\:::
TESTIN' FOR ELIGIBILITY:
ASSET 
PROFILES OF SIX
FEDERAL BENEFIT PROGRAMS
., 'IIW/(t,..
OFFICE OF INSPECTOR GENERAL
OFFICE OF ANALYSIS AND INSPECTIONS
NOVEMBER 1988 GEN
 
OFFICE OF INSPECTR 
The mission of the Office of Inspector General 
(OIG) is to

promote the efficiency, effectiveness and integrity of programs
 
in the United states Department of Health and Human Services
 
(HHS). It does this by developing methods to detect and prevent
fraud , waste and abuse. 
Created by statute in 1976
, the
Inspector General keeps both the Secretary and the Congress fully
 
and currently informed about programs or management problems and
 
recommends corrective action. 
The OIG performs its mission by

conducting audits, investigations and inspections with
 
approximately 1 200 staff strategically located around the

country . 
OFFICE OF ANALYSIS AN 
INSPECTIONS 
This report is produced by the Office of Analysis and Inspections
 
(OAI), one of the three major offices within the OIG. 

The other

two are the Office of Audit and the Office of Investigations.
 
The OAI conducts inspections which are typically short-term
 
studies designed to determine program effectiveness 
, efficiency 
and vulnerability to fraud and abuse. 
This inspection, entitled "Asset Testing for Eligibility:

Profiles of Six Federal Benefit Programs 
" was conducted at the

request of the President'
s Council on Integrity and Efficiency.

The Council asked (1) how six 
major Federal needs-based programs

define and treat nonliquid assets to determine eligibility for 
benefi ts and (2) what prior studies have found in this area. 
This report was prepared under the direction of Linda 
Herzog,
the Regional Inspector General of Region IV Office of Analysis 
and Inspections. 
Participating in the project were the
following people: 
Atlanta Reqion  Headauarter' 
Ron Kalil (Project Leader)  s Office 
Penny Thompson 
Betty Davis 
Paulette Roberts  ASSET TESTING FOR ELIGIBILITY:
PROFILES OF SIX FEDER BENFIT PROGRA
RICHAD P. 
KUSSEROW
INSPECTOR GENERAL
OAI-04-88-01286
November 1988 EXECUIV SUMY
 
PUSE: 
This inspection was conducted at the request of the President' 

Council on Integrity and Efficiency to review: 
how six major Federal needs-based programs define and treat
 
nonliquid assets to determine eligibility for 
benefits; and
 
what prior studies on the topic found and what actions they
 
recommended for simplifying asset testing.
 
BACKGROUN : 
The Federal Government' s benefit programs for individuals fall
 
into two general categories:
 
insurance-based programs in which the individual recei 
ves 
benefits after financially contributing to the programs or
 
serving in the military; and
 
needs-based programs in which the individual must
 
need. 
demonstrate financial  The individual neither 
contributes to the program financially nor renders a

service in return for benefits received. Eligibility is
based on income and other factors such as assets. 
In the second category, the following are the six largest
 
(measured by cash outlay) of the Federal needs-based benefit
 
programs: 
Medicaid 
, which purchases medical care for persons unable to 
afford the cost of such care; 
Aid to Families with Dependent Children (AFDC), which
provides a monthly cash allowance to children and their

caretakers; 
Food Stamp, which provides coupons to households for

purchasing food; 
Supplemental Security Income (SSI), which provides cash

assistance to individuals who are 
aged, blind, or disabled;
 
Section 8 Low-Income Housing Assistance, which subsidizes
 
rent for families or individuals who are aged or disabled;

and 
Pell Grant, which provides cash assistance to students for

postsecondary education.  study. 
These six programs are examined in this  They are
administered by six different Federal agencies: 
the Departments
of Housing and Urban Development 
(HUD), Education, Agriculture
and three different operating divisions of the Department of 
Heal th and Human Services (HHS). Regulations are developed and
entities. 
enforced by six separate 
At the local level, the six programs are administered by four
 
agencies. Pulic housing authorities manage the Section 8 
program; postsecondary institutions administer Pell Grants; the
Social Security Administration 
(SSA) operates the SSI program;
and local welfare agencies (under State supervision or
aadmnindis trMateiodn)i dcetaerimiqne  elpigriboilgitry afomr sth.e  Fo.od
  
Stamp, AFDC,.

METHODOLOGY: 
Interviews were conducted with regional and central office 
HofHfiSc.i Aal sre vinie wth eo fD leapwars tments of Agriculture, Education, HUD, and
, regulations, and program guidelines was
conducted. We also reviewed prior study findings and 
recommendations on eligibility simplification and streamlining as 
they relate to asset testing. 
FINDINGS 
These programs operate independently of each other. 
Property defined as an asset in one program may not be 
considered for eligibility purposes in another. 
An obstacle to streamlining services to low-income persons 
is that each program uses its own definition and treatment 
of assets when determining eligibility. The requirements
are a result of different statutes and regulations that 
govern asset testing. 
Basic eligibility data supplied and verified in one program 
must be resupplied and reverified for another program. 
There is more discretion in determining the value of assets 
than in evaluating other eligibility factors. 
Program complexities in the definition and treatment of 
assets increase the administrative burden of determining
eligibility. 
This can cause eligibility errors which result 
in misspent funds.  Previous studies have made a number of recommendations
 
relating to asset testing. The following are most relevant

to the purposes of this study: 
- Standardize the definition, verification
, and
requirements for 
reporting of assets for needs-based 
programs. 
- Develop easily understandable and uniform eligibility

rules. 
- Adjust asset limits to reasonable levels and update 
periodically to reflect economic change. 
- Develop a common intake system to centralize the
 
eligibility determination process.
 
iii
  ....... ..................................................
. . . . . . . . . . . . . . . . .
. . . . . . . .. .  ...   ...   ...  . .. .  . .. .  . .. .  . .. .  . .. .  . .. .  . .. .  . .. .  . .. .  . .. .  . .. .  . .. ...  .. .. ... ....  .. .. .. .......  .. .  . .. .......  .. .   ... ....... .  . . .. . .. .... .. . .. ..  . . .. . ..... . ... .    . .  ..... . .     . . ..... . .     . . ..... .  .   . . .. ... . .  . .  ..  . . ..  .. .. .  .  .   ...... .. ... .   ..   . .........  ....    .  ...   ..... ... ... ..   .  ...  ..  ......  .. ...  .  ... .  . .. ... .. .....   .   ..    . .. .. ..... .     .   .  ......  ....      . .   ...... . .. .   .-  ..  .  .. ..  . . ..   ...  .  ..  . . .....  .  .     . .. .......  .       .  ....... ..       .  ...... ...    .    .. . .....  . .     .... . ..  ..  . . ...   . .    . .... .....  .        . ........ ..        .  ........ ..     .   .. ... ...   . .    .... . .  ..  . . ... . .   .  .. ....  .     . .... .     .....     ..  ..  . 
CONTS
 
TABLE OF 
Page 
INTODUCTION 
Background. 
. . . . . . . . . . . . . . . . 1
 
Purpose  and  Scope  the 
study.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 
Methods. 
. . . . . . . . . . . . . . . . . . . 3
 
FINDINGS 
Maximum Allowable As sets.  . . 4 
Treatment 
of Assets  Program. . . . .
 
Specifici ty  Federal  Regulations. . . 
 
Determining Value......
 
Specific 
Types 
Assets. 
Jointly 
Owned Assets........ 
 
Disposing 
of Assets...............
 
REIEW OF PRIOR STUIES 
Treatment 
of Assets................. 
 
Verification 
Assets.  . . . 10
Elimination 
of Asset 
Tests. 
 
Recommendations  Prior
 
studies. 

NOTES. 
BIBLIOGRAHY. 
APPENDICES 
Appendix  Benefits  Paid  and Recipients Served. . . ..  A-l 
Appendix  Description 
Programs. . . . . . . . . . . . .  B-1 
Appendix  Nonl iquid Assets Counted  Program. . . . . . . . . . . . C-1 
Appendix  Review  Prior  Studies 
D-l  INTODUCTION
 
This study examines the ways in which property assets affect
 
eligibility for six Federal programs of assistance to

individuals . 
Backqround 
The General Accounting Office (GAO) has identified 150 Federal

individual assistance programs. 
They fall into two groups: 
Fifty-five 
insurance-based 
programs provide benefits to
(55) 
individuals who financially contribute to the programs or
 
serve in the military. Benefits are paid in some cases

without regard to the client' s income or assets.
 
Ninety-five 
needs-based 
programs provide benefits to
(95) 
individuals who demonstrate financial need. The individual 
neither contributes to the program financially nor renders a 
received. Eligibility is
service in return for the benefits 
based on income and other factors such as assets. 
Alsiqseutsid a.r e generally divided into two categories: liquid and non-
Liquid assets are those readily convertible to
disposable income. 
These assets include cash on hand, checking
and savings accounts, and stocks and bonds. 
Nonliquid assets
are real and personal property not readily convertible to
disposable income. 
These include homes, business property,
vehicles, life insurance, burial plots, household furnishings
equipment 
, clothing, and jewelry. 
This study concentrates on the six largest 
(measured by cash

outlay) of the Federal needs-based benefit programs. 
Appendix A
served. 
provides figures on benefits paid and recipients 
The
programs are: 
Medicaid
 
Aid to Families with Dependent Children 
(AFDC)

Food stamp
 
Supplemental Security Income (SSI)

Section 8 Low-Income Housing Assistance
 
Pell Grant
 
The following table summarizes the benefits
, recipients, an
administering agencies Gf these programs. 
(More detail can be
found in appendix B.  THE SIX LAGEST
 
NEEDS-BASED PROGRAS
 
FEDERAL
PROGRA  BENEFITS  ISSUED TO  DEPARTMENT 
Food Stamp  Coupons to  Households  Agricul ture
buy food
 
AFDC  Cash assistance Families  (called  Health and
assistance 
Human Services 
groups" ) 
(HHS) 
SSI  Cash assistance Individuals or  HHS
 
married couples
 
Medicaid	  Payment for  Individuals 
HHS
medical care 
Section 8  Rent subsidy  Families or  Housing and

individuals 
Urban Develop
ment 
(HqD) 
Pell Grant	  Cash assistance Students  Education
 
for postsecond

ary education
 
These programs are administered by six different Federal

agencies. 
(Although three of the programs are within the 
jurisdiction of HHS, they are administered by three separate 
operating divisions within the Department. 
Further, and
significant to this  requlations 
are developed
inquiry, program 
and enforced by six separate entities. 
At the local level, the six programs are operated by four types
 
of agencies:
 
Public housing authorities 
(PHAs) manage the Section 8

program. 
Postsecondary institutions administer Pell Grants.
 
The Social Security Administration 
(SSA) operates the SSI

program.  Local welfare agencies conduct eligibility determinations
 
for the Food stamp, AFDC, and Medicaid programs under state

supervision or administration. In many local welfare

agencies 
, the same person determines eligibility for all 
three of these programs.
 
PurDose and Scoce of the Study
 
This inspection was requested by the President'
s Council on
 
Integrity and Efficiency (PCIE). The Council asked (1) how six
maj or Federal needs-based programs define and treat nonliquid
 
assets to determine eligibility for benefits and (2) what prior
studies have found in this area. 
This analysis is limited to a review of Federal requirements for
asset testing. Al 
though state and local agencies operating these 
programs may impose addi tional eligibility requirements relating 
to assets, those rules are not considered here.
 
Methods 
Interviews were conducted with regional and central office 
officials in the Departments of Agriculture
, Education, HUD and
HHS. 
Laws, regulations, and program guidelines were reviewed to
(1) determine major types of nonliquid assets defined by these

programs, and 
(2) compare definitions and treatment of these 
assets in determining eligibility. 
We reviewed more than 60 studies conducted since 1975 which
 
relate to eligibility in one or more of the six needs-based
 
programs examined here. These prior studies were identified

through bibliographies from other studies
, journal articles, and
discussions with staff at Federal agencies: 
HHS, Agriculture
Education, HUD, GAO, and the Office of Management and Budget.
This report' s bibliography identifies those studies.  ---------------------- ---------------------------------------------------------- 
-------------------------- ----- --------------- --------------- -_
FINDINGS 
Maximum Allowable Assets
 
All six programs in this study consider assets when determining
 
eligibility; however, the programs vary in their treatment of

assets. 
Four of the programs have set maximum limits for the 
value of assets an individual or family may own. Two programs
limits. 
have no such specific 
In the Food Stamp, AFDC, SSI, and Medicaid programs, the combined

value of the assets is compared to the asset maximum allowed for

the particular program. 
Each program sets the maximum at a
different level. 
The Section 8 and Pell Grant programs do not have specified
maximums. In these 
programs, the value of the applicant' s assets 
is combined with the income and then compared to a maximum.
 
Section 8 eligibility limits are based on the median income of
 
the geographic area. Pell Grant eligibility limits are set for

each school year by the Department of Education. 
To be eligible for the four programs which count assets
 
independent of income, applicants may not have liquid and
 
nonliquid assets combined exceeding these amounts: 
SSI 
AFDC 
r------------------------------------------------------------------ - -------
FOOD STAMP 
MEDICAID 
-----1 
S2000 per  SSI-related
household agsrsiostaunpce   limiStS*!
S1000 per  01/01/88:
lessS)19 00 for Medicaid: 
Sind2iv8idu5al0   for 
or older 
S3000 per 
(At State' 
related 
household with option, may be couple AFDC-
member(s) age 60  01/01Med/ica8id: S9tate':
AFDC limit*
couple
S2000 for Medically needy:
Sind3iv0idu0al0   for

Set by the States
L - -

*Eligibility based on requirements for either SSI or AFDC.
  Treatment of Assets bv Proqram
 
The following explains how the treatment of assets varies in each
 
program: 
Food Stamp:  Benefits are funded totally by Federal monies.
 
states must adhere to the eligibility criteria set by Federal

regulation. 
Therefore, the eligibility criteria and benefit
amounts are  the same in every state. 
To be eligible for food stamps a household' s income and assets 

must be below the amount set by the sFiezdeer.a l regulations. The

income limit is based on household  The asset limit is the 
same for all size households, although the limit is higher if the 

older. 
household has a member age 60 or  Once eligibility has
been established, Food stamp benefit amounts, called coupon

allotments, are based only on household size and income. Assets 
are not included in the calculation of coupon allotment. 

Households are certified to receive food stamps for a specified
 
length of time, usually 6 months to 1 year, depending on the

anticipated stability of the household circumstances. At the end 
of the certification period, every element of eligibility is

reviewed. 
However, if the household' s assets ever exceed the 
maximum limit, even during a certification period, the household 

is no longer eligible for the program. 
Aid to Families with Dependent Children (AFDC): Federal
criteria. 
regulations specify AFDC eligibility  However, states
may make the criteria more restrictive. For example, states may
count some assets which the Federal regulations allow to be

excl uded. 
Both income and assets are used to determine eligibility, and

each must be below a specified amount. states set 
the income 
limits, which depend on the size of the assistance group (usually
a family). 
Federal regulations set the asset limit at $1, 
regardless of the family size. However, states may set a l000o  wer
imi t . 
As in the Food stamp program, assets are used only to determine
 
eligibility and do not affect the amount of benefits. While a 
family is eligible, benefits are based only on family size and
income. 
Assets are evaluated at every review--usually every six
months. At 
any time the assets exceed the limit, the assistance
ineligible. 
group becomes 
Supplemental Security Income (SSI): The eligibility criteria for

SSI are uniform nationwide. Both income and assets must be below
 
specific amounts for the individual- or couple to be eligible.
Once eligibility is established, however, the monthly benefits
are based solely on income.  The regulations specify different asset limits for individuals
 
aansds efto lri mcoitu pclheasn. gIefs a.  Irfe cipient' s marital status changes, the

assets ever exceed the appropriate 
limit, the individual or couple becomes ineligible. 
Medicaid: 
This program does not have a single set of eligibility
requirements. 
Medicaid eligibility is determined by applying the 
AFDC or SSI program criteria to applicants who are potentially 
eligible for those two programs. Applicants who qualify for
Medicaid in this way, along with other specific groups of people 
Congress has designated, are termed "categorically eligible. 
For the most part, the Medicaid asset limit for the AFDC-related 
categorically eligible" coverage groups is the same as the

State' 
s AFDC asset limit. The Medicaid asset limit for SSI-
related "
categorically eligible" coverage groups is the same as
the SSI asset limit. 
Those who do not qualify for AFDC or SSI because their income or 
resources are above the program' s limits may still qualify for
Medicaid as "
medically needy.  For these applicants the 
based 
on AFDC or SSI but with modification. 
eligibility rules are 
For example, children may qualify for Medicaid as "medically
needy" if they meet all the AFDC criteria except the income
limitation. 
"Medically needy" presumes they are not poor enough 
to require cash assistance, but they still may not be able to 
afford medical care.
 
For the "
medically needy" coverage groups, states set their own
asset limits. The Federal regulations require only that the 
limits be based on family size, be uniform for individuals within 
a coverage group, and be reasonable. 
For the past several years, " Congress has been adding more
coverage groups to the Medicaid program. 
Each group has its own
set of eligibility criteria. Although the asset requirements
remain similar to those of the cash assistance programs 
(AFDC and
SSI), the eligibility policies are generally more liberal and
allow states greater flexibility. 
section 8 Low-Income Housing Assistance: 
Although PHAs have some
flexibility in the administration of the Section 8 program
, the
Federal regulations provide guidelines for the treatment of
assets. 
There is no asset limit per se; either the income 
I value is 
derived from the asset or a percentage of the assets 
combined with the family' s proj ected annual income to determine
the family' 
s eligibility and its share of the rent. 
If the assets' value totals $5000 or less, only the income from
the assets is counted.  If the value exceeds $5, 000 , the greater
of either the income from the assets or a percentage of the
assets I value (currently 5. 
5 percent) is counted.  Pell Grant: This program uses both income and assets to 
determine the financial ability of the applicant and his/her 
family to pay the costs of postsecondary education. A formula is 
used to determine the amount of income and assets considered in 
the calculation of eligibility and grant amount. 
The formula combines income and assets of both the parents and

student. 
For the asset portion of the calculation:
 
The equity value of the asset is determined. 
A specified amount of the equity is disregarded.  Only the
excess is used in further calculations. 
A percentage of the amount from step 2 is combined with the
 
income to determine eligibility and grant amount.
 
The basic formula for assessing the countable assets has several

exceptions: 
Assets are not counted at all for families with a total 
income of $15, 000 or less if they file the 1040A or 1040EZ 
all. 
tax forms, or do not file taxes at 
Homeplace value is not counted for displaced homemakers or
 
dislocated workers.
 
Assets are fully counted (i. 
e. no portion is disregarded) if
owned by a dependent student or a single independent student
 
with no dependents.
 
Specificity of Federal Requlations
 
Federal regulations regarding the types of nonliquid assets to
 
be counted or excluded are more specific for some programs than
 
for others. For example, Food stamp regulations provide fairly

explicit guidelines, whereas Section 8 regulations have very

little written guidance regarding assets. The policies which are

less specific are subject to varying interpretations by all
 
levels of staff involved with the programs.
 
Determininq Value
 
When determining the value of an 
asset, the six programs
generally consider the equity value 
(fair market value less
encumbrances). 
However, exceptions to the equity value pol 
occur.  icy do
The Food stamp program, for example, counts the full fair
still
market value of certain vehicles and real property. 
another variation is the Section 8 program which deducts from 
the value reasonable costs incurred in converting the asset to
cash.  SDecific Tves of Assets 
The general premise for needs-based programs is that assets
 
count toward the determination of eligibility. 
However, in most

of the programs, certain types of nonliquid assets are either
 
totally excluded or have a specified amount of their value
 
excluded from the determination calculations.
 
Little consistency exists among the programs in the treatment of

specific assets. 
Treatment of an automobile is an example. The 
AFDC program counts the equity value which exceeds $1500. 
The 
Section 8 program excludes one automobile and the Pell Grant 

automobiles. 
program excludes all  Exclusions in the SSI and Food 
s use. 
Stamp programs depend on the automobile'
Appendix C shows
how each of the six programs counts specific assets most
 
frequently owned by individuals who apply for assistance. 
v-oed 
Jointl  Assets 
All six programs generally agree on the treatment of nonliquid
 
assets owned jointly by the applicant and a nonapplicant. 
The 
programs count only that part of the asset available to the
 
applicant for liquidation. The Food Stamp and Section 8 programs

specifically define the portion considered available to the
 
applicant. The other programs have less specific regulations
which are subj 
ect to varying interpretations by the agencies 
which determine eligibility. The 
Pell Grant program does not

ownership at all. 
 
mention j oint 
DisDosina of Assets
 
Four of the six programs have rules governing disposal of assets 
at less than fair market value for the purpose of qualifying for 
ass  stance. Pell 
Grant and AFDC Federal policies do not provide 
for penal ties for disposing of assets. However, in thet iAeFsDC. 
program , States have the option of imposing such penal 
The
chart on the following page illustrates the rules and associated
penal ties of the other four programs.  POLICIES FOR DISPOSING OF ASSETS 

IF DISPOSITION  THE PENALTY
 
PROGRA  OF ASSETS  REMAINS IN 
NAM  OCCURS WITHIN...  THE PROGRA...  EFFECT FOR...
 
disqualifies
Food Stamp
  3 months prior  up to 12

to application  the applicant.  months  based 
on difference 
between fair 
market value 
and amount of 
compensation. 
SSI*  24 months prior counts in deter- up to 24
(for assets
 to application  mining eligi- months,
transferred  bili ty the 
based on type 
prior to
 difference be- of asset and 
7/1/88 )  tween fair  uncompensated 
market value and value. 
amount of 
compensation. 
Medicaid
30 months prior	 counts in deter- based on un
(Institu to insti tution-	
mining eligi- compensated
tionalized alization	 
bility the  val ue. 
individuals 
difference be
only**) 
tween fair 
market value and 
amount of 
compensation. 
Section 8
  24 months prior	 counts  in deter- 24 months 
to application
  mining eligi
 from date of
disposition. 
bility the
 
difference be

tween fair
 
market value and
 
amount of 
compensa tion.
 
*Transfers occurring after 7/1/88 have no effect on SSI

eligibility. 
**Medicaid does not penalize individuals living in the 
community for disposing of assets to qualify for the program.  REEW OF PRIOR STUIES 
Many studies have been done since 1975 on various aspects of
 
services. 
welfare reform and integration of 
Relatively few of
them specifically address asset testing for eligibility
 
determination. The vast majority of prior studies, when

eligibility factors are  income  testing. We
examined, focus on 
have selected 16 prior studies which specifically identify the
 
testing of nonliquid assets in one or more of the six programs we
 
examined. The following is a sumary of those studies. Many
the findings they report are confirmed by our own research. 
Appendix D contains brief descriptions of the findings and
 
recommendations of individual studies as they relate to asset

testing. 
Treatment of Assets
 
Programs administering benefits for low-income persons do not

operate as a system. 
They operate independently of each other. 
An asset in one program may not be considered an asset for
 
eligibility purposes in another program. 
One of the obstacles to
 
streamlining services to low-income persons is that each needs-

based program uses its own definition and treatment of assets when
 
determining eligibility. For example, asset limits are defined

differently among the programs. 
 
Each Federal agency providing benefits follows different asset-

test requirements when determining eligibility. The requirements
are a result of different statutes and regulations which govern
 
asset testing. Not only are the asset-test requirements different
 
from program to program but they are also complicated to administer
within each program. 
Complexity of asset rules and variations from
one program to another are hindrances to meeting the basic needs of
clients. 4 
A recipient can be "poorer" by one program' s rule--and
thus, qualify for its benefits--while ineligible in another. 5 A 
family can have income low enough to qualify for both AFDC and food 
stamps , only to be found ineligible for AFDC because the family car 
is worth too much. 
These overlaps 
, gaps, and program complexities in asset-tested 
programs cause administrative inconsistencies and coordination
 
problems which not only increase the burden of determining

eligibility
7 but can also cause eligibility errors which result in 
misspent funds. 
Verification of Assets
 
While this study did not address the verification of assets
, prior

studies found variances in the verification methods.
 
Differences in the definition and treatment of assets from program
 
to program (and in some cases from state to state9) contribute to
 
assets being verified in different ways by each program. 
  Eligibility data supplied and verified in one program must be
 
resubmitted to another program and reverified.
 
Verification of the value of assets can also differ from worker to
 
worker within each program. 
There is more administrative 
difficulty and discretion in valuing assets than any other of the
 
eligibility determination factors.
 
Verification requirements and practices are not adequate to
prevent improper payments. 
The requirements are either extremely
vague or overly restrictive and can result in erroneous
 
eligibility payments .
 
Elimination of Asset Tests
 
While asset testing and verification varies from one program to
another and causes inconsistencies 
, removal of assets as an 
costly. 
eligibility determinant would be  Asset testing excludes
many applicants from the programs. For example, asset tests in
the Food stamp program reduced eligibility by 12.
3 million persons
at a savings of $2. 9 billion a year. 
Recommendations of Prior studies
 
Previous studies have made a number of recommendations relating to
 
asset testing. The following are most relevant for purposes of
 
this study:
 
- Standardize the definition, verification, and requirements for

reporting of assets for needs-based programs. 
- Develop easily understandable and uniform eligibility

rules. 
- Adjust asset limits to reasonable levels and update 
periodically to reflect economic change. 
- Develop a common intake system to a centralize the
 
eligibility determination process.
  p. 
NOTES
 
Federal Benefit
UPnitredo stqaters aGenmerals A:cc ouAntin gP Offricoe. f
 ile  GAO/HRD 86-14. October 1985.
ii. 
United states Office of Management and Budget. 
Eliqibilitv Simplification Proiect  October 1980. 
pps. 9-10. 
United states General Accounting Office, Testimony.
 
Inteqration of Services for Low-Income Families
 
GAO/T-HRD-87-9. September 1987. p. 2.
 
United states Department of Health, Education and
 
Welfare Reform: Final National Summarv 
Welfare. 
Recort on Reqional Outreach  April 1977. p. C-8. 
Illinois Bureau of the Budget.  Streamlininq Social
Benefit Proqrams  Fall 1976.  p. 37.
 
Studv of the 
ASouFtheDrn GCove/r noMrs' eAsdsociicataioni.d 
  El iqibil i tv 
Process in the Southern
States  April 1988. p. 
Uni ted  Federal 
States General Accounting Office. 
Domestic Food Assistance Proqrams: A Time for 
Assessment and Chanqe  CED-78-113. June 1978. p. 48. 
Office of Inspector General, United States Department
 
Eliqibilitv Errors
of Health and Human Services. 
 
Resul tinq in Misscent Funds in the Medicaid Proqram 
OAI-04-87-00014. May 1988. p. 
Medicaid: 
United States General Accounting Office. 
 
Interstate Variations in Benefits and Excendi tures 
GAO/HRD-87-67BR. May 1987. p. 18. 
10.  united States General Accounting  Eliqibilitv
Office. 
Verification and Privacy in Federal Benefit Proqrams:
A Delicate Balance  GAO/HRD-85-22. March 1985. p. 7. 
11.  United States Office of Management and Budget.
Eliqibilitv Simclification Proiect  October 1980. 
p. 10.
 
12.  Illinois Bureau of the Budget.  Streamlininq Social
Benefit Proqrams  Fall 1976.  p. 71.  p. 
13.  Leaislative 
United states General Accounting Office.

and Administrative Chanaes to Imorove Verification of 
Welfare Recioients' Income and Assets Could Save 
Hundreds of Millions  HRD-82-9. January 1982. 
pps. 23-24. 
14.  Food and Nutrition Services, United States Department 
Assets of Low-Income Households: 
of Agriculture. 
  New 
Findiii.n as on Food Stamo particioants  January 1981. BIBLIOGRAHY 
Advance Technology, Inc., "Title IV Quality Control Policy

Option: 
Final Report on the Evaluation of Data Element
Reduction, 
" stage 1, Phase V, prepared for the Department of
Education, June 
1985. 
Advance Technology, Inc. and Westat, Inc., "Title IV Quality
Control Project,  Sumary, prepared for the
" stage Two Executive 
Department of Education, Contract numer 300-84-0020 
, August
1987. 
Advance Technology, Inc. and Westat, Inc., "Title IV Quality

Control Study, " Stage Two, Final Report, Volumes I and II,
prepared for Department of Education, Contract numer 300-84
0020 , June 1987. 
Bureau of the Budget, State of Illinois, "Who Should Benefit 

Streamlining Social Benefit Programs, " Volume 1, Fall 1976.
 
Congressional Research Service, "Cash and Noncash Benefits for
 
Income: Eligibility 
Persons with Limited  Rules, Recipient and
Expenditure Data, FY 1984-86 " September 10, 1987.
 
Cox , George H. Jr. , Donna R. Brogan and Millicent Ann Dandridge, 
"The Effectiveness of Home Visitation in Reducing AFDC Case
 
Payment Errors,  Social Service Review, Volume 60, November 4

December 1986, pps. 603-618.
 
Department of Health and Human Services,  Characteristics of state
 
Plans for Aid to Families with DeDendent Children under the
 
Social Security Act of Title IV-A, 1985 Edition.
 
Department of Health and Human Services, "Evaluation of the
 
Relative Cost-Effectiveness of AFDC Corrective Actions 
" Volumes
 
I, III, and IV, November 1984.
 
Department of Health and Human Services,  Profile of State
 
Performance in the Aid to Families with DeDendent Children 
Proqram 1981, SSA Pub. No. 80-08031, October 1984. 
Department of Health and Human Services
, "Welfare Reform Final
National Sumary Report  " April 
on Regional Outreach,  15, 1977. 
Department. of Health, Education and Welfare, "Alternatives to the
Pres 
nt Welfare System - A Selected Bibliography, " August 1969. 
Dukert, Joseph M. , "Who is Poor? Who is Truly Needy?  Public 
Welfare Maqazine, Volume 41, Number 1, Winter 1983 , pps. 17-22.  Food and Nutrition Service, Department of Agriculture, "Assets of 
Low-Income Households: New Findings on Food Stamp Participants
and Nonparticipants, 
" Report to the Congress, January 1981. 
General Accounting Office, "A Central Wage File for Use by

Federal Agencies: Benefits and Concerns, II GAO/HRD-85-31, May 21,
1985. 
IIEligibility Verification 
General Accounting Office,  and Privacy
in Federal Benefits Programs: A Delicate Balance, " GAO/HRD-85-22
March 1, 1985. 
IIError in the Pell 
General Accounting Office,  Grant Program,

testimony before the House of Representatives' Subcommittee on
 
Postsecondary Education, June 27 , 1985.
 
General Accounting Office, "Federal and State Liability for
 
Inaccurate Payments of Food Stamp, AFDC, and SSI Program

Benefits , II GAO/RCED-84-155, April 
25, 1984. 
General Accounting Office, IIFederal Benefits Programs:

Profile, II GAO/HRD-86-14, October 
17, 1985. 
General Accounting Office, "Federal Domestic Food Assistance
Programs: A  II CED-78-113, Report 
Time for Assessment and Change, 
to the Congress by Robert F. Keller, Acting Comptroller General, 
June 13 , 1978.
 
General Accounting Office, "Federal Efforts to Simplify the Aid
 
to Families with Dependent Children, Medicaid, and Food Stamp
 
Program Requirements and Quality Control Procedures, 
" GAO/HRD-82

, May 18, 1982.
 
General Accounting Office, "Federal Funding-Information on
 
Selected Benefit/Mandatory Spending Programs " GAO/AFMD-88-31FS

January 
1988. 
General Accounting Office, IIFinancial Management Overall Plan

Needed to Guide System Improvements at Education, II GAO/AFMD-88

15, December 1987.
 
General Accounting Office, "Food Stamp Program-Restoration of

Improperly Denied or Terminated Benefits " GAO/RCED-87-51,

October 1986. 
IIFood Stamp Program-Results 
General Accounting Office, 
"Simplified Application Demonstration Project 
" GAO/RCED-87-102

June 1987.
 
General Accounting Office, "Food Stamp Program-Statistical
 
Validity of Agriculture' s Payment Error-Rate Estimates,

GAO/RCED-87-4 , October 1986.
  General Accounting Office, "Further Actions Needed to Improve
 
Management of HUD Programs, " CED-81-41, February 26, 1981.
 
General Accounting Office, "GAO Observations on the Use of Tax
 
Return Information for Verification in Entitlement Programs,
 
GAO/HRD-84-72, June 5, 1984.
 
General Accounting Office, "Grant Formulas-A Catalog of Federal
 
Aid to states and Localities, " GAO/HRD-87-28, March 1987. 
General Accounting Office, "Housing Programs-Funding Approach
 
for HUD' s Section 8 Certificate Program Needs Changing,
 
GAO/RCED-88-136, April 1988. 
General Accounting Office, "Implementing GAO' s Recommendations on 
the Social Security Administration' s Program Could Save
Billions 
" HRD-81-37 , December 31, 1980. 
General Accounting Office, "Integration of Services for Low-

Income Families, " Testimony before the House of Representatives
 
Select Committee on Hunger, GAO/T-HRD-87-17 , September 30, 1987.
 
General Accounting Office, "Legislative and Administrative
Changes to. Improve 
Verification of Welfare Recipients' Income and 
Assets Could Save Hundreds of Millions " HRD-82-9, January 14
1982. 
General Accounting Office, "Lenient Rules About the Occupancy of
 
Low Income Housing by Ineligible Tenants, " CED-81-74, April 27

1981. 
General Accounting Office, "Managing Welfare-Issues and 

Alternatives for Reforming Quality Control Systems 
" GAO/HRD-86

117BR , August 1986. 
General Accounting Office, "Many Proprietary Schools Do not
 
Comply with Department of Education' s Pell Grant Program
Requirements 
" GAO/HED-84-17 , August 20 , 1984. 
General Accounting Office, "Medicaid Interstate Variations in
 
Benefits and Expenditures, " GAO/HRO-87-67BR, May 1987. 
General Accounting Office, "Millions Can be Saved By Identifying

Supplemental Security Income Recipients Owning Too Many Assets, 
HRD-81-4, February 4, 1981. 
General Accounting Office, "Needs-Based Programs-Eligibility and

Benefit Factors " GAO/HRD-86-107FS, July 1986. 
General Accounting Office, "Pell Grant Validation Imposes Some

Costs and Does Not Greatly Reduce Award Errors: 
New Strategies

Are Needed " GAO/PEMD-85-10, September 27, 1985.
  General Accounting Office, "Potential Reduction in the Section 8
 
Existing and Voucher Inventory, " GAO/RCED-87-20FS.
 
General Accounting Office, "Section 8 Subsidized Housing-some

Observations on Its High Rents, Costs, and Inequities, 
" CED 80
59, June 6, 1980. 
General Accounting Office, "Social Security Needs to Determine
 
the Cost Effectiveness of the Supplemental Security Income
 
Redetermination Process and to Implement Recommendations Made for
 
Eliminating Erroneous Payments " GAO/HRD-82-126, September 2

1982. 
General Accounting Office, "Social Securitt Should Obtain and Use
 
State Data to Verify Benefits for All Its Programs, 
" HRD-80-4
 
October 16, 1979. 
1980. 
General Accounting Office, "U. S. Income Security System Needs

Leadership, Policy, and Effective Management, 
" HRD-80-33,

February 29 
General Accounting Office, "Welfare-Expert 
Panels' Insights on

Maj or Reform Proposals  " GAO/HRD-88-59, February 1988. 
General Accounting Office, "Welfare-Income and Relative Poverty

Status of AFDC Families " GAO/HRD-88-9, November 1987. 
General Accounting Office, "Welfare Issues to Consider in
 
Assessing Proposals for Reform, " GAO/HRD-87-51BR, February 1987. 
General Accounting Office, "Welfare Reform-Bibliographies of
 
Case Management and Agency/Client Contracting, 
" GAO/HRD-88-61FS

March 1988. 
General Accounting Office, "Welfare Simplification-Projects to

Coordinate Services for Low-Income Families 
" GAO/HRD-86-124FS

August 1986. 
General Accounting Office, "Welfare Simplification-Service

Integration Demonstrations Under the 1984 Deficit Reduction Act 
GAO/HRD-86-125BR, August 1986. 
General Accounting Office, "Welfare Simplification Thirty-two

States' Views on Coordinating Services for Low-Income Families

GAO/HRD-87-6FS. 
Graduate School of Public Policy, University of California,
"Special Issue of the HEW MEGA-Proposal 
Policy Analysis
Volume 1, NUmber 2, Spring 1975.  Hagenaars, Aldi and Klas deVos, "The Definition and Measurement
 
of Poverty,  Journal of Human .Resources , Volume 23, November 2
Spring 
1988, pps 211-221. 
Hansenfeld, Yeheskel, "citizens Encounters with Welfare State

Bureaucracies 
Social Service Review, Volume 59, Numer 4,
December 1985, pps. 622-635. 
Maximus, 
Inc., "A Study of the Characteristics of Medicaid
Ineligibles, 
" prepared for the Department of Health, Education 
and Welfare, April 30 , 1980.
 
National Council of State Human Service Administrators of the
 
Pulic 
American 
Welfare Association, "Comparison of Food stamp 
and AFDC Program Requirements with Recommendations for Change
 
July 1986.
 
Office of Inspector General, Department of Health and Human
Services 
, "Eligibility Errors Resulting in Misspent Funds in the 
Medicaid Program, " OAI-04-87-00014 , May 1988. 
Office of Inspector General, Department of Health and Human
 
Services, "Errors Resulting in Overpayment in the AFDC Program

OAI-04-86-00024 
, June 1987. 
Office of Inspector General, Department of Health and Human
 
Services, "Medicaid Estate Recoveries,
" OAI-09-86-00078 , June

1988. 
Office of Inspector General, Department of Housing and Urban

Development , "Area Office Procedures for Monitoring 
PHAs' 
Compliance with the Requirements of Section 8-Housing Assistance
Payments Program (Existing), 
" 82-CH-I03-0001, December 2, 1981. 
Office of Inspector General, Department of Housing and Urban
 
Development, "Report on Special Operational Survey-Section 8
 
Leased Hous ing Program, " July 16, 1979 
 
Office of Inspector General, Department of Housing and Urban
 
Development, "Survey Report - Housing Assistance Payments for 
Non-Insured Section 8 Projects, New York Regional Office
86-NY-I03-0003 , June 11, 1986. 
Office of Management and Budget, "
Eligibility Simplification
proj ect 
" an interagency study with recommendations for 
simplifying client eligibility, October 1980. 
Reishaver 
, Robert D., "The Prospects for Welfare Reform,  Public
Welfare Maaazine, Volume 44 , Number 4, Fall 1986, pps. 4-11.  Shuptrine, Sarah C. and Vicki C. Grant, "Study of the
 
AFDC/Medicaid Eligibility Process in the Southern States " Sarah
 
Shuptrine and Associate for the Southern Governor' s Association,

April 
1988. 
Vigiliante, Florence Wexler and Mildred D. Mailick, "Needs-
Resource Evaluation in the Assessment Process,  Social Work: 
Journal of the National Association of social Workers, March-
April 1988, Volume 33, Numer 2, pps. 101-109. 
Warlick, Jennifer, "Participation of the Aged in SSI,  Journal 
of Human Resources, Volume 27  Numer 2, Spring 1982, pps. 236
260. 
Weinberg, Daniel H., "Filling the Poverty Gap: Multiple Transfer 
Program Participation,  Journal of Human Resources, Volume 20
Numer 1, Winter 
1985, pps. 64-89. 
Young, John D. , "Reflections on the Root Causes of Fraud, Abuse 
and Waste in Federal Social Programs,  public Administration
Review , Volume 43, Numer 4 , July/August 1983, pps. 362-369.  APPENDIX A 

BENFITS PAID AND RECIPIENS SERVED 

According to a Congressional Research Service for Congress
, the

six needs-based programs discussed in this report paid out
 
$100 billion in Fiscal Year (FY) 1986:
 
BENEFITS PAID FY 1986 (BILLIONS) 
Federal  State/Local Total 
Medicaid  $24. 995  $19. 730  $44. 725 
AFDC  536  221  17. 757 
SSI  10. 307  514  12. 821 
Food stamps  12. 528  938  13. 466 
Section 8  430  430 
Pell Grants  862 862 
Total  $68. 658  $31. 403  $100. 061 
According to the same Congressional study, the numers of 
program recipients in Fiscal Year 1986 were: 
RECIPIENTS SERVED FY 1986 (MILLIONS) 
Recipients  Period 
Medicaid  22. 592  Annual 
AFDC  10. 995  Monthly Average

SSI  449  Monthly Average

Food Stamps  20. 900  Monthly Average

Section 8  143*  Annual 

Pell Grants  881  Annual 

Families (Dwellings Units) 
Source of Information: Congressional Research Service. 
  Cash and

Noncash Benefits for Persons with Limited Income: Eliqibilitv
Rules and Expenditure Data. FY 1984-86  By Vee Burke. Rept. no.
87-759 EPW, Washington, D.  Library of Congress, 1987. 
A-I
  APPENDIX B
 
DESCRPTION OF PROGRA 
FOOD STAM 
PUrDose  To promote the general welfare and to safeguard the 
heal th and well-being of the nation' s population by raising the
level of nutrition among low-income households.
 
DescriDtion  This program provides free coupons for el gible
stores. 
households to use for purchasing food in retail  The 
benefits are not expected to meet the household' s full need for
food , but rather supplement the funds they have available for 
this purpose. The coupons are issued monthly  Although the
program is administered by states through local public welfare
agencies 
, states have few options in how the program is managed.
The Federal regulations establish the eligibility criteria and 
benefit amounts to which states must adhere. 
Fundina 
Benef i ts :  100 percent Federal 
Administration: 
Federal/ state
Federal share is based on the state' 
s error 
rate and is generally 50-60 percent.
 
Federal Aaency	  Department of Agriculture
 
Food and Nutrition Service
 
Authorization:	 
Food Stamp Act, 1964 
Reaulations	  7 CFR 271-279 et seq. 
AID TO FAMLIES WITH DEPENDENT CHILDREN (AFDC) 
PurDose  To encourage the care of dependent children in their 
own homes or in the homes of relatives by enabling states to
 
furnish financial assistance to the families. 
DescriDtion 
states provide monthly cash assistance payments to 
meet basic needs of children (and their eligible caretakers) who
are deprived of parental support because at least one parent is
absent, incapacitated, 
deceased, or (in some states) unemployed.
States establish their own income limits and benefit amounts;
however, the asset limit ($1 000) is set by Federal regula ion. 
States administer the program through local public welfare
agencies. 
Recipients of AFDC are automatically eligible for 
Medicaid benefits. 
B-1  Fundina 
Federal/state 
Benefi ts:	 
Federal share is based on State' s per
capita income. In Fiscal 
Year 1987 , the 
cFeedenratl. s hare ranged from 50-78. 5 per
Administration:	 
Federal share is 50 percent, with 
increased funding for the development 
of automated systems. 
Federal Aaency	  Department of Health and Human Services
 
Family Support Administration
 
Authorization:	 
Social Security Act, Title IV-A 
Reaulations	  45 CFR 200 et seq. 
SUPPLEAL 
SECUTY 
INCOME (SSI)
 
PurDose  To provide supplemental security income to indi viduals
 
who are age 65 or older, or are blind or disabled.
 
DescriDtion 
The Federal Government provides monthly cash
assistance payments to low-
income individuals who are aged,
blind, or disabled. 
The program is administered by the Social
Security Administration. 
Benefits may be issued to either an
individual or to a husband and wife who both meet the
eligibility criteria. 
In most states, eligibility for SSI
automatically qualifies the individual for Medicaid. In other 
States, criteria more restrictive than the SSI standards are used 
to determine Medicaid eligibility. 
Funding	 
100 percent Federal 
Federal Aaencv	  Department of Health and Human Services
 
Social Security Administration
 
Authorization:	 
Social Security Act, Title XVI 
Reaulations	 
20 CFR 401 et seq. 
MEDICAID 
PurDose  To enable States to furnish (1) medical assistance for
families with dependent children and for aged
, blind, or disabled
individuals whose income and resources are insufficient to meet 
the costs of necessary medical services and (2) rehabilitation
and other services to help such families and individuals attain 
or retain capability for independence or self-care. 
B-2  DescriDtion 
The Medicaid program purchases medical care for low-
income families with dependent children and for low-income aged
 
blind, or disabled individuals. Health  the 
state for their services and are paid witchare  paro vidceros m	  bination oill f S.tate 
and Federal funds. The medical care may include prescription

drugs, hospital, l	 aboratory, nursing home, and physician services.

slitmateist sm.a y design their Medicaid programs wi thin broad Federal

Generally, eligibility can cover two groups of people.
The first group is the "categorically needy, " which includes
 
persons receiving assistance under the AFDC or SSI program. 
The 
second group is referred to as "medically needy.  At the option of

each state, persons who do not meet the "
categorically needy"

requirements because of excess income or assets
, but cannot afford

to pay for necessary health care, can be made eligible for Medicaid

under the "medically needy" category. 
Medicaid programs differ greatly from state to state because of 
variations such as benefits offered
, groups covered, and income
and assets allowed. 
Eligibility criteria for the "categorically
needy" are generally the same as the criteria for either the AFDC
 
or SSI programs. "Medically needy" criteria are usually related to
 
a State' s AFDC requirements, but the income and resource limits
 
are higher.
 
states administer the Medicaid program through local public
 
welfare agencies.
 
Funding 
Benefits:	  Federal/state 
Federal share is based on state' s per
capita income. For 
Fiscal Year 1986 , the 
Federal matching rate averaged 55 percent. 
Administration:	  Federal/state 
Federal share is generally 50 percent 
but can be higher for certain items. 
Federal Aqencv	  Department of Health and Human Services 
Care Financing Administration 
Heal th 
Authorization:	 
Social Security Act, Title XIX 
Requlations	 
42 CFR 430 et seq. 
SECTION 8 LOW-INCOME HOUSING ASSISTANCE
 
PUrDose  To help lower-income families obtain housing which is 
decent, safe, and sanitary, and to promote economically mixed
housing. 
B-3
  DescriDtion 
The Federal Government pays a rent subsidy for low-
income or displaced families and individuals who are aged or
 
disabled. The program is administered through local Pulic 
Housing Authorities (PHA). The PHAs contract with private
building owners, who lease the units to the low-income families. 
The family pays a portion of the rent and the Federal Government
 
subsidizes that amount to cover the total monthly housing cost
 
(including an allowance for utilities).
 
Eligible families select their own places of residence. Their 
portion of the housing cost is the greater of either 30 percent 
of their monthly income after specified deductions or 10 percent 
of their monthly income with no deductions. 
The PHA uses Section 
8 monies to supplement that payment up to the amount specified 
in a contract with the owner of the unit. 
Fundina	 
100 percent Federal 
Federal Aaency	  Department of Housing and
 
Urban Development
 
Authorization:	 
Housing and Community Development 
Act of 1974 (Public Law 93-383) 
Reaulations  CFR 812 et seq. 
PELL GRAS 
PurDose:  To provide financial assistance for educational costs 
to undergraduate students who are in financial need. 
DescriDtion: 
Postsecondary institutions receive Federal funds to 
assist students who demonstrate need for help with the costs of 
undergraduate education. Both income and assets are used to
determine the student' 
s eligibility and the amount of assistance. 
Whether the parents' income and assets are included depends on
 
whether the student is considered to be dependent 
on, or

independent of, the parents.
 
A formula is used to determine eligibility and grant amount. 
Assets are evaluated to assess the family'
s total financial 
strength. The value of assets is combined with the income 
determined by the formula to be available for 
education. The 
formula takes into account factors such as marital status
size  , family
, and number of children in school. The formula protects a
portion of income and assets to reserve them for retirement and
emergencies. 
Fundina:	 
100 percent Federal 
Federal Aaencv:	  Department of Education
 
Authorization:	 
Higher Education Act, 1965, Title IV-A 
Reaulations:	 
34 CFR 690 
B-4  APPENDIX C
 
NONLQUID ASSETS COUNED BY PROGRA 
The following matrix shows how each of the six programs counts
 
specific assets most frequently owned by individuals who apply
 
for assistance.
 
Fa STA/  SSI  foICAID  SECTIOI 8  PE GW 
III 
Exlu:  Exlu:  Ex lu:  Exlu:  caed.  ex 
Eq.i ty  Eqi ty in 
Exial: Eqity !X caed. 
is caed if 
in-
dividJl is irsti- Exi a-: 
tia'l ize a1: 
Total eqity COted 
rd 
dr:e r o plcn to sif tsiurgl e i de It I
ha: a1 
sp,  pE. wi th ra
0 ha ra 
I. ag 
chi ld 
, or disaled  Valle exlu: if 
haer 
displac 
acl t ch ild  orl 
ha. 
l ivirg at  dislocted wrer. 
Ba 
IMJILE  alIl ue;t:   eEqxity  in  Totnalley e xlu:  Ei th AF or SSI  01 aJcmi le  Exlu: 
0 Fai r  value  if  for  exlu:.
rN $450 caed  S150 caed  EllO)  pol icy i:lied. 
if th ally veicle for er aJo nei cal tretJ  caed 
orerl aitfe dE. IO) meq:ii  lteye  caToetdal   hifl rin ified fpore  , Efqoir  talyl  oth. 
0 Exlu: if  for oth  obr ief  
pto: n  veicles. 
irc:  of cl iRBte,
terin, distcr 
- tral la
etc. to peor
distan  esial 
for  dlily

EllO): Ot

tMr J:  acivities. 
hli- wise, fai er RxBrl et 
sically  valle in 
:or 
$450 for er aJo
-l iw in.  m:i le caed. 
sj 
0 Hi  of ei  Total eqity 
th fai  caed for oth 
valle or eqity  veicles. 
caed fo all 
oth 
veicles. 
***AAts tSsta otef' bso qth: isatl,u  trae1 tJp aofs a,s e cxa  bIeo ! Ir atleidb.
 el th AFD or SSI pol icy.
 
C-l  FC 
51  AFO  SSI  Pf 1 CAID  SECTIOj 8  PELL ffT* 
ExluE  State' s cpia'  llL 
Eq,i$ t2y i n  Eith AFO or SSI  Ex l  Ex 
to ex l!. or  of  COted.  lied. 
(Hasold  CO.  PJlicy 
gc, 
IClothirg, 
letc. 
rret 
I RE  Fai r  valU!  Eqi ty COed  Eqi ty COed  Eith AFO or SSI  Eqi ty COted.  Eq,ity in 
COed. 
bc.l laLn  be ex b. an be ex PJlicy  ied.  of S2 , (X COted. 
I (Not in- nx for six  ncluxE  for nire 
car 
if rri rg  if rr i  Ex i a':  Ex i a': 
d.irg)  a go faith  a go fai 
t of  Total Eqity CCted I
effor to sell.  effor to sell.  beits reive  if stLt 
AFD reive  SSI reive  Ioi le rrirg go  dets. has no
ciirg six  ciirg nire  fai th effor 
IItht n:u.t  te  IIth1 n:u.t  te  sell not rei re. 
j: id  j: i d 
l. 
lcn 
p1 f n 
foe for 
ha ca i a' 
$6 
first 
llL. 
Eqi ty ex 
IPUIlDIEI-G  ExlupE irf   Eq,i ty COed  Eq,i ty tel cw  Eith AFO or SSI  ExluE if  I f a b. i ne, ast 
aclaly  caisrtreenitn   ncb.l xLan.   fboer  seixx   deinx.lcu  rEet  iaf -l PJlicy  lied.  SEqSiO Oty.   Eq,i t(yX i nC Cextecde.  of 
I (Lcn  wi th fai r  if rr i  of at leat  Ex i a': 
IbJildirg  valU!; othise  a go faith  pet. 
pr, 
I eqi  eqi ty COed.  effor to sell.  bei ts reive  Iinf  ea fxann , eqi ty (X I 
of $100 
ISLl ies  AFO reive  Ioi le rrirg go  If valU! ex COed. 
I veicles  dnrixrg  six  If do't  fai th effor to  ce SS 
letc.  nut te  d. 6 pet  peag 
1:.  sell not rei re. 
j: i d  ent i re eqi ty  va lU! 
COed.  arret 
en 
sairg rate 
inc 
or 
fra prty
is COted 
Ioi 
greter. 
II LIIFEIB  ExluE  Ca Slre  Ca Slre  Eith AFO or SSI  Ca Slre Ex luE 
valU! COed.  valU! COed  lied.  valU! COted. 
PJlicy 
if total fac 
valU! of all 
PJl ides a' in
dividal 
$150.  If cD 
ex 
not  $150 
Slre 
ca 
valU! exluE. 
ex Ii 
Asts of both stLt cn j:rets 
, tretl  IIn oted. 
-At State' s cptia' of ast an be  libel tl AFO or SSI PJl icy. 
C-2  APPENDIX D

REIEW OF PRIOR STUIES 
Prior Study Ouick Reference Guide

s guide gives a quick look at reports briefly described on the following

pages. 
YE 
AGENCY  PROG (s) DEFINITION  VEFICATION 
TRTM  RECOMMNDATIONS REI 
CONDUCTING  REPORT  REEWD  OF ASSETS  FOR SIMLIFYING 
NO. 
STUDY  OF ASSETS  ADDRESSED?  OR STRNING 
ADDRESSED?  ASSET TESTING? 
Illinois 
Bureau of  1976  AFDC,  SSI, YES  YES  YES 
Medicaid 
Budget 
Food Stamp,

Section 8

Hous ing,

Pell Grant

HEW  1977  AFDC  SSI  YES  YES 
Medicaid 
Food Stamp

GAO  1978  AFDC  SSI,  YES  YES 
Food Stamp

Federal. 
Interagency 1980  AFDC,  SSI, YES  YES 
Medicaid, 
Group 
Food Stamp,

Section 8

Hous ing

Dept.
1981  Food Stamp

YES 
Agricul ture 
GAO  1981  Section 8

YES  YES 
Hous ing

GAO  1981  SSI 
YES  YES 
GAO  1982  AFDC,  SSI,
YES  YES 
Medicaid, 
Food Stamp,

Section 8

Hous ing

GAO  1985  AFDC  SSI,
YES  YES 
Medicaid 
Food Stamp,

Section 8

Hous ing,

Pell Grant

0-1  Prior StudY Ouick Reference Guide 
(Continued) 
AGENCY  YEA 	 PROGRA (s) DEFINITION  VEFICATION 
CONDUCTING	 REPORT  REEWD  TRTM  RECOMMDATIONS REF 
STUY	 OF ASSETS	 FOR SIMLIFYING  NO.
OF ASSETS  ADDRESSED?  OR STRINING
ADDRESSED? 
ASSET TESTING?

Amerian 
Pulic  1986  AFDC  Food  YES

stamp  YES

Welfare 
Association 
(APWA) 
GAO  1987	 AFDC,  SSI, 
YES
Medicaid 
Dept. 
of ED  1987	 Pell Grant
Contract/ YES  YES

Advanced

Technology

Inc. 
Westat Inc. 
GAO  1987	 AFDC  YES

Medicaid  YES

Food stamp, 
Section 8

Housing 
Southern 
1988  AFDC

Governors I  Medicaid  YES  YES

Association	
HHS  1988	 Medicaid 
YES  YES  YES 
HHS  1988	 Medicaid 
YES  YES  YES 
0-2
 Selected Prior studY Findinqs and Recommendations

Title of Report #1: Streamlining Social Benefit Programs

Agency
Conductinq study 
Illinois Bureau of the Budget 
(HEW Grant) 
Date of Release:  Fall 
, 1976 
Proqrams Reviewed 
AFDC , SSI, Medicaid, Food Stamp, Section 8
Housing, Pell Grant

Findinqs and Recommendations 
Forty-two needs-based programs

study. 
were included in the 
Nineteen of these programs consider
assets in eligibility determination. 
Since over half the

programs have no asset test
, it is possible for low-income

persons to be eligible for one program without asset screens but 
ineligible for another program where assets are considered. 
The
treatment of assets varies greatly among programs which consider 
them in eligibility determination. 
One reason for the disparity
could be the lack of acceptable standards for what constitutes a 
assets. 
reasonable" level of 
Where assets are treated 
differently from program to program
, a recipient appears
poorer" in some programs than others. 
The study also found there is more difficulty and discretion in

vfaalcuitnogr ass.s ets than in any of the other eligibility determination

In some programs, the caseworkers themselves must
assess the value of real and personal property. 
This may result
in an unparallel assessment if each caseworker is responsible for 
determining the value of the assets. 
Complex eligibility determinants
, such as nonliquid assets
confuse both the applicant and the caseworker, making it 
difficult for the applicant to understand whether or not he or 
she is eligible for various benefits. 
A growing opinion is that
reform of these programs is needed. 
Each program has its own
narrowly defined eligibility rules
inefficiencies.  , resulting in administrative
The report recommends a common intake system in each State to
centralize eligibility determination. 
Applicants for any of the
needs-based programs (with the 
exception of Pell Grants) would
have eligibility determined through this single intake 
system.
After intake, the client would be directed to the appropriate 
agency. 
D-3
 Title of Report #2: Welfare Reform: National Summary Report

On Regional Outreach

Agency 
Conductinq Studv 
HEW 
Date of Release:  April 1977

Proqrams Reviewed  AFDC , SSI, Medicaid, Food stamp 
Findinqs and Recommendations  The HEW regional offices conducted

system. 
a survey of the welfare 
Over 10 000 individuals and
organizations provided oral and written comments. 
The agreement
was that income and, to a lesser extent, assets must continue to
be priority considerations in needs-based 
programs. However
program complexity of rules and variations from one program to 
needs. 
another were hindrances to meeting basic 
Because of this 
there was strong and widespread support for easily understandable 
and uniform eligibility rules. 
Title of Report #3: Federal Domestic Food Assistance Programs: 
A Time for Assessment and Change (CED-78-113) 
Agency 
Conductinq StudY 
GAO 
Date of Release:  June 1978

Proqrams Reviewed  Food Stamp, AFDC, SSI

Findinqs and Recommendations 
This study reviewed eligibility

criteria in 13 major food assistance programs
, one of which was

the Food Stamp program. 
The study also examined AFDC and SSI

programs as general cash assistance programs designed to provide

recipients with cash for food and other basic needs. 
The study found benefit overlaps and gaps
, eligibility
differences 
, administratiNe inconsistencies, and coordination
problems among the programs. 
With regard to asset eligibility
criteria 
, the study found that the treatment of assets in the 
AFDC , SSI , and Food Stamp programs differs substantially. 
The GAO believes there should be a single definition of needy 
persons and uniform criteria for eligibility. The report
recommended that Congress and the Federal agencies administering 
rograms propose consistent income and asset eligibility 
these 
requirements. The report also recommended that the effects of
eligibility re  lirements and procedures on program participation,
program costs 
, and work incentives be studied. 
The results of
these studies should be reported to Congress along with 
recommendations for authorizing legislation. 
0-4
 Title of Report #4 : Eligibility Simplification proj ect 
Agency 
Conductinq Studv	 Federal Interagency Policy steering

Group 
Date of Release:	 October 1980

Proqrams Reviewed	 AFDC , SSI, Medicaid, Food Stamp, Section 8

Hous ing

Findinqs and Recommendations: A Federal interagency policy

steering group, cochaired by OMB and HHS , conducted this study.
Other agencies participating included HUD
, Agriculture, Labor

and the Community Services Administration. 
The study team

developed a comprehensive analysis and recommendations for

simplifying and standardizing client eligibility among major

public assistance programs.

While various programs may have similarities in goals

requirements 
, and procedures in eligibility determination
, the
programs do not operate as a system to provide services and

to people. 
benefi ts  Each program operates in a highly
independent fashion. An asset in one is not considered an asset

in another. 
Eligibility data supplied and verified in one 
program must be resubmitted to another program and reverified. 
To enable all programs to agree on basic eligibility

requirements 
, the study team formulated a standard glossary of
defini tions of  assets. 
the elements of income and  Standardizing
the identification of assets was intended to establish common

defini tions 
for Federal agencies in developing legislation and 
regulations regarding eligibility requirements.

The study team also addressed standardizing the treatment of

assets among programs. 
This would enable programs to gather and

record basic data on an applicant in a uniform 
manner, and reduce
forms. 
the need for multiple  Once data are gathered in this
fashion, verification by one program should be sufficient for

others. 
Determining financial eligibility for all programs can 
source. 
be carried out through one central 
with the use of
computers 
, determinations would be more accurate since financial 
rules regarding eligibility determination are easily 
programmed.
The study team believed that these recommendations would lay the 
groundwork for fundamental reform and improvement in the system. 
by the
Some of those recommendations have been implemented 
administering agencies since this report was issued. 
Specific recommendations relating to nonliquid assets are: 
Income-Producinq Property  All programs should adopt a standard

exclusion from the resource test of nonbusiness property which 
produces a 6 percent rate of return annually on its fair market
value. 
This recommendation does not apply to Section 8 Housing 
since it already inputs income from property. 
D-5  Converted Excluded Assets 
Food stamp and AFDC should adopt the
SSI policy of excluding the proceeds from the sale of a home for

up to 6 months.

Restricted Use/Inaccessible Assets 
All programs should adopt

the study team' s common definition governing the availability or

assets: 
accessibility of  Resources shall be considered 
available to the applicant or recipient and their value included

in the calculation of gross resources if the applicant or

recipient has the right 
, authority, or power to liquidate the
resources 
, or his/her share of the resource. 
Excl uded but 
Comminqled Assets  Programs should adopt the Food
stamp policy of excluding commingled assets 
(joint ownership) for

6 months after initial receipt. 
Beyond 6 months the exclusion

should continue only if the excludable resource is maintained in

a separate account.

Household Goods and Personal Effects 
All programs should

exclude these from assets and use a common definition for these

items. 
Vehicles 
All programs should exclude from assets vehicles used 
to produce income or modified for use by handicapped persons. 
Further, all programs should adopt the Food stamp requirement 
which includes the fair market value of another vehicle in excess 
500. 
of $4  This exclusion amount should be adjusted annually 
based on the increase in automobile cost. 
Life Insurance Policies and Burial Plots/Funds 
All programs
should exclude the value of burial plots. 
Also, all programs
should set the maximum exclusion on the cash value of life 
insurance policies and burial funds together at $2 
les5s00.  per person
and $5 000 per household or family whichever is  Amounts in
excess of these limits would be countable assets for eligibility. 
D-6
 Title of Report #5: Assets of Low-Income Households:

New Findings on Food stamps Participants and

Nonparticipants 
Agency 
Conductinq Study  Food and Nutrition Service 
u. s. Department of Agriculture 
Date of Release:  January 1981 
Proqrams Reviewed  Food stamp 
Findinqs and Recommendations:. The report presented findings on

the types and value of assets held by Food stamp participants 
and nonparticipants. The principal data base for analysis was a 
1979 Survey of Income and lePrvoegrlasm.  Participation sample of 11 300 
households at all income  The study concluded that limits
placed on assets exclude many applicants from the program. Asset 
limits reduce eligibility for food stamps by 12. 3 million persons
at a savings of $2. 9 billion annually (based on 1979 data). 
Data from this study revealed the following: 
Almost half (49 percent) of the Food Stamp households have 
no countable assets and 91 percent have $500 or less. 
Food stamp recipients tend to have little in liquid assets. 
Half of the Food stamp households have no car, only

36 percent own homes , and only 9 percent have life

insurance. No Food Stamp households in the sample have farm

or business interest, undeveloped land, estates, or trusts.

Assets owned by Food Stamp recipients tend not to be worth
large amounts. For 
example, 70 percent either do not own a 
car or have less than $500 equity in the car. 
Elderly households generally have assets of greater value.

Households disqualified from the Food Stamp program solely 
because their assets exceed allowable limits are relatively
well-
off as a group in terms of the types and value of the 
own. 
assets they  Two-thirds of these households have assets 
(not including equity in homes) in excess of $5 000. 
0-7  Title of Report #6: Further Actions Needed to Improve Management

of HUD Programs (CED-81-41) 
Agency 
Conductinq studv 
GAO 
Date of Release:  February 1981 
Proqrams Reviewed  Section 8 Housing 
Findinqs and Recommendations: This report is a compilation of

prior GAO reports on HUD housing programs  regard to
wi th 
Section 8 Housing programs, the report cites two prior studies

(CED-79-51 and CED-80-59). Both 
document high program costs and
program weaknesses. For example, GAO found that unreported

income and assets are a problem in Section 8 housing proj 
ects in
Chicago. 
Agency staff rely heavily on statements by prospective
tenants. 
assets. 
Li ttle attempt is made to detect unreported  Forty-three
percent of the files sampled in four housing proj 
ects had 
inadequate documentation supporting income and other allowances 
such as assets. Because of improper verification by public 
housing agencies , the accurate calculation of a tenant I s allotted
rent is not possible.

In testimony before the Subcommittee on Housing and Community
Development 
, House Committee on Banking, Finance and Urban
Affairs 
, Congressman Andrew McGuire, in April 1979 , stated: 
"At the present time, Section 8 functions on the principle

that a program recipient will in all cases totally divulge

his assets and income in the verification process. 
Given 
the fact that any understatement of income will translate

into a decreased rent payment
, it does not seem unreasonable

to assume that such reporting may occasionally be
incomplete. 
Section 8 has no method to discover all sources 
of household income, if the household does not volunteer 
those sources.

The GAO recommended that HUD strengthen procedures to verify 
tenant income and other allowances such as assets by: 
highlighting to all Section 8 program administrators and

beneficiaries the serious regard HUD places on this matter; 
reaffirming and restating, as necessary, the duties and

responsibilities of HUD field offices
, housing owners, and

PHAs in carrying out this important function; 
monitoring more aggressively the verification efforts of

housing owners and PHAs; and 
D-8  devising appropriate penal ties for owners and PHAs who fail

to adequately perform their verification duties and
responsibilities 
, and tenant families who willfully attempt 
to defraud the Federal Government by inaccurately reporting
income and allowances. 
Title of Report #7 : Millions Can Be Saved by Identifying

Supplemental Security Income Recipients 
Owning Too Many Assets (HRD-81-4) 
Agency 
Conducting Studv 
GAO 
Date of Release:  February 1981 
Proqrams Reviewed  SSI 
Findinqs and Recommendations  In Fiscal Year 1979, more than

$125 million was overpaid in assets due to incorrectly reported 
value and ownership of bank accounts and real 
property. The SSA
estimates that $20 million was overpaid to SSI recipients owning 
real property other than a home, such as land valued at more than

the asset limits for eligibility. 
Social Security employees fiati.le d to identify real property when 
recipients did not report  Interview questions and procedures
did not emphasize real property. 
The SSA' s regional Office of

Assessment staff found that SSA could better establish ownership

by improved interviewing techniques; 
yet, SSA, according to GAO

had not adopted the suggested improvement. The GAO believed that

the procedural improvements suggested by regional assessment

staff were reasonable. The 
HHS agreed with the GAO

recommendation and was acting to improve interviewing techniques

in the SSI claims process.

D-9
 Title of Report #8	 Legislative and Administrative Changes to

Improve Verification of Welfare Recipients 

Income and Assets Could Save Hundreds of

Millions 
(HRD-82-9) 
Agency
Conductinq studv	
GAO 
Date of Release:	 January 1982

Proqrams Reviewed	 AFDC , SSI, Medicaid, Food stamp, Section 8 
Hous ing 
Findinqs and Recommendations  Underreporting of assets by

recipients in needs-based programs results in erroneous payments

of $332 million, annually as follows:

Asset-Related 
Erroneous Payment
program*  (Millions)  Time Period 
AFDC  $ 40  FY 1979 
SSI  103  FY 1979 
Medicaid 
151  FY 1979 
Food stamp  CY 1978 
$332 
*No information available for Section 8 Housing for the time

period. 
Current verification requirements and practices are not adequate
to prevent improper payments. 
Not only do verification
requirements vary widely, but they are either extremely vague or
overly estrictive. In addition, some Federal laws and 
regulations preclude the use of information that would 
significantly enhance the verification process. 
Improved verification systems would help identify unreported or
underreported assets 
, thereby reducing the amount of improper
payments. 
D-I0
 . -
Title of Report #9 : Eligibility Verification and Privacy

in Federal Benefit Programs: 
A Delicate
Balance 
(HRD-85-22) 
Agency
Conductinq studv 
GAO 
Date of Release:  March 1985 
Proqrams Reviewed  AFDC , SSI, Medicaid, Food Stamp, Section 8 
Housing, Pell Grant

Findinqs and Recommendations  Inadequate verification of

lients I eligibility contributes to erroneous payments of several 
billion dollars annually. The definitions and treatment of 
assets vary from program to program 
(and state to State in some
instances) and thus contribute to similar items being considered
or verified in different ways. 
The report describes the lack of
uniformity among programs in how reported recipient data are

verified. To ensure proper eligibility decisions  believes 
that the information must be complete GAD 
, accurate and current.
Eligibili ty verification 
becomes important to assure the right
amount of benefits is being paid to the right person. 
The report presents actions that Congress and others should take

in streamlining verification procedures
, as follows:

Congress should legislate changes to make eligibility

factors more uniform and allow programs to verify factors in

the same way;

should aid in simplifying verification across

the  DMB 
programs; and

Federal agency program managers should coordinate 
verification across programs. 
0-11
 Title of Report #10  Comparison of Food stamp and AFDC Program 
Requirements with Recommendations for
Change 
Agency
Conductinq studv 
National Council of State Human 
Services Administrators of the 
American Public Welfare Association 
Date of Release:  July 1986 
Proqrams Reviewed  Food Stamp, AFDC 
Findinqs and Recommendations  The vast majority of low-income

families who receive AFDC also receive food stamps. However
agencies providing benefits to these families must follow 
different Federal requirements to determine eligibility. These
requirements differ greatly because the statutes and regulations 
which govern these programs have not been closely coordinated. 
As a result, erroneous payments occur. State and local agencies
administering the AFDC and Food Stamp programs have expended 
significant resources to reduce eligibility errors that cause
erroneous payments. Simplification of 
eligibility determinations
is essential error reduction. The report recommendations are

based on the premise that needs should be defined the same in

programs that often serve the same population. 
Wi th regard to asset testing, the report recommends that Congress

should: 
Resource Limits 
permi t States to allow AFDC recipients to
retain assets equal to the Food Stamp limit. 
Vehicles  Allow all households to have one automobile. 
If this
is not feasible, allow all households to have one automobile 
whose equity value in excess of $4 
500 would be applied to the
resource limit. 
Life Insurance  Follow the Food Stamp policy and exempt from'

consideration the value of life insurance policies in the AFDC

program. State 
experience indicates that most AFDC recipients do 
not have policies whose value would make them 
ineligible. The

administrative burden and expense in verifying this factor is not

cost-effective. 
Transfer of Asset Policy  Amend the Food Stamp Act to allow

States flexibility in developing transfer of asset policies to 
coincide with AFDC policy. 
Prepaid Burial Plans  Amend the Food Stamp Act to coincide with

AFDC policy exempting funeral agreements with an equity value

not in excess of $1, 500 for each member of the household.

D-12  Title of Report #11  Medicaid: Interstate Variations in 
Benefit Expenditures (HRD-87-67BR) 
Agency 
Conductinq study 
GAO 
Date of Release:  May 1987 
Proqrams Reviewed  Medicaid , SSI, AFOC 
Findinqs and Recommendations  This briefing report to Congress

identified the trends and variations among states in Medicaid

spending. One objective was to compare eligibility criteria.

While Federal statutes mandate the rules f  determini 
eligibility, discretion is given to the states in defining

Medicaid eligibility.

Asset limits for Medicaid "medically needy" programs vary from

state to state but must be (1) as- liberal as the highest asset

limits allowed for cash assistance recipients 
(AFDC and SSI) and

(2) the same asset limit for all covered groups. 
In 1984, the
asset limits for a family of two ranged from $2,
250 in 21 States 
to $9 500 in North Dakota. 
No recommendations were made. 
Title of Report # 	 Title IV Quality Control Project:

Stage Two Executive Summary

Agency 
Conductinq Studv  Advance Technology Inc. and Westat, Inc.
for u. 
S. Department of Education 
Date of Release:	 August 1987

Proqrams Reviewed	 Pell Grant

Findinqs and Recommendations  Fifty-four percent of recipients

of Pell Grants received incorrect awards 
(within a $50 tolerance)
, totalling $763 million. 
in 1985-86  This represents 21 percent 
of all  Pell  Grant funds paid. About one-third of the award 
errors were caused by incorrect information on student 
applications. With regard to reported assets
, errors in home
equity accounted for $64 million in net payment errors. 
Home 
equi ty errors were the second largest cause of errors.
Dependent students I 
net assets was the fourth largest cause of
errors 
, accounting for $35. 5 million in net payment errors. 
Since the first nationwide study on errors in 1978-79
considerable attention has been placed on lowering the error rate
in the Pell Grant Program.  The 1978-79 study found an error rate
of 31 percent (compared to 21 percent in 1985-85). Increasing 
0-13
 the validation of student application data
, redesigning forms and
procedures 
, and conducting quality control have been effective in 
reducing some errors. Yet, errors continue to be high in spite
of corrective actions already taken. 
One area that continues to 
be high is in asset testing for eligibility. The following table

is a comparison of how student errors in asset-
reported items

ranked in 1982-83 and 1985-86. 
Asset-Reported Items  Rank 
1985-86  1982-83 
Home Equity

Dependent Student I s Assets

Investment Equity

Business Farm Equity

Cash/ Checking/ Sav ings

A significant percent of misreporting home 
equity, savings, and

dependent students I assets was found to be due to reporting a

zero value for these assets. The study found that erroneously

reporting zero could be cross-checked on the Federal tax form

filed either by the student or the parents. 
Information on the 
tax return can indicate areas where a data item exists but was

not reported on the application. 
With regard to further reducing payment errors through corrective

action, the study found that 80 percent of all Pell Grant

recipients are already undergoing some type of validation.

Further reduction in errors will not come from validating more

applications. The most likely way to reduce errors through

validation is by developing better techniques for targeting 
validation towards applications and data items 
(e.g. home equity)
that have proven to be more error-prone. 
The report concludes that the Department of Education must either

accept the magnitude of error rates that currently exists by

relying on costly after-the-fact inspection techniques
, or

restructure the delivery system to design errors out of the

process. 
0-14
 Title of Report #13  Integration of Services for Low-Income 
Families/Testimony Before Select Committee 
on Hunger, House of Representatives 
Agency 
Conductinq Studv 
GAO 
Date of Release:  September 1987 
Proqrams Reviewed	 AFDC , Food Stamps, Medicaid, Section 8 
Hous ing 
Findinqs and Recommendations  The testimony was based on four

GAO reports on integration of services. One of the reports

surveyed 50 States to obtain their views on obstacles and actions

needed to enhance integration of services. One of the obstacles

is that programs use different definitions. 
For example, asset

limits are defined differently among the AFDC
, Food Stamp, and

Section 8 Housing programs.

The GAO reported that States desire more simplified and uniform

eligibility requirements among the programs and improved

coordination among legislative committees
, levels of government

Federal agencies, and programs wi thin the same Federal agency.
States also desire increased funding for integration

demonstration proj ects. 
One option for standardizing or eliminating program differences

is to make all AFDC families categorically eligible for Food 
Stamps and Section 8 Housing. All AFDC families are currently
categorically eligible for Medicaid, and about 65 percent of AFDC
families are eligible for Food Stamps. 
The GAO testimony concluded that, while eligibility differences

among the various needs-based programs may be more difficult to

resolve than procedural or administrative differences, many

procedural improvements cannot be made until the eligibility

requirements are simplified.

D-15
 Title of Report #14 
study of AFDCjMedicaid Eligibility 
Process in the Southern States 
Agency
Conductinq study  I Association 
Southern Governors 
Date of Release: 
April 1988 
Proqrams Reviewed 
AFDC , Medicaid 
Findinqs and Recommendations
: A family can have income low

enough to qualify for AFDCjMedicaid benefits but still be found

ineligible because its assets exceed allowable levels. 
example  For
, to be eligible for AFDCjMedicaid
have over $1,  , an applicant cannot
500 equity in a vehicle. 
This equity value was
established in 1979 as a result of a survey which showed that

96 percent of Food stamp recipients own vehicles which had

equity value of $1, 500 or less. 
This limit has not been adjusted

since 1979. Yet
, inflation between 1979 and 1987
Consumer Price Index , based on the

, would move the equity value of a vehicle

from $1 500 in 1979 to $2  1987. 
348 in  Asset limits have become
more restrictive since 1979 without inflationary

adjustments. Asset 
limits on vehicles appear to be

work incentive purposes: 
counterproductive 	 having a job
requires dependablefor transportation.

To address the problem of outdated asset limits

, the study

recommended that the asset limitations in AFDCjMedicaid should be 
adjusted to a reasonable level and reviewed 
periodically. 
Title of Report #15	
Eligibility Errors Resulting in Misspent

Funds in the Medicaid Program

Agency 
Conductinq Study	
Office of Inspector General

Department Of Health and Human Services

Date of Release:	
May 1988 
Proqrams Reviewed	 Medicaid 
Findinqs and Recommendations 
Eligibility errors in the Medicaid

program cost state and Federal Governments approximately $1. 
billion in misspent funds in Fiscal Year 1986. 
The highest
dollar errors occur in cases where the client is in a medical 
care facility. 
Because this type of care is so expensive
eligibility erros are costly.  , these
The study found that these errors
are frequently attributed to unreported

reported  , or inaccurately

, assets, primarily property and bank accounts. 
D-16
 One reason for errors is that states continually gr 
pple with

policy issues that make the containment of errors _difficult. 
This is largely due to untimely and unclear Federal policy and

eligibility requirements which are incompatible with medical

needs. states 
have to keep abreast of all Medicaid changes for 
various categories of assistance. 
In addition, since Medicaid

eligibility policy is tied to cash assistance programs 
(SSI and

AFDC), state agencies administering the Medicaid program must

keep up with the changes in those programs. 
Another reason for errors is that no formal network exists for 
states to share information on ways to improve eligibility
determinations 
, and there is no national system to assist states 
in ideatifying causes of error and appropriate corrective
actions. 
The report recommends that Federal Medicaid policy makers issue 
Medicaid policy in a timely manner. This 
would provide States
wi th sufficient lead time to properly implement the changes.
Federal policies should be written clearly to lessen the 
likelihood of different interpretations that could cause
eligibility errors. 
The report also recommends offering special 
assistance to states having difficulty reducing Medicaid
eligibility errors. 
Assistance would include determining the
specific causes of errors and assisting in the design of
correcti ve action 
measures to address the problem. 
Title of Report #16  Medicaid Estate Recoveries

Agency
Conductinq study 
Office of Inspector General 
Department of Health and Human Services 
Date of Release:  June 1988 
Proqrams Reviewed  Medicaid 
Findinqs and Recommendations  One of the purposes of the study

was to evaluate the extent and effectiveness of Medicaid estate

recovery programs implemented pursuant to the Tax Equity and
Fiscal Responsibility Act 
that:  (TEFRA) of 1982. Findings indicate
(1) people with very large assets can receive Medicaid 
long-term care benefits, although nearly two-thirds of the
nation' 
s elderly poor cannot qualify for acute or emergency care
under the program; 
(2) Medicaid eligibility rules are 
interpreted and enforced differently in almost every State

frequently to the detriment of the poor and to the advantage of

the affluent; and (3) billions of dollars in state and Federal 
funds are expended each year for Medicaid long-term care benefits 
wi thout adequate Federal oversight and only nominal State 
attention. The potential exists for recycling scarce r sources
by recovering benefits erroneously paid to propertied families. 
0-17  The OIG believes that $500 million per year could be saved by 
actively promoting Medicaid estate recoveries, even under 
laws. 
disadvantageous current  Even more importantly, however
the OIG believes that facing the certainty of Medicaid estate 
recoveries would influence propertied individuals, who now rely
on public assistance by default, to purchase private long-term 
care insurance instead. This would eliminate the risk of 
catastrophic long-term care costs for such individuals and shift 
the financing burden to the private sector. 
The report recommends that appropriate actions be taken to: 
Change Medicaid rules to allow families to retain and 
manage property while their elders receive long-term care. 
strengthen the transfer-of-assets rules so that people
cannot give away property to qualify for Medicaid. 
Require a legal instrument as a condition of Medicaid
eligibili ty to 
secure property owned by applicants and 
recipients for later recovery. 
Increase estate recoveries as a nontax revenue source for

the Medicaid program while steadfastly protecting the

personal and property rights of recipients and their

families. 
Conduct (1) a thorough audit of current estate recovery 
programs  (2) a study to determine how much equity is being 
diverted through liquidation or transfer of assets at the 
expense of the Medicaid program, and (3) a review to
evaluate how large a chilling effect the availability of 
Medicaid without encumbering assets affects the 
marketability of private risk-sharing solutions like long-
term care insurance. 
0-18