The Government Accountability Office’s newest tally of federal payment mistakes puts a number on something many older Americans have suspected for years: when a benefit program gets an eligibility call wrong, the money almost always goes out the door rather than staying withheld. GAO’s review of fiscal year 2025 found an estimated $186 billion in improper payments government-wide, and roughly $153 billion of that total, about 82 percent, was overpayments: money sent to someone who was not entitled to the full amount, or to any of it. That imbalance matters well beyond the federal ledger, because it is a later audit, not an advance warning, that ends up deciding whose payment gets clawed back.
How GAO Defines an Overpayment
Federal auditors sort every wrongly issued dollar into three groups: money paid to someone who should have received less or nothing at all, money withheld from someone entitled to more, and payments auditors could not classify either way for lack of documentation. The first group, overpayments, covers a wide range of situations familiar to anyone dealing with Medicare, Medicaid or Social Security: a provider billed for a service that did not meet coverage rules, a household’s income changed and nobody updated the file, or a recertification form went unprocessed and payments kept flowing on old information. None of that requires intent. A payment counts as improper the moment it turns out to be wrong, whether the cause was a clerical slip or deliberate deception, and the government’s accounting does not sort the two apart. That distinction shapes what happens next: an overpayment typically triggers a demand for repayment or an offset against future benefits, while an underpayment simply gets made up later, often without anyone having to ask.
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The Fiscal Year 2025 Tally
GAO’s review of fiscal year 2025 put the government-wide total at about $186 billion in improper payments, reported across 15 agencies and 64 programs and up roughly $24 billion from the prior year. Of that total, about $153 billion, some 82 percent, fell into the overpayment category rather than the underpayment or unknown categories. Nineteen of the 64 programs reported error rates of at least 10 percent, and six of those exceeded 25 percent, meaning that for those six, more than a quarter of every dollar paid out was later determined to be wrong in some way. For an older reader watching a Medicare or Medicaid coverage decision, that error rate is not simply a Washington statistic; it is the same measurement system that later shows up as an audit letter, a recoupment notice sent to a health plan, or a billing adjustment months after a claim was paid.
Why the Total Jumped, and Where It Concentrated
Part of the increase reflects better bookkeeping rather than new waste: some programs that skipped reporting in fiscal year 2024 reported in 2025. But GAO’s own account of the rise points to a specific driver, Medicaid’s post-pandemic eligibility redeterminations and provider screening: as states rechecked who still qualified once the pandemic’s continuous-coverage rules ended, income and household changes that had gone unverified for years surfaced as overpayments all at once. Five programs accounted for about 73 percent of all the errors GAO reviewed: Medicare, Medicaid, the Earned Income Tax Credit, SNAP and the Small Business Administration’s Shuttered Venue Operators Grant program. Medicare alone reported the largest single amount, an estimated $57 billion, with Medicaid next at $37 billion, the Earned Income Tax Credit at about $21 billion and SNAP, the food-assistance program used by millions of retirees on fixed incomes, at roughly $10 billion. Since fiscal year 2003, the government has reported about $3 trillion in improper payments, and last year’s total remains below the levels recorded during the pandemic years even after this increase.
The Recoupment Machine Behind the Number
The overpayment estimate is not an abstraction confined to a GAO spreadsheet. It is the same category behind the individual recovery actions that HHS’s Office of Inspector General posts through the year, ordering specific hospitals and insurers to return money Medicare already paid out because a claim did not meet the billing rules in place at the time. Those audits are retrospective by design, arriving months or sometimes years after the original payment cleared, which is exactly the pattern the government-wide number describes at scale: the dollars go out first, and only a later review catches the mistake and starts the process of getting it back. Three such findings surfaced within weeks of each other this year alone: a health insurer agreeing to pay $117.7 million over Medicare Advantage billing allegations, and two separate Pennsylvania hospitals ordered to return $17.8 million and $4.7 million after billing audits.
What GAO Says Still Goes Unmeasured
GAO cautions that its $186 billion figure is a floor, not a ceiling. The estimate leaves out the Temporary Assistance for Needy Families program, which spent about $16.5 billion in fiscal year 2025, because the Department of Health and Human Services says it lacks the authority to require states to report the data needed to estimate that program’s error rate. GAO has asked Congress to give HHS that authority so a future tally can include it. Until that gap closes, the agency’s own fiscal year 2025 report stands as an acknowledged undercount of how much of the government’s money moved to the wrong place last year.
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This report was produced with AI assistance and checked against its sources before publishing.
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.
