The federal government reported that 15 agencies made an estimated $186 billion in improper payments during fiscal year 2025, and Medicare and Medicaid alone accounted for $94 billion of that total. The finding comes from the Government Accountability Office’s annual review of federal payment errors, released in April 2026. Medicare and Medicaid are the two largest sources of federal payment mistakes tracked in the report, and the government’s own accounting shows the errors grew larger last year, not smaller. For older Americans who rely on Medicare and Medicaid for health coverage, the total is less a headline number than evidence of how often the systems paying for their care get the amount wrong.
Medicare's Three Programs Add Up to $57 Billion
Medicare’s improper payment estimate for fiscal year 2025 totaled $57 billion, spread across three components: Medicare Fee-for-Service, Medicare Advantage (Part C), and the Part D prescription drug program, according to the Government Accountability Office’s report on the government’s payment errors. Fee-for-service carried the largest share on its own, $28.8 billion, an estimated 6.6 percent error rate against its outlays. That was actually an improvement of $2.9 billion from the prior year, which HHS credited to strengthened prior-authorization reviews used to verify coverage and coding rules before claims are paid. Medicare Advantage added another $23.7 billion to the total, a 6.1 percent error rate on its own outlays. The remainder came from Part D, which GAO folds into the same $57 billion Medicare figure rather than breaking out separately in the report’s headline numbers. Combined, the three programs made Medicare the single largest source of improper payments the federal government reported for the year.
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Medicaid's Errors Grew as States Unwound Pandemic-Era Rules
Medicaid’s improper payment estimate reached $37.4 billion, a 6.1 percent error rate, an increase of $6.3 billion over the prior fiscal year — one of the largest increases of any program GAO tracked. The Government Accountability Office reported that the Department of Health and Human Services attributed the jump to more mistakes in eligibility redeterminations and provider screening as states wound down COVID-19-era flexibilities that had let some enrollees stay covered without the usual paperwork checks. HHS computes the Medicaid figure as a weighted average of states’ own estimates across three components: fee-for-service claims, managed care payments, and beneficiary eligibility determinations. Combined, Medicare’s $57 billion and Medicaid’s $37.4 billion equal roughly $94 billion, just over half of the government’s entire $186 billion error total for the year.
Three More Programs Round Out the Five Biggest Sources of Errors
Medicare and Medicaid were not alone at the top of the list. Together with three other programs, they made up about 73 percent — roughly $136 billion — of all the improper payments the government reported for fiscal year 2025, according to the Government Accountability Office’s report. The Treasury Department’s Earned Income Tax Credit added $21.1 billion, by far the highest error rate of any large program at 32.7 percent. The Department of Agriculture’s Supplemental Nutrition Assistance Program added $10.2 billion, a 10.9 percent rate. The Small Business Administration’s Shuttered Venue Operators Grant program, a COVID-era relief effort for shuttered concert halls and theaters, reported $10.1 billion in errors on its own, a 68.9 percent rate — the highest of any program in the report, though GAO noted the agency was reporting an estimate for that program for the first time in fiscal year 2025.
Four of Every Five Error Dollars Were Overpayments
About $153 billion, or 82 percent, of the government-wide total was classified as overpayments — money sent out that exceeded what a recipient was owed and, at least in theory, could still be recovered. The rest of the total is made up of underpayments, where the government sent less than a recipient was entitled to; unknown payments, which agencies could not classify as proper or improper because of missing or incomplete documentation; and technically improper payments, where an eligible recipient received funds but the payment failed to follow every applicable rule. Separately, GAO found that 19 federal programs reported error rates of at least 10 percent for fiscal year 2025, and six of those exceeded 25 percent — a group that included the Shuttered Venue Operators Grant program, the Earned Income Tax Credit, and several other tax-credit and rental-assistance programs, according to GAO’s report.
The $186 Billion Total Still Leaves Billions Uncounted
The government-wide total climbed by about $24 billion from fiscal year 2024, with 15 agencies reporting estimates across 64 programs, according to the Government Accountability Office. Even that figure understates the problem. The $186 billion excludes some programs agencies have determined are susceptible to significant improper payments but do not estimate, including HHS’s Temporary Assistance for Needy Families program, which spent about $16.5 billion in fiscal year 2025 without ever producing an improper-payment figure, because HHS says it lacks the statutory authority to require states to report the data needed to calculate one. Cumulative improper payment estimates reported since fiscal year 2003 now total roughly $3 trillion, and GAO has said repeatedly that the true figure is likely higher still, since the government cannot fully determine the extent of its own errors.
A New Law Targets One Narrow Piece of the Problem
In February 2026, the president signed the Ending Improper Payments to Deceased People Act, making permanent — effective December 27, 2026 — a pilot program that requires the Social Security Administration to share its Death Master File with the Treasury Department’s Do Not Pay screening system, so agencies can check payments against records of who has died. The new law addresses just one of ten matters GAO recommended to Congress in March 2022 to tighten oversight of federal spending; as of April 2026, the other nine remained open. Compliance with payment-integrity law has also slipped: inspectors general found that only 12 of 24 major federal agencies fully complied with applicable requirements in fiscal year 2024, down from 13 the year before, with the Department of Health and Human Services among those falling short. HHS’s own inspector general, for one example, recommended the agency address the root causes of errors in its Head Start program, according to the Government Accountability Office.
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AI tools assisted in researching and drafting this article, which was reviewed prior to publication.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
