Opportunities and Challenges in Reimagining SNAP to Eliminate the Benefits Cliff

When we’ve asked families what benefit they are most concerned about losing, SNAP is often at the top of the list. No parent wants to put their children at risk of going hungry. For a household facing financial instability, SNAP provides reassurance that if nothing else there will be food for the kids. While SNAP is a critical resource for many families, it’s current design can create administrative challenges, and it’s complex eligibility rules are often opaque and unpredictable for families, leaving many facing steep cliffs. AEI’s proposal to reform SNAP has promising features to make SNAP work better for families, but there are opportunities to build upon the AEI framework in order to protect the most vulnerable and to better promote work.

Promising Features: Promoting Simplicity, Improving Predictability, and Eliminating Benefits Cliffs

Currently, SNAP eligibility is based on a cumbersome and complex set of rules. Households may qualify for additional assistance if they have certain qualifying expenses like childcare expenses but not for other essential needs like the transportation costs to get to work. Documenting these expenses in an administratively acceptable way can be onerous for families and for government workers alike. These deductions then feed into what feels for many a convoluted formula that declares some eligible and some ineligible even when they have the same income. In short, it’s a system that frustrates families and increases government inefficiencies.

By eliminating these deductions and making SNAP income eligibility primarily a function of gross income, the proposal creates a more administratively simple solution while also increasing transparency and predictability for participants. Understanding what will happen to benefits as earnings increase will be a straightforward calculation for households.

Importantly, this proposal tackles the benefits cliff head on by eliminating the arbitrary income eligibility limits that can reduce SNAP assistance from hundreds of dollars per month to nothing due to earning even a single dollar too much. By phasing out SNAP assistance at consistent rate without arbitrary income cutoffs, parents can increase earnings without the fear of losing more in SNAP than has been gained through work.

Protecting the Most Vulnerable

While the proposal makes for a simpler system for SNAP participants to navigate and for government workers to administer, it will also lead to disproportionate reductions in assistance for some groups. For example, if this reform were applied to those currently receiving SNAP assistance, older adults, those with work-related childcare expenses, and those experiencing high inflation-driven housing costs would see substantial decreases in benefits (a 27% or greater reduction).

One way to offset some of these unintended side effects while maintaining the proposal’s administrative efficiencies and benefit predictability would be to introduce a standard deduction available to all participating households. This deduction could be on a “per household” basis as is the case with a modest standard deduction that currently exists under SNAP rules or could be a “per person” deduction or some combination of the two. While this isn’t a perfect solution reducing cost savings and making the benefit calculation formula a little more complex, it blunts some of the larger reductions in benefits for the most financially vulnerable, particularly older adults, adults with disabilities, and those with high qualifying expenses.

Rewarding Work

Under current SNAP rules, the earned income deduction allows a portion of income generated from work to be excluded from the eligibility determination. This provides a direct financial incentive to SNAP recipients to increase their earned income and ultimately to exit dependence on government assistance. Eliminating this deduction as suggested in the AEI proposal would remove this work incentive in the long term while in the near term, disproportionately reducing benefits for working families. By maintaining the 20% earned income disregard in SNAP, work will continue to be the clear preference for those who get SNAP assistance.

SNAP is complicated, and there are no easy answers when it comes to reforming the program to achieve the best outcomes for those currently receiving it and to facilitate more families increasing their employment. AEI’s proposal offers an invitation for all of us to imagine a better approach, and it includes several features like administrative simplicity, benefit transparency, and the elimination of benefits cliffs that should be guiding principles for any reform effort. Thoughtful adjustments to this proposal could serve as a framework for a more efficient and effective program that preserves assistance for financially vulnerable groups like the elderly while addressing the benefits cliff, ensuring work is rewarded, and leading to more economic advancement and reduced dependency. That means more government savings, more tax revenues, and more flourishing families.