The 2025 federal budget reconciliation law, known as the One Big Beautiful Bill Act (Public Law 119-21), was signed on July 4, 2025. It makes payment accuracy a direct budget issue for states. This briefing summarizes the provisions that affect SNAP and Medicaid error rates, the deadlines that matter, and where states stand today.1
Before H.R. 1, the federal government paid all SNAP benefits and half of administrative costs. The law changes both.
| Payment error rate | State share of benefits |
|---|---|
| Below 6% | 0% |
| 6% to under 8% | 5% |
| 8% to under 10% | 10% |
| 10% or higher | 15% |
For fiscal year 2028, a state may use either its FY 2025 or FY 2026 error rate. From FY 2029 on, the rate from three years earlier applies. States whose rate multiplied by 1.5 is 20% or more (about 13.33%, or 20 divided by 1.5) get a delayed start: FY 2029 if based on the FY 2025 rate, FY 2030 if based on FY 2026.3
USDA released FY 2025 SNAP payment error rates on June 24, 2026. These are the first rates that can be used to set the new cost share.2
Calculated from USDA FNS FY 2025 state payment error rates for the 50 states and the District of Columbia. Seven of the 20 in the top tier are at or above 13.33% and would qualify for a delayed start. Tiers shown are for illustration; a state may instead use its FY 2026 rate.2
Federal law has allowed a 3% Medicaid eligibility error rate since 1983, and states could avoid penalties by showing good-faith efforts. GAO found no recoupments under the related quality control program since 1992.13 H.R. 1 changes how errors are counted and removes the main path to waivers.5
Each of these provisions adds data, verification, or renewal work, and each is a place where documentation errors can occur.610
| Provision | Effective | What states must do | CBO 10-year federal impact |
|---|---|---|---|
| Community engagement | Jan 1, 2027 | Verify 80 hours a month of work or qualifying activity for expansion adults ages 19 to 64, using data matching where possible. Good-faith extensions possible to Dec 31, 2028 | $326B reduction |
| Six-month renewals | Renewals scheduled on or after Jan 1, 2027 | Redetermine eligibility for expansion adults every six months | $63B reduction |
| Address verification and duplicate enrollment | Jan 1, 2027; federal system by Oct 1, 2029 | Verify enrollee addresses and submit enrollee data monthly to a federal system that prevents enrollment in more than one state | $17B reduction |
| Enrollee death checks | Jan 1, 2027 | Check the death master file at least quarterly | No CBO effect |
| Provider death checks | Jan 1, 2028 | Check at enrollment, reenrollment, and quarterly | Not separately scored |
| Retroactive coverage | Jan 1, 2027 | Shorten retroactive coverage periods | $4B reduction |
| Cost sharing | Oct 1, 2028 | Apply cost sharing for expansion adults above the poverty line | $7B reduction |
| Eligibility error penalty | Oct 1, 2029 | Keep eligibility-related improper payments at or below 3% | About $8B reduction |
Break recent quality control and PERM findings down by error type, office, and step in the process. Income, deductions, and documentation gaps usually account for most of the dollars.
Add validation before benefits are issued. An error caught before issuance costs a few minutes of review; one caught after costs a recovery effort and counts against the rate.
Link records for the same person across programs and systems. Duplicate IDs and conflicting determinations are a common source of both errors and rejected claims.
Reduce manual keying, standardize rules across offices, and prioritize the cases with the highest error risk and the nearest deadlines.
Under the new Medicaid rules, a payment that cannot be confirmed because documentation is missing counts toward the penalty, even if the person was eligible. Make sure verification is captured and retrievable.
Monitor error indicators continuously, and track denial and termination accuracy alongside them, so lowering the error rate never comes at the cost of eligible people.12
This briefing is a general summary for informational purposes and is not legal advice. Agencies should confirm requirements against federal guidance from USDA and CMS as it is issued.