Public benefit delivery systems help millions of families and households afford daily life—covering food, child care, rent, and utilities—and weather financial shocks. Yet each year $140 billion in eligible benefits go unclaimed. During economic downturns, low- and middle-income households are especially vulnerable to further economic shocks if benefit delivery systems do not ensure the access, delivery, and use of benefits as stabilizing resources from which they can build wealth. The U.S. Department of the Treasury’s National Strategy for Financial Inclusion, released in October 2024, offers several opportunities for the nation’s financial system to help American households comfortably afford daily life.
In addition to the Strategy’s focus on designing financial products through research with recipients and expanding access to safe and affordable credit, the strategy also makes a clear connection between inclusive financial systems and the delivery of public benefits (Recommendations 4.1-4.3). We are encouraged by its emphasis on: 1) the need for inclusive financial products and services used for government-to-person payments and 2) the opportunity to strengthen data sharing with the tax system to help streamline and integrate public benefit applications and eligibility determinations.
To receive benefits, applicants must gather documentation, complete complex forms, and navigate administrative processes, which cost time, effort, and financial resources for households. The Strategy outlines opportunities to improve these processes, particularly through government provided or purchased financial products and services. These recommendations include:
- Address administrative burdens of programs delivered by governments that waste people’s time and create barriers to obtaining the benefits for which they qualify.
- Improve government-to-person payments systems, in part by making sure agency leaders and program administrators have the information and resources to effectively procure vendors that will meet the needs of benefit applicants, caseworkers, and system administrators, especially regarding the product’s ease of use and consumer protections.
- Address design features in public benefit programs, such as asset limits, which penalize individuals for accumulating even modest savings and assets—resources that families need for long-term financial well-being.
The Strategy also highlights interoperability as a North Star for benefits delivery: that Americans seeking services should only have to enter their information once. Agreed upon by eight federal agencies, this North Star encourages, and the Strategy recommends, that state benefits administrators and federal benefits agencies develop interoperable standards, practices, and infrastructure to enable the rapid and smooth delivery of public benefits. This includes standards for sharing household financial data housed by different systems such as tax, pensions, Social Security, SNAP, and WIC.
This type of protected data sharing, especially data matching with tax records, would enable the streamlining of enrollment where information already verified for enrollment in one program (such as income) can be used to eliminate that step when applying for another. There is an increasingly clear opportunity for this type of data matching given the success of Direct File, a government-provided, user-centered-designed, and free tax-filing system that is integrated with many state tax filing systems.
Interagency, interstate, and cross-sector efforts are increasingly crucial for promoting the effective and efficient functioning of government services and delivery of benefits. We are encouraged by the growing recognition that creating a more inclusive financial system must also include improving our public benefits systems, and we look forward to partnering with public, nonprofit, and private sector leaders to promote integrated and inclusive solutions that help more households afford daily life and achieve long-term financial security.