Sneak Preview: Federal Agencies Estimate $186B in FY 2025 Improper Payments
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) Federal agencies estimated a total of about $186 billion in reported improper payments in federal fiscal year (FY) 2025, according to a recent Government Accountability Office (GAO) report. This amount is about $24 billion higher than FY 2024, although GAO notes that this is largely attributable to key programs that reported estimates in FY 2025 that did not report the previous year.
The FY 2025 improper payment estimates, however, do not include certain programs that agencies have determined are susceptible to significant improper payments, GAO noted, adding that, therefore, the total reported estimates do not represent the full extent of governmentwide improper payments. For example, the total does not include estimated improper payments within the Department of Health and Human Services (HHS) Temporary Assistance for Needy Families (TANF) program, which spent about $16.5 billion in FY 2025. HHS reported that it does not calculate or report improper payment amounts for this program due to statutory limitations.
GAO also is required to report to Congress on the level of improper payments estimated annually by federal agencies. Improper payments — payments that the federal government should not have made or that were made in incorrect amounts — continue to be an area of fiscal concern in the federal government.
Fifteen federal agencies reported improper payment estimates across 64 programs for FY 2025, compared to 16 agencies estimating improper payments covering 68 programs in FY 2024. About 73% (some $136 billion) of the governmentwide total of estimated improper payments stemmed from five programs: Medicare (HHS) — $57 billion; Medicaid (HHS) — $37 billion; Earned Income Tax Credit (EITC) (Department of the Treasury) — $21 billion; Supplemental Nutrition Assistance Program (SNAP) (Department of Agriculture (USDA)) — $10 billion; and the Shuttered Venue Operators Grant program (SVOG) (Small Business Administration) — $10 billion.
Estimated improper payments from the SVOG program were not included in the FY 2024 total. Other key programs that did not report in FY 2024 that reported in FY 2025 include the Department of Housing and Urban Development’s (HUD) Section 8 Tenant Based Rental Assistance – Housing Certificate Fund program ($1.5 billion) and the Social Security Administration’s Disability Insurance program ($2.3 billion).
In addition, HHS noted an increase in Medicaid improper payments due to increased errors in eligibility redeterminations and provider screening while phasing out COVID-era flexibilities in the program, according to the report.
(The full version of this story has now been made available to all for a limited time here.)
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