HB 1625: Modernizing the Vehicle Asset Test House Committee on Human Services March 19, 2009 Celia Hagert, Senior Policy Analyst

Asset Policies in Public Benefit Programs Most non-liquid assets are exempt Limit on total liquid assets (cash, stocks, etc.) Vehicle limits vary across programs. In general: –some vehicles are exempt, and –a portion of the Fair Market Value (FMV) of add’l vehicles is counted as a liquid asset

Current vehicle policies TANF/Adult Medicaid: The FMV above $4,650 of most vehicles is counted toward $1,000 liquid asset limit. Food Stamps: The FMV above $15,000 of one vehicle and FMV above $4,650 of most additional vehicles is counted toward $5,000 liquid asset limit. Children’s Medicaid: One vehicle is exempt; FMV above $4,650 of most additional vehicles is counted toward $2,000/$3,000 (for households incl. member who is aged or disabled) liquid asset limit. Medicaid for Pregnant Women/Children under 1: No asset test.

In addition All programs exempt: –income producing vehicles, and –vehicles used to transport physically disabled members Most programs exempt: –Vehicles necessary for long-distance travel for employment; –Vehicles used as the household's home; –Vehicles necessary to carry primary source of fuel for heating or water; –Vehicles with FMV less than $4,650; –Vehicles with equity value less than or equal to $1,500.

A Fair Asset Test… Ensures that needy individuals and families get can get the help they need and still have reliable transportation Supports other goals of public benefit programs, such as: –Welfare-to-work –Self-sufficiency –Helping families weather bad economic times, –Children’s health, –Helping people with disabilities live independently

Why modernize Current policies no longer allow low-income households, especially working families, to own reliable means of transportation Undermines work –most people on Food Stamps due to loss of earnings; need car to get back to work TANF/Food Stamp policy is out of step with the vehicle policy for Children’s Medicaid. Counting Fair Market Value of vehicles penalizes families with little to no equity value

Spotlight on TANF TANF vehicle asset limit is based on a 32-year-old Food Stamp law, which required states to count FMV above $4,500. This exemption was not indexed to inflation and has been raised only $150 in 32 years. TANF vehicle limit would need to be set at more than $11,000 today to have the same real value that the $4,500 limit had in 1977.

Why a Common Policy States have complete flexibility under federal law to design their own vehicle policies, with only a few exceptions Current vehicle policies are complicated and hard to administer A common policy would provide workload relief at a time when system is struggling to keep up with meet and is not meeting federal standards

Other States – Food Stamps 33 states exclude the value of all vehicles 7 states exclude the value of one vehicle per adult, apply federal food stamp rules to subsequent vehicles 5 states exclude the value of one vehicle per household, apply federal Food Stamp to subsequent vehicles 4 states apply a less restrictive FMV or equity test to the first vehicle, apply food stamp rules to additional vehicles 1 state excludes the value of all vehicles for families with children and 1 vehicle for all other households 1 state excludes vehicles based on the use of the vehicle (exempting most vehicles)

SOURCE: Center on Budget and Policy Priorities,

Other examples of asset test modernization 2008 Farm Bill excluded most retirement and education savings from Food Stamp asset test Texas Legislature adopted a more reasonable asset test for CHIP in 2007 Texas Legislature modernized the Food Stamp asset test in 2001

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