from government
assistance and achieve true self-sufficiency—the goal of the 1996 welfare
reform. Forcing individuals to “spend down” personal savings in order to
qualify for assistance leaves families vulnerable to temporary income shocks
due to emergency or temporary unemployment. Precautionary savings will reduce
overall dependence on public assistance.
(4)(A)SSI is federally administered with asset
limits of $2,000 for individuals and $3,000 for couples. Assets may be reduced
by unearned income from interest on past savings accounts or other assets. One
household vehicle is excluded from the asset tests, but the value of any other
vehicles is counted as assets.
(B)Individuals with disabilities who
receive SSI benefits and are able to work for short periods of time are
penalized for saving any money they earn with a complete loss of
benefits.
(5)TANF is a cash assistance block grant
program whose policies are set by individual States. The 1996 welfare reform
law gave states the discretion to set asset limits for TANF, or waive the limit
entirely. Today, States’ asset limits vary from $1,000 to no limit, with most
set from $1,000 to $3,000. A number of States have reformed their asset
limits:
(A)Virginia and Ohio have already eliminated
the asset limit for TANF. To date, Virginia reports administrative savings due
to streamlining the eligibility process and has experienced no increase in
fraud.
(B)16 States have liberalized the financial
asset limit for TANF to allow assets of more than $2,000. 29 States have
liberalized their vehicle allowances by either eliminating the value of at
least one vehicle, or by raising the allowable value of a household
vehicle.
(6)(A)Within broad Federal
guidelines for the SCHIP program, each State determines the design of its
program, eligibility groups, benefit packages, payment levels for coverage, and
administrative and operating procedures. States have substantial flexibility in
setting asset criteria in public health insurance plans for children under
Medicaid and the State Children’s Health Insurance Program (SCHIP).
(B)49
States waive asset tests altogether; 2 states (Oregon and Texas) have asset
limits in their separate SCHIP programs.
(C)Parents applying for public health
insurance face more restrictive eligibility criteria than children. 19 States
have waived the asset test for parents; 6 states continue to limit assets to
$1,000 per household; and 26 States have asset limits that range from $2,000 to
$30,000.
(7)The personal
savings rate was negative in 2005 and 2006 according to the Department of
Commerce, meaning that spending outstripped disposable income for the first
time since the Great Depression.
(8)Asset limits are inefficient and, in some
programs, entirely unnecessary. According to the Federal Reserve, most poor and
near-poor families hold little to no wealth: in 2004, 17 percent of all
households had zero or negative net worth, while 29.6 percent had a net worth
of less than $10,000. Few families who meet the low income eligibility
thresholds that govern eligibility for major income support programs have any
significant asset holdings. For people with disabilities, 38 percent live on
less than $15,000 annually, and that 58 percent are asset poor.
(9)A consistent segment of the American
population remains outside the financial mainstream where they rely on costly
check cashing and lending institutions: 11 percent of households do not have a
checking account and 9 percent do not have a transaction account of any kind.
54 percent of people with disabilities have no savings accounts, and 69 percent
have no checking accounts. Low-income families who rely on public assistance
are less likely to use a formal financial institution, in part out of fear that
any account balance will be penalized by a reduction in benefits.
(10)According to the Center for Social
Development, the presence of savings and even small asset holdings by a
household is associated with a range of positive outcomes, including increased
economic stability, educational attainment and performance, and health and
psychological well-being.
(11)Increasing the number of households that
save and the amounts that they save will allow more Americans to achieve
greater control, security, independence, and choice in their lives.
2.Modification of asset
test under Food Stamp program
(a)Section 5(g) of the
Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended—
(1)by
striking (g)(1) The Secretary
and inserting the
following:
(g)Allowable
Financial Resources
(1)
(A)The
Secretary
;
(2)in subparagraph
(A) (as designated by paragraph (1)—
(A)by striking
$2,000
and inserting $6,000 (as adjusted in accordance
with subparagraph (B))
; and
(B)by striking
$3,000
and inserting $8,000 (as adjusted in accordance
with subparagraph (B))
; and
(3)by adding at the
end the following:
(B)
(i)Beginning on October 1, 2007, and each October 1
thereafter, the amounts in subparagraph (A) shall be adjusted to the nearest
$100 increment to reflect changes for the 12-month period ending the preceding
June in the Consumer Price Index for All Urban Consumers published by the
Bureau of Labor Statistics of the Department of Labor.
(ii)Each
adjustment under clause (I) shall be based on the unrounded amount for the
prior 12-month
period.
.
(b)Section 5(g)(6)(B)(iii) of the Food Stamp Act of 1977 (7
U.S.C. 2014(g)(6)(B)(iii)) is amended by inserting (as defined by the
Secretary)
after available
.
(c)Exclusion of
retirement accounts from countable financial resources
(1)Section 5(g)(2)(B)(v) of the Food Stamp Act of 1977 (7
U.S.C. 2014(g)(2)(B)(v)) is amended by striking or retirement account
(including an individual account)
and inserting
account
.
(2)Mandatory and
discretionary exclusionsSection 5(g) of the Food Stamp Act of
1977 (7 U.S.C. 2014(g)) is amended by adding at the end the following:
(7)Exclusion of
retirement accounts from countable financial resources
(A)The Secretary shall exclude from financial resources
under this subsection the value of any funds in a plan, contract, or account,
described in sections 401(a), 403(a), 403(b), 408, 408A, 457(b), and 501(c)(18)
of the Internal Revenue Code of 1986 and the value of funds in a Federal Thrift
Savings Plan account as provided in section 8439 of title 5, United States
Code.
(B)The Secretary may exclude from financial resources
under this subsection the value of any other retirement plans, contracts, or
accounts (as determined by the Secretary through
regulation).
.
(d)Exclusion of
education accounts from countable financial resourcesSection
5(g) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) (as amended by section 3)
is amended by adding at the end the following:
(8)Exclusion of
education accounts from countable financial resources
(A)The Secretary shall exclude from financial resources
under this subsection the value of any funds in a qualified tuition program
described in section 529 of the Internal Revenue Code of 1986 or in a Coverdell
education savings account under section 530 of that Code.
(B)The Secretary may exclude from financial resources
under this subsection the value of any other education programs, contracts, or
accounts (as determined by the Secretary through
regulation).
.
(e)Exclusion of
vehicles from countable financial resourcesSection
5(g)(2)(B)(iv) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)(2)(B)(iv)) is
amended to read as follows:
(iv)subject to subparagraphs (B) and (C), any
licensed vehicle that is not used for household transportation or to obtain or
continue
employment.
.
3.Prohibition on
use of asset test under the Temporary Assistance for Needy Families (TANF)
program
(a)Section 408(a) of the Social Security Act
(42 U.S.C. 608(a)) is amended by adding at the end the following:
(12)Prohibition on
imposition of asset testA State to which a grant is made under
section 403 shall not consider the level or types of assets or resources of an
individual or family in determining the eligibility of the individual or family
for, or the amount or types of assistance to provide to the individual or
family under the State program funded under this
part.
.
(b)Section
409(a) of such Act (42 U.S.C. 609(a)) is amended by adding at the end the
following:
(16)Penalty for
imposition of asset test
(A)If the Secretary determines that a State to which a grant
is made under section 403 in a fiscal year has violated section 408(a)(12)
during the fiscal year, the Secretary shall reduce the grant payable to the
State under section 403(a)(1) for the immediately succeeding fiscal year by an
amount equal to not less than 1 percent and not more than 5 percent of the
State family assistance grant.
(B)Penalty based on
severity of failureThe Secretary shall impose reductions under
subparagraph (A) with respect to a fiscal year based on the degree of
noncompliance.
.
(c)The amendments made by this section shall take effect on
July 1, 2008.
4.Elimination of
asset test for disabled persons under the Supplemental Security Income (SSI)
program
(a)Section 1611(a) of the Social Security Act (42 U.S.C.
1382(a)) is amended in each of paragraphs (1)(B) and (2)(B) by inserting
in the case of an individual who is aged or blind,
before
whose
.
(b)
(1)Section 1602 of such Act (42 U.S.C. 1381a)
is amended by inserting (in the case of an individual who is aged or
blind)
before resources
.
(2)Section 1621(a) of
such Act (42 U.S.C. 1382j(a)) is amended by striking an
individual
and inserting a blind or disabled
individual
.
(3)Section 1631(b)(3)
of such Act (42 U.S.C. 1383(b)(3)) is amended by inserting (as in effect
before the effective date of section 4 of the Freedom to Save Act of
2007)
after section 1611(a)
.
(c)The amendments made by this section shall apply to benefits
for months beginning on or after July 1, 2008.
5.Elimination of
asset test under State children’s health insurance program
(SCHIP)Section 2102(b) of the
Social Security Act (42 U.S.C. 1397bb(b)) is amended—
(1)in paragraph (1)(A), by striking
income and resources (including any standards relating to spenddowns and
disposition of resources)
and inserting and income
;
and
(2)in
paragraph (1)(B)—
(A)by striking
and
at the end of clause (i);
(B)by striking the
period at the end of clause (ii) and inserting , and
; and
(C)by adding at the
end the following new clause:
(iii)may not deny
eligibility, or vary the amount of benefits under this title, based on assets
or
resources.
.
6.Except as otherwise
provided in this Act, the amendments made by this Act shall apply to assistance
furnished on or after July 1, 2008.