Food Stamps: New Report Outlines 5 Possible Ways To Combat SNAP ‘Benefits Cliffs’ at Federal Level — Would They Save Recipients Money?

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Many Americans rely on the Supplemental Nutrition Assistance Program (SNAP) to afford their groceries, but some have fallen into a cycle (or trap) of dependency, known as the SNAP benefits cliff.

A benefits cliff is when a household loses more in net income and benefits from governmental assistance programs — like SNAP — than it gains from additional earnings. According to a report by the Georgia Center for Opportunity, this net loss is a “perverse incentive” discouraging any desire to increase income.

“The very basic concept is that when you lose more in taxes and benefits than you receive from a gain in additional earnings, that’s how we’re defining a cliff,” Erik Randolph, GCO’s research director, told The Center Square. “Let’s say that you get a pay raise worth $2,000, but you actually lose $3,000, you’re $1,000 behind; you’re worse off financially than what you were.”

The report noted that SNAP benefits cliffs are at a 20-year high, and the situation has worsened. To have an effective safety net program, four critical factors must be aligned: the starting point, the tapering point, the benefit reduction rate and the exit point.

There must be a tapering method where benefits decrease as income increases, the report said. This benefit reduction process continues until the exit income. At the exit point, the loss in benefits must be small enough relative to income that a SNAP participant can easily overcome with a standard pay raise.

Randolph said the report identified several steps federal authorities can take to ensure that SNAP functions as it should without spending more money. These are the five recommended actions for Congress to permanently eliminate SNAP benefits cliffs:

• Step 1: Fix the benefit reduction rate to 30% for all households. 
• Step 2: Eliminate all deductions against income.
• Step 3: Predetermine the exit SNAP point when the benefit equals 0.5% of countable income. 
• Step 4: Detach the gross income limit from the poverty level, define it as equal to the income at exit and eliminate the net income limit. 
• Step 5: Redefine the minimum allotment as the benefit amount at exit and apply it to all household sizes.

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