Navigating H.R. 1 impacts across Medicaid and SNAP

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Following the passage of H.R. 1 in July 2025, states face significant new operational and financial challenges across health and human services programs. The most immediate impacts have been felt in the Supplemental Nutrition Assistance Program (SNAP), while implementation of Medicaid community engagement requirements is now actively underway as states prepare for compliance deadlines in 2027. Together, these demands reinforce the need for a holistic, coordinated approach across programs. Thoughtful planning now—including alignment of systems, processes, and cost allocation strategies—will be critical to navigating evolving requirements while sustaining effective service delivery.

SNAP: Immediate pressures and emerging fiscal risks

H.R. 1 introduced future financial penalties through cost-sharing requirements effective in fiscal year 2027, prompting states to intensify efforts to improve payment accuracy and strengthen quality control processes. Recent policy changes require states to implement changes to Able-Bodied Adults Without Dependents (ABAWD) policies, citizenship eligibility, and how recipients qualify for utility deductions. Operational strain increased following the November SNAP shutdown, which disrupted services and stretched limited state resources.

Looking ahead, states must continue reducing payment error rates while preparing for a 25% increase in SNAP administrative cost sharing beginning October 2026. Early planning will be critical to mitigating fiscal impact and maximizing federal funding participation.

Medicaid community engagement requirements

In December 2025, the Centers for Medicare & Medicaid Services (CMS) issued draft guidance outlining compliance expectations for Medicaid community engagement requirements. The requirements take effect January 1, 2027, though states may elect earlier implementation.

Applicable individuals — primarily those enrolled through Affordable Care Act expansion or certain waivers — must demonstrate participation in employment, education, or volunteer activities.

Key implementation challenges

States face several key challenges:

Identifying and tracking applicable individuals
Verifying compliance at application and renewal
Managing exclusions and exceptions (e.g., for medically frail individuals)
Developing reliable systems for compliance monitoring

Implementation will require new or enhanced systems, staff training, and coordination with workforce and education agencies. Noncompliance procedures must be clear, fair, and consistently applied, with beneficiaries given notice and opportunity to cure deficiencies.

Policy and operational uncertainty

Federal guidance released in December represents the first step in an evolving rulemaking process, with additional regulations anticipated in June 2026. To prepare for continued change, states should:

Establish cross-agency implementation task forces
Invest in data systems to track engagement and compliance
Engage stakeholders early to identify barriers and solutions
Monitor federal guidance and participate in CMS technical assistance

Cost allocation and cross-program alignment opportunities

New requirements create an opportunity to rethink cost allocation and operational alignment across SNAP and Medicaid. States can consider:

SNAP waivers allowing text notification of electronic notices to reduce mailing costs
Augmenting current tracking systems of work activities already collected by SNAP while creating systems to communicate participation for the Medicaid agency, and allocating costs accordingly
Aligning certification and renewal timelines to reduce churn and administrative burden

Although perfect policy alignment is unlikely, reducing unnecessary inconsistencies can simplify system logic, reduce worker burden, and improve the client experience.

Managing rising administrative costs

To mitigate administrative cost increases, states should:

Conduct comprehensive reviews of cost drivers and identify areas for efficiency gains
Invest in technology to automate eligibility checks and reduce manual processing
Explore shared services models across agencies to leverage economies of scale
Determine whether there is federal flexibility in cost allocation methodologies, especially for states with high caseloads or unique challenges

Moving forward

The coming year will test the resilience and adaptability of state Medicaid and SNAP agencies.

The cost shifts and compliance requirements introduced by H.R. 1 and CMS guidance demand deliberate planning, operational innovation, and strong stakeholder engagement. States that take a strategic, cross-program approach — including thoughtful cost allocation and targeted investments — will be best positioned to navigate these changes while continuing to serve vulnerable populations effectively.