Long way for Iowa to go in implementing new asset test for aid

Iowa has yet to implement large portions of a 2023 state law that established new requirements and regular checks for Iowans receiving public assistance benefits to determine their eligibility, including an asset test.

Officials from the Iowa Department of Health and Human Services told The Gazette some components of Senate File 494 have been implemented, including those requiring checks of sources of income from the IRS and the Social Security Administration. Other components of the bill’s requirements currently are in process and will take time to implement as they require major upgrades to state information technology systems.

A large portion of the law pertains to the implementation of a new “real-time” eligibility verification system — a list of data sources for the system to cross check, and contracting with a third-party vendor to implement the system.

The law requires Health and Human Services to implement provisions of the bill incrementally, with full implementation no later than July 1, 2025. So far, the state has spent $315,779 to implement pieces of the law, and had yet to hire additional staff.

“The pieces of Senate File 494 that have been implemented at this time have not required new staff,” the department responded in a public records request filed by The Gazette. “As we plan for implementation of the various SF 494 requirements, we will be assessing the needs for any additional resources.”

What does the public assistance law do?

The new law limits households to a maximum of $15,000 in liquid assets and personal property in order to receive Supplemental Nutrition Assistance Program (SNAP) benefits. The applicant’s home, a first car of any value, a second car worth up to $10,000 and retirement accounts will not be included in that calculation. Recipients also cannot have a household income more than 160 percent of the federal poverty level. That equates to roughly $24,000 for an individual or nearly $50,000 for a family of four.

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The new requirements apply to the SNAP food assistance program, the low-income health care program Medicaid, the children’s health care program known as CHIP and the Family Investment Program, which provides cash assistance to needy families.

An analysis by the state’s nonpartisan Legislative Services Agency projected thousands of Iowans eligible for assistance will have their benefits canceled due to discrepancies in enrollment.

Supporters have said the changes will prevent fraud and abuse and ensure only those Iowans truly in need of government assistance are the ones benefiting. They note other federal assistance programs, notably Medicaid, have an asset or “resource” limit and require asset verification.

Democrats and a coalition of nonprofits and anti-hunger advocates say the measure raises unnecessary barriers for low-income Iowans to receive food and health care assistance at a time when heightened food insecurity in Iowa has put growing pressure and strain on food banks and pantries across the state, and that deserving families could lose benefits.

They also point out that fraud is low: 266 out of roughly 280,000 SNAP recipients were disqualified for fraud during the 2023 state budget year, according to a report by the Iowa Department of Inspections, Appeals and Licensing.

There were 241 open fraud cases in the state’s Medicaid program, out of more than 800,000 people enrolled, according to the report. The state's Medicaid Fraud Control Unit recovered $3.5 million in Medicaid funds as a result of criminal and civil cases in fiscal 2023. The Medicaid program provides roughly $5 billion in health care to Iowans who are lower income or have disabilities.

The state's Economic Fraud Control Bureau, which investigates several public assistance programs, including SNAP, closed 4,702 cases in fiscal 2023. Of those, 2,778 were determined to be founded, 1,796 unfounded and 128 were canceled or duplicates, saving the state nearly $5 million.

What will it cost to verify identity and assets?

Implementing the law was expected to cost the state a total of $7.5 million over the program's first two years, according to the Legislative Services analysis.

The agency estimates the state would need to hire 218 full-time equivalent positions to check Iowans' eligibility. More than 100 of those positions would be focused on child support recovery.

The law requires recipients of Medicaid to cooperate with Child Support Services as a condition of eligibility. It requires those who owe child support to make their payments and those who are due child support to cooperate with the state’s efforts to obtain compliance with a child support arrangement in order to receive health care benefits.

In the third year, costs to the state’s general fund are projected to decrease by $200,000. Beginning in the fourth year, state spending is expected to drop by $8.2 million.

Those estimates don't include federal spending. In total, the agency estimates $42.2 million in reduced spending by the end of fiscal 2027, which would include the $8.2 million in state spending.

Erin Drinnin, who oversees child support services, economic assistance programs and wellness and preventive health at the Health and Human Services department, told lawmakers during a subcommittee meeting earlier this year the child support cooperation requirements places “significant demands on workforce and IT,” without additional funding for staff support.

The new law also requires a computerized authentication process to confirm the identity of those applying for assistance benefits through a questionnaire consisting of financial and personal questions. That provision also has yet to be implemented.

What about federal approval?

SF 494 directs the Health and Human Services department to seek federal approval if necessary to implement the law.

SNAP and Medicaid are administered by states, according to federal requirements. Medicaid is funded jointly by states and the federal government, while SNAP funding for benefits is received from the federal government.

No amendments or waivers have been requested to date. State officials told The Gazette they don’t anticipate needing to ask for federal waivers.

According to the U.S. Department of Agriculture’s Food and Nutrition Service, Iowa does not need approval to change its broad-based categorical eligibility policy to add an asset test for SNAP recipients.

A Centers for Medicare & Medicaid Services spokesperson said in general, parents or caretakers applying for Medicaid must cooperate with child support enforcement agencies to establish paternity and obtain medical support. That may include assigning rights to private health care coverage to the state. If parents do not cooperate, they may lose their Medicaid coverage, but their children can still receive it. However, states cannot suspend the enrollment process for either the parent or child while they're waiting for cooperation.

Comments: (319) 398-8499; tom.barton@thegazette.com