SNAP Overview: America’s Food Stamp Program

By Ryan C. Fuhrmann, CFA. May 7th 2016

Many Americans have heard of food stamps, a government program to help lower-income individuals, families and others in need to receive basic food and nutrition. In 2008, to further emphasize the nutritional aspects that go with serving the needy, the Federal Food Stamp Program officially changed its name to the Supplemental Nutrition Assistance Program (SNAP). The organization officially falls under the influence of the United States Department of Agriculture (USDA) Food and Nutrition Service. Below is an overview of the program, who is eligible for SNAP, how to apply for benefits and other important considerations. 

Program Overview

On October 1, 2008, the Federal Food Stamp Program officially became SNAP. According to the official website under the federal USDA site, “The new name reflects the changes we’ve made to meet the needs of our clients, including a focus on nutrition and an increase in benefit amounts.” At that time, the minimum monthly benefit increased to $14 per month. The site also points out that SNAP is the federal name for the program, and that separate state programs can have different names. As a result, it is important to check for local SNAP programs and any differences that may exist from the federal one. 

Program participation and costs date back to 1969 on the website. More than four decades ago, an average participation rate was nearly 2.9 million individuals that each received an average of $6.63 per month. Back then, the entire cost of the program ran at just over $250 million annually. Fast forward to 2012, and an average of 46.6 million people received benefits, received an average of $133.41 per month, and the total program costs $78.4 billion annually. These total costs combine the federal and state assistance provided. The top five state programs are Texas, California, Florida, New York and Michigan, where the average annual issuance costs exceed $3 billion per state. 

Who Is Eligible

According to SNAP, eligibility depends on a number of factors. These include the number of individuals in a household applying, income levels and financial resources such as savings levels and related net worth considerations. Receiving benefits elsewhere, such as through Welfare of California’s Supplemental Security Income program, can affect eligibility and overall payout levels. 

SNAP has a pre-screening tool that can help individuals determine if they are eligible. The tool asks basic questions, such as where an individual lives, the number of people in the household, if any member is a migrant farm worker, and if the household is currently living in a homeless shelter. After listing household members, their age and other details including citizenship status and whether the individual is disabled, a detailed asset report is required. 

At this point, SNAP points out that liquid asset levels above $2,000 in vehicles including a bank checking or savings account, or even through the value of a motor vehicle, likely indicate the household or individual is not eligible for benefits. However, this may exclude certain asset categories such as a home, belongings, life insurance, 401(k) plans and burial plots. Again, state stipulations can differ and make it important to check with local SNAP affiliates. 

How To Apply

According to SNAP, an individual or household must first submit an application at a local SNAP office. At this point the office will reach out to schedule an interview and determine if further information is required. The opportunity to submit online applications varies by state, as does the availability of digital state requirements. More sophisticated digital sites let applicants apply, check on the status of an application, and determine their ability to apply for benefits if already receiving other benefits, again from welfare or other state programs. 

Where to Receive Benefits

Applicants that are successfully accepted into the SNAP program will then be able to use an electronic card that resembles a debit card at an accepted retail store. SNAP authorizes retailers, details of which can be found online and again depend on state location. Retailers are able to apply to accept the SNAP card, meaning locations are always changing. A wide array of retailers might be eligible and can even include local farmers’ markets. 

Other Considerations

As with any large program, applicants and program beneficiaries will have many questions. The SNAP website covers the above matters in great detail, as well as more basic and even creative questions such as why successful applicants are able to purchase “junk food”, or whether bottled water is an acceptable purchase with a SNAP card. It even explains whether baby food and formula are covered. According to SNAP, “You can use SNAP benefits to buy foods for the household to eat, such as breads and cereals, fruits and vegetables, meats, fish and poultry, and dairy products. You can also use your benefits to buy seeds and plants, which produce food for the household to eat. You CANNOT use SNAP Benefits to buy beer, wine, liquor, cigarettes or tobacco; nonfood items, such as pet foods, soaps, paper products and household supplies; vitamins and medicines; food that will be eaten in the store; and hot foods.”

The Bottom Line

During economic downturns and general rises in unemployment, the SNAP program will see an increase in applications and individuals in need. Since 1969, benefits have grown markedly, which is logical because the population of the United States has grown immensely since then. However, so has prosperity, though regardless of the higher wealth levels there will always be individuals that need a helping hand with making ends meet.

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