Fiscal Note
Fiscal Services Division
SF 494 – Medicaid, Supplemental Nutrition Assistance Program (SNAP), Eligibility Verification
(LSB1320SV.2)
Staff Contact: Eric Richardson (515.281.6767) eric.richardson@legis.iowa.gov
Fiscal Note Version – Final Action
Description
Senate File 494 makes various changes related to public assistance programs under the
Department of Health and Human Services (HHS). Changes by section include the following:
• Section 1 creates various definitions, including defining “public assistance” as the
Supplemental Nutrition Assistance Program (SNAP), the Medicaid Program, the Family
Investment Program (FIP), and the Children’s Health Insurance Program (CHIP); “asset” as
liquid assets and other personal property excluding one vehicle and the fair market value in
excess of $10,000 of an additional vehicle; and “asset test” as including the value of all
assets of all members of the applicant’s household up to $15,000.
• Section 2 establishes the gross countable monthly income threshold for SNAP in Iowa at
160.0% of the federal poverty level (FPL) for the household.
• Section 3 requires that prior to the HHS awarding public assistance benefits, the applicant
shall complete, through a variety of available methods, a computerized identity
authentication process to confirm the identity of the applicant through a knowledge-based
questionnaire consisting of financial and personal questions. The questionnaire will contain
questions tailored to assist persons without a bank account or those who have poor access
to financial and banking services or who do not have an established credit history. The Bill
allows the HHS to adopt administrative rules to administer Section 3.
• Section 4 requires the HHS to receive and review State and federal information from
various entities concerning all individuals in the applicant’s household and their assets for
the purposes of determining eligibility for receipt of SNAP benefits.
• Section 5 requires the HHS, by July 1, 2025, to modify or create a computerized system, or
contract with a third-party entity, to provide for identity verification and authentication, asset
verification, and dual enrollment prevention for real-time eligibility verification in each public
assistance program. The HHS is required to seek federal approval if necessary to
implement Section 5.
• Section 6 requires all initial applications and ongoing recipient eligibility for public
assistance to be processed through a system that reviews federal sources, including the
Internal Revenue Service (IRS), Social Security Administration (SSA), U.S. Department of
Health and Human Services, U.S. Department of Homeland Security, and the Federal
Bureau of Investigation (FBI); State sources, including the HHS and Iowa Workforce
Development (IWD); and other sources of information. Before initial eligibility for public
assistance is determined, the HHS is required to review physical asset ownership and to
review information related to identity fraud, defaults, or arrest warrants.
• Section 7 requires the HHS to respond to discrepancies in an applicant’s or recipient’s
information affecting eligibility for public assistance.
• Section 8 requires the HHS to provide written notice to an applicant or recipient to explain
any issues identified during an application review. The applicant or recipient must be
provided 10 days to respond to the written notice. The HHS must reevaluate any finding if
the applicant or recipient disagrees with the HHS. If the applicant or recipient of public
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 assistance fails to respond in a timely manner, the HHS is required to provide notice before
an application is denied or public assistance is terminated.
• Section 9 allows the HHS to refer cases of suspected fraud to the Department of
Inspections and Appeals (DIA) for review.
• Section 10 requires the HHS to adopt administrative rules to administer the Bill, and to
submit an annual report to the Governor and the General Assembly beginning January 15,
2025, through January 15, 2030, to assess the impact of the Bill.
• Section 11 requires applicants for or recipients of Medicaid to cooperate with Child Support
Services as a condition of eligibility and requires the HHS to adopt administrative rules to
administer Section 11.
• Section 12 requires the HHS to request federal approval, including for any State plan
amendments or waivers necessary to administer the Bill. Any provisions of the Bill requiring
federal approval must be implemented once approval is received. Section 12 allows
provisions in the Bill to be suspended if they are incongruent with federal law or regulations
and jeopardize federal funding or services. Section 12 also requires the HHS to implement
provisions in the Bill incrementally, beginning July 1, 2023, and ending July 1, 2025. The
HHS is required to implement provisions that do not require federal approval by July 1,
2025. The HHS is allowed to contract with multiple third-party vendors to administer the Bill.
Background
SNAP is administered federally through 7 C.F.R. §271-285 and in Iowa through 441 IAC 65.
SNAP benefits must be utilized by eligible recipients, per federal guidelines, on a specific set of
foods, including fruits and vegetables, meat, dairy products, breads and cereals, snack foods,
and seeds and plants. Asset tests for receipt of SNAP benefits are specified in 7 U.S.C.
§2014(g)(1) and include members of the applicant’s household. In FY 2023, allowable federal
asset limits are $2,750 (including bank accounts), or $4,250 if at least one member of the
household is age 60 or older or disabled. Certain resources are not counted when determining
eligibility, including homes. Allowable assets for review by State agencies include boats,
vacation homes, savings accounts, and the value of vehicles used for household transportation
purposes. Federal regulations (7 C.F.R. §273.11(o)) provide a State option to disqualify
custodial parents from participation in SNAP unless the individual cooperates with a State
agency. There is currently no State statute related to asset tests for SNAP.
In FY 2022, the average number of Iowans receiving SNAP benefits was 287,000, while the
average amount of monthly benefits issued was $60.4 million. SNAP funding for benefits is
received from the federal government; however, 50.0% of administrative costs are paid by the
State. According to the U.S. Department of Agriculture, in FY 2020 the State paid $22.4 million
for SNAP administrative expenses to match federal funding. Federal income thresholds for
SNAP are specified at 130.0% of the FPL, with states able to exceed the floor. The current
Iowa Code contains no provision regarding the income threshold for SNAP recipients, although
the HHS has administered the program at 160.0% of the FPL, which is the level specified in the
Bill. Figure 1 shows FPL thresholds by family size for 2023.
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 Figure 1 — 2023 Federal Poverty Level Thresholds
Family Size 100.0% 130.0% 160.0%
1 $ 14,580 $ 18,954 $ 23,328
2 19,720 25,636 31,552
3 24,860 32,318 39,776
4 30,000 39,000 48,000
5 35,140 45,682 56,224
6 40,280 52,364 64,448
7 45,420 59,046 72,672
8 50,560 65,728 80,896
State Medicaid statute is codified in Iowa Code chapter 249A, while the Iowa Health and
Wellness Plan (IHAWP) is established in Iowa Code chapter 249N. There is currently no State
statute for asset tests to Medicaid or the IHAWP. Federal asset verification for Medicaid is
codified in 42 U.S.C. §1396a for aged, blind, and disabled individuals, and 42 U.S.C. §1396w
requires states to have submitted an asset verification plan to the Centers for Medicare and
Medicaid Services (CMS). There is no asset test for children, based on federal statute.
The DIA currently employs 19.0 Investigator 3 FTE positions to investigate referrals from the
HHS. These positions are funded through a combination of federal and State moneys, the
General Fund, and the DIA’s memorandums of understanding (MOU) contract with the HHS.
Assumptions
All staff increases are phased in beginning in FY 2024 and completed by the end of FY 2025,
assuming a total of 37.7 full-time equivalent (FTE) positions in FY 2024, 169.2 FTE positions in
FY 2025, and 219.0 FTE positions in FY 2026 and subsequent fiscal years. In addition, the
federal match rate varies by program and activity from 0.0% to 100.0% federal match. Total
cost and State share are depicted in Figure 2.
HHS Staff
There will be three years of FTE position cost integration beginning in FY 2024 as the HHS
begins to implement the program, with all staff costs being annualized by FY 2026.
New staff due to Sections 3, 4, 6, and 11 will result in new computer and software costs of
$3,000 per FTE position and $2,000 for ongoing software costs per FTE position.
Section 4 requiring the HHS to check and review new data sources, including usage of the
National Directory of New Hires database for the 135,000 households participating in SNAP, will
take 28 minutes per household for 4 new data sources, and will require the following:
• 39.0 Income Maintenance Worker 2 FTE positions at $61,000 per position.
• 5.0 Support Staff FTE positions at $45,000 per position.
• 3.0 Income Maintenance Supervisor FTE positions at $75,000 per position.
Section 6 requiring the HHS to check and review new data sources, including reviewing tax
information and fleeing felon information for 135,000 SNAP households and 216,000 Medicaid
households annually at 14 minutes per review, will require:
• 51.0 Income Maintenance Worker 2 FTE positions at $61,000 per position.
• 7.0 Support Staff FTE positions at $45,000 per position.
• 3.0 Income Maintenance Supervisor FTE positions at $75,000 per position.
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Section 11 requiring cooperation with Child Support Services will create approximately 37,000
new cases for the HHS and will require:
• 86.0 Support Recovery Officer FTE positions at $61,000 per position.
• 7.0 Support Recovery Supervisor FTE positions at $77,000 per position.
• 7.0 Assistant Attorneys General FTE positions at $121,000 per position.
• 7.0 Clerk Specialist FTE positions at $50,000 per position.
• 2.0 Management Analyst FTE positions at $77,000 per position.
Provisions in Sections 3, 4, and 6 that allow a vendor contract and administration of MOUs will
require 1.0 Management Analyst 3 FTE position at $77,000 for management.
Miscellaneous
The provisions in Sections 4 and 6 that require the IWD to share information with the HHS will
create the need for 1.0 additional FTE position at the Labor Market Research Economist 3
classification within the IWD at $72,000. The position will be staffed in January 2024, reducing
FY 2024 salary and benefit expenditures by 50.0%, with full-time annualization beginning in
FY 2025. The IWD also charges fees to State agencies for access to unemployment insurance
information and will collect $350 per fiscal year from the HHS beginning in FY 2024, resulting in
a net zero State cost.
Requirements in Sections 4 and 6 to access IRS data will require all Income Maintenance
Worker 2 FTE positions to receive FBI background checks. The cost of a background check is
$61 per employee. It is estimated that the HHS will hire 49.0 new Income Maintenance Worker
2 FTE positions annually. Every five years, the HHS will need to complete a new background
check for each employee.
Section 11 requiring cooperation with Child Support Services will require court action to
establish child support orders for approximately 73.0% (27,000) of the new cases. Child
Support Services must serve each nonrequesting parent in an establishment action with a
notice, which will cost an average of $14 per notice for certified mail. Approximately 45.0% of
parents will not accept or pick up the certified mail, requiring the use of a process server or
sheriff at an average cost of $79 per case. The average cost to serve the requesting parent by
regular mail is $1.
Information Technology (IT) Costs
The IT changes in Sections 2, 3, 4, 6, and 11 will require various one-time IT systems costs to
update interfaces, link with required data sources and systems, and build a dashboard and
reporting requirements. These one-time costs are estimated to be $5.5 million, of which
$2.4 million are costs to the State, and will be completed over three years beginning in FY 2024.
Ongoing maintenance is a part of the current HHS IT contract.
Program Impacts
Beginning in FY 2026, it is assumed that 1.0% of individuals receiving benefits will have their
benefits canceled due to discrepancies. This includes approximately 8,000 Medicaid recipients,
600 CHIP recipients, 100 FIP recipients, and 2,800 SNAP recipients.
In FY 2027, there will be a third-party contract to help administer Sections 3, 4, 5, and 6 with an
estimated cost of $7.0 million, of which approximately $3.3 million are State funds. The price of
the vendor contract will be a $500,000 base contract amount plus a 10.0% contingency
payment based on total savings.
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Fiscal Impact
Senate File 494 is estimated to increase State General Fund costs by $1.6 million in FY 2024
and $5.9 million in FY 2025, and decrease State costs by $200,000 in FY 2026. Beginning in
FY 2027 and subsequent fiscal years, the Bill is estimated to decrease State costs by
$8.2 million annually. Details of the estimated HHS and IWD staff costs, increases in IT and
miscellaneous costs, and savings are listed in Figure 2 for FY 2024 through FY 2027.
Figure 2 — SF 494 Fiscal Impact vs. Current Law
FY 2024 FY 2025 FY 2026 FY 2027
Total Total
HHS Staff Costs FTEs Total Cost State Share FTEs Total Cost State Share FTEs Cost/Savings State Share FTEs Cost/Savings State Share
HHS Staff Increase 37.2 $ 1,305,000 $ 456,000 168.2 $10,710,000 $4,151,000 218.0 $ 13,719,000 $ 5,453,000 218.0 $ 13,719,000 $ 5,453,000
Support Costs 890,000 303,000 2,034,000 843,000 1,679,000 629,000 1,680,000 629,000
Total HHS Staff Costs $ 2,195,000 $ 759,000 $12,744,000 $4,994,000 $ 15,398,000 $ 6,082,000 $ 15,399,000 $ 6,082,000
Total Total
IWD Staff Costs FTEs Total Cost State Share FTEs Total Cost State Share FTEs Cost/Savings State Share FTEs Cost/Savings State Share
IWD Staff Increase 0.5 $ 36,000 $ 36,000 1.0 $ 72,000 $ 72,000 1.0 $ 72,000 $ 72,000 1.0 $ 72,000 $ 72,000
Total IWD Staff Costs $ 36,000 $ 36,000 $ 72,000 $ 72,000 $ 72,000 $ 72,000 $ 72,000 $ 72,000
Total Total
HHS Information Technology Total Cost State Share Total Cost State Share Cost/Savings State Share Cost/Savings State Share
IT Systems Costs $ 1,846,000 $ 807,000 $ 1,846,000 $ 807,000 $ 1,846,000 $ 807,000 $ 0 $ 0
Total HHS IT Costs $ 1,846,000 $ 807,000 $ 1,846,000 $ 807,000 $ 1,846,000 $ 807,000 $ 0 $ 0
HHS Program Savings
Medicaid $ 0 $ 0 $ 0 $ 0 $-28,629,000 $-8,514,000 $-57,258,000 $-17,028,000
Children's Health Insurance Program 0 0 0 0 -874,000 -219,000 -1,748,000 -439,000
Food Assistance Program 0 0 0 0 -95,000 -95,000 -189,000 -189,000
SNAP 0 0 0 0 -2,700,000 0 -5,400,000 0
Third-Party Contract 0 0 0 0 3,480,000 1,668,000 6,960,000 3,337,000
HHS Total Program Savings $ 0 $ 0 $ 0 $ 0 $-28,818,000 $-7,160,000 $-57,635,000 $-14,319,000
SF 494 Total Cost/Savings $ 4,077,000 $ 1,602,000 $14,662,000 $5,873,000 $-11,502,000 $ -199,000 $-42,164,000 $ -8,165,000
The HHS currently refers cases of suspected fraud, along with any supporting information, to
the DIA for investigation. In FY 2022, the Economic Fraud Control Bureau responded to 4,696
referrals, and investigations from those referrals resulted in $3.3 million in savings to the State.
Section 9 of the Bill may increase the number of referrals from the HHS to the DIA, but the
number of new referrals cannot be estimated, and it is assumed that any additional referrals can
be absorbed by current staff.
Sources
U.S. Department of Agriculture
Department of Health and Human Services
Iowa Workforce Development
Centers for Medicare and Medicaid Services
Department of Inspections, Appeals, and Licen