Effective May 1, Maryland eliminated its assets test for families applying for Temporary Cash Assistance (TCA), the state’s name for its TANF assistance program. The decision not to count cash assets against a family’s eligibility to receive temporary cash assistance is a significant step towards promoting self-sufficiency and asset building among families receiving public assistance. Prior to this decision state policy followed federal TANF guidelines and had a cash assets eligibility limit of $2,000.
When originally conceived, assets limits for families receiving different forms of public assistance- from TANF to SNAP (formerly called food stamps), to housing or energy assistance- were put in place to prevent fraud and abuse of the system by individuals whose family income may have dropped below eligibility guidelines for a wide variety of reasons but who might have had large savings accounts or other investments and while technically “low-income” were not truly in need of public assistance.
What the assets limits policy has done in actuality is encourage a culture of spending rather than saving which in turn can foster reliance on assistance programs. This is counterintuitive to the underlying goal of public assistance programs serving as temporary or stop-gap measures to help families get back on their feet after a period of financial crisis or a bout of unemployment.
Rather than promoting upward economic mobility and long-term financial security, the assets test, when combined with lifetime assistance limits for programs like TANF, leave families who “time out” of public assistance benefits no better off than when they began receiving assistance. Many families indeed end up worse off because they were forced to “spend down” their savings to qualify for assistance benefits.
Families need to save in order to cover both short-term emergency spending needs and to build the long-term savings that move a family towards financial stability. By eliminating the assets test from TCA eligibility requirements, the state of Maryland has taken a critical step towards encouraging families receiving cash assistance to plan for future economic self-sufficiency.