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Monday, July 16, 2012

2012 Farm Bill: Changing the Treatment of LIHEAP Receipt in the Calculation of SNAP Benefits

Randy Alison Aussenberg
Analyst in Nutrition Assistance Policy

Libby Perl
Specialist in Housing Policy

As Congress formulates the 2012 farm bill—an omnibus bill that reauthorizes a range of agriculture and nutrition programs—program integrity and deficit reduction have been leading themes. One of the cost-saving measures in the farm bill would address the way in which Supplemental Nutrition Assistance Program (SNAP) benefits are calculated. The SNAP statute allows for certain deductions from income when calculating a household’s benefit level, including a deduction for excess shelter expenses, which includes utility costs. If a family receives benefits through another federal program, the Low Income Home Energy Assistance Program (LIHEAP), this deduction from income can be higher, allowing for a higher SNAP benefit for the household. Both the Senate-passed 2012 farm bill (S. 3240) and the House Agriculture Committee Chairman’s mark limit the deduction associated with LIHEAP, seeking to end a practice that has been referred to as “Heat and Eat.”

Under current law, a SNAP household can use a LIHEAP payment (regardless of the amount of that payment) to document that the household has incurred heating and cooling costs. This documentation triggers a standard utility allowance (SUA), a figure that enters into the SNAP benefit calculation equation. Unless the household is getting the maximum SNAP benefit already, a household’s monthly benefit can increase if the SUA calculation results in an excess shelter deduction.

In addition to current law, current practice also affects the interaction between these benefit programs. While virtually all SNAP states consider LIHEAP in their calculation, approximately 16 states have implemented the so-called “Heat and Eat” policy. “Heat and Eat” is a phrase that the low-income and anti-hunger advocacy community has used to describe state and program policies that leverage nominal (as little as $1) LIHEAP payments into an increase in households’ SNAP benefits that is larger than the initial LIHEAP payment.

As of the date of the report, two policies have been voted on in Congress that would change current law to limit or eliminate this practice:

  • Under Section 4002 of the Senate-passed 2012 farm bill, S. 3240, only LIHEAP payments above $10 would confer this potential advantage. Payments of $10 and below would no longer entitle a household to earn an SUA during the benefit calculation process. If a household received less than $10 in energy assistance, households would have to present alternate documentation of utility costs in order to have utilities factored into calculating their excess shelter deduction. 
  • Under Section 104 of the Sequester Replacement Reconciliation Act, H.R. 5652, no amount of LIHEAP benefits would garner additional SNAP benefits. Households would have to present alternative documentation of utility costs. 
The July 5, 2012, release of the House Agriculture Committee Chairs’ farm bill, scheduled to be marked up on July 11, 2012, also contains the S. 3240 version of this policy.

This report discusses the policy background, details, and context associated with these bills’ changes to the current law of LIHEAP and SNAP SUAs, focusing primarily on S. 3240’s language. The report will be revised to reflect congressional action in this area.

Date of Report: July 10, 2012
Number of Pages: 14
Order Number: R42591
Price: $29.95

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