Close Welfare Eligibility Loopholes

Author: Rachel Greszler, Senior Research Fellow

Affordability 101 · Chapter 10: Accountability and Oversight

Plymouth Institute for Free Enterprise

Topline

Congress should eliminate the Broad-Based Categorical Eligibility (BBCE) loophole that allows millions of otherwise ineligible people to qualify for welfare.

Background

BBCE allows states to expand Supplemental Nutrition Assistance Program—SNAP, or food stamps—beyond federal income and asset standards simply through the provision of a nominal welfare benefit that can be as trivial as a brochure.

The Department of Agriculture estimated that this categorical eligibility resulted in 5.6 million individuals who did not meet the federal eligibility standards nonetheless receiving SNAP benefits. Only seven states do not use BBCE and instead apply the federal eligibility and asset standards of SNAP. The percentage of the population that receives SNAP benefits is 50% higher in states that use BBCE (12.3%) than in those that apply federal SNAP standards (8.0%)—and yet, the average poverty rate is identical across both groups. This loophole also opens the door to fraudsters by making it easier to wrongly claim eligibility. An estimated 82% of all improper payments in SNAP came from individuals who claimed eligibility through BBCE.

Action Items (Congress, the Administration, and States)

• Congress should eliminate BBCE and require states to follow federal SNAP eligibility standards.
• If Congress does not act, the administration should implement a rule—one it is working on—to limit BBCE to households receiving substantial cash TANF benefits, rather than allowing nominal, non-cash benefits to qualify.
• States should not use BBCE and should follow federal SNAP eligibility standards.

How It Would Make Life More Affordable

• Eliminating BBCE would save federal taxpayers an estimated $100 billion and state taxpayers an additional $10 billion between 2026 and 2035.

Related Legislation: No Welfare for the Wealthy Act of 2025 (H.R. 416).

Bottomline

Congress should protect taxpayer dollars and preserve SNAP benefits for those in need by closing eligibility loopholes that let wealthy people receive welfare.

This memo is part of Affordability 101, Advancing American Freedom’s playbook of 101 policy solutions to make life more affordable.

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