MDHHS' 10% SNAP Error Rate Will Trigger $ 320 Million In Federal Penalties

MDHHS' half assed management of SNAP is about to cost the State of Michigan real money.  Why State AG Dana Nessel is suing USDA to keep Michigan's SNAP data secret and force eligibility for illegal immigrants?

https://bridgemi.com/michigan-health-watch/michigan-set-to-lose-millions-under-trump-snap-reforms/

Michigan set to lose millions under Trump SNAP reforms
By Eli Newman - December 16, 2025

• Michigan could lose hundreds of millions of federal dollars under changes for the Supplemental Nutrition Assistance Program
• The federal government will penalize states that report a SNAP error rate of 6% or more
• Michigan’s latest error rate is at 9.53% and the state health department is working to reduce it

Michigan may have to shell out upwards of $320 million to provide food aid to residents as new rules kick in for the federal government’s Supplemental Nutrition Assistance Program, or SNAP.

Under President Donald Trump’s One Big Beautiful Bill Act, starting in the 2028 fiscal year, the federal government will require states to cover at least 5% of the cost of SNAP benefits if they make too many mistakes, either through overpaying benefits or underpaying.

Under the new law, the federal government will penalize states that report a SNAP error rate of 6% or more.

Michigan’s SNAP error rate was 9.53% in the 2024 fiscal year, according to the US Department of Agriculture, while the national average was 10.93%. Only nine states had SNAP error rates less than 6%.

How much the state would have to pay would rise depending on the error rate. At Michigan’s 2024 rate of 9.53%, the state would have to cover 10% of SNAP costs, or more than $320 million.

As a “worst case scenario,” Michigan would see a $481 million penalty to the state’s current SNAP benefits, David Knezek, chief operating officer of the Michigan Department of Health and Human Services, testified Tuesday at a state Senate appropriations subcommittee meeting.

If the error rate is anywhere above the federal threshold, the state would need to provide a minimum 5% cost share, totalling $160 million under recent figures.

Michigan paid $3.2 billion in SNAP benefits in the past fiscal year. A pause in the program during the federal government shutdown earlier this year wreaked havoc on hundreds of thousands of state residents who rely on government food assistance.

“We’ve seen the error rate decrease over the last five years. We want to continue on that trend,” Knezek told the Senate subcommittee.

Separate from instances of fraud and technical glitches, the state’s reported errors are driven by both households that apply for SNAP and the state agencies that handle their forms.

Knezek said the state will likely see an additional $95 million increase in administrative costs starting in the 2027 fiscal year due to federal restructuring of funding.

Michigan’s budget allocates $15 million to MDHHS to review and improve its SNAP error rate. Knezek said there are several factors driving the “root cause” of error, including applicants reporting changes in earned income, fluctuations in household members and the monitoring of unearned income.

MDHHS Chief Operating Officer David Knezek speaks before a state Senate subcommittee Dec. 16. (Screenshot)
The department has eight initiatives to reduce future error, Knezek said, including improvements in information technology and the state’s MI Bridges benefits platform.

New work requirements for SNAP under the One Big Beautiful Bill Act took effect at the beginning of December. The Michigan League for Public Policy says most beneficiaries in the state already have a working family member, and the Trump-era policy is expected to lead to coverage loss and increased tax payer burden. The state estimates it will cost $75 million annually to implement the new work requirements.