How Common Is Welfare Abuse? SNAP, Healthcare, and Error Rates

Deliberate welfare abuse is far less common than public debate suggests. The best available data puts intentional recipient fraud in programs like SNAP at roughly 1.6 percent of benefits, and Medicaid’s fraud share is a fraction of its improper payment rate of about 5 percent. The larger figures often cited as evidence of widespread welfare abuse — most prominently the $162 billion in federal improper payments reported for fiscal year 2024 — measure something broader: any payment made in the wrong amount, to the wrong person, or without the right paperwork, whether or not anyone did anything dishonest.¹

Improper Payments Are Not the Same as Fraud

The federal government tracks an “improper payment rate” for each benefit program. An improper payment is any payment made in the wrong amount, to the wrong person, for an ineligible service, or without proper documentation.² That definition sweeps in everything from a caseworker forgetting to collect a signature to a recipient deliberately lying about income. All fraudulent payments are improper, but most improper payments are not fraud.

In fiscal year 2024, agencies estimated about $162 billion in improper payments across 68 programs. Roughly 84 percent were overpayments, and about 75 percent of the total was concentrated in just five program areas.¹ Eighteen programs reported rates of 10 percent or higher, and six exceeded 25 percent. The government itself cautions that improper payment estimates “are not intended to reflect the extent of fraud in a program.”²

Keep that distinction in mind through the rest of the numbers below. A high improper payment rate can mean sloppy paperwork, a fast-changing caseload, or genuine theft. Only a subset is fraud.

How Often Recipients Actually Cheat SNAP

SNAP draws more public scrutiny than any other assistance program, so its numbers are worth looking at closely. The most recent USDA study, covering 2015 through 2017, estimated SNAP benefit trafficking at about 1.6 percent of total benefits issued.³ Trafficking means exchanging benefits for cash or anything other than eligible food: selling an EBT card, buying products with benefits and reselling them, or purchasing returnable containers to redeem the deposit.⁴ A 1.6 percent trafficking rate is not trivial in dollar terms given the size of the program, but it means the overwhelming majority of SNAP dollars go toward buying groceries.

Recipient fraud beyond trafficking generally involves misrepresenting income, hiding household members, or claiming benefits in more than one state.⁵ Stores commit their own version of fraud by giving customers cash in exchange for EBT transactions or by buying inventory back from customers who paid with benefits.⁶ Store-level trafficking is where investigators tend to focus, because a single dishonest retailer can process far more fraudulent volume than any individual recipient.

Where the Big Dollars Actually Disappear: Healthcare Programs

The largest dollar losses in public benefits do not come from food stamp recipients. They come from healthcare programs, and they are overwhelmingly on the provider side. Medicaid’s improper payment rate for fiscal year 2024 was 5.09 percent, or about $31.1 billion. Roughly 79 percent of those improper payments resulted from insufficient documentation rather than fraud or abuse.⁷ The remaining share includes billing for services never delivered, performing medically unnecessary procedures, and upcoding, meaning billing a more expensive procedure code than the one actually performed.

Medicare follows the same pattern. The fee-for-service improper payment rate was 7.66 percent ($31.7 billion) in fiscal year 2024, Medicare Part C came in at 5.61 percent ($19.07 billion), and Part D at 3.70 percent ($3.58 billion).⁷ Most of those dollars again reflect documentation gaps and coding errors. Even so, because the programs are so large, the subset attributable to actual fraud runs into the billions. Medicaid Fraud Control Units recovered $1.4 billion and secured more than 1,150 convictions in fiscal year 2024, a record year for convictions.

The picture that emerges: when large sums are stolen from public benefit programs, the person doing it is usually a provider or an organized retailer, not a household on assistance.

Administrative Errors Are the Biggest Category

The single largest contributor to improper payment statistics is neither a scheming recipient nor a crooked doctor. It is a caseworker who did not collect the right form, a state agency that failed to verify income at recertification, or a provider who submitted incomplete documentation. CMS puts it plainly: “Most improper payments involve a state, contractor, or provider missing an administrative step.”⁸ For the Children’s Health Insurance Program, about 62 percent of fiscal year 2024 improper payments fell into this documentation-gap category.⁷

Administrative errors also matter to individual households, because an agency’s mistake can generate an overpayment demand even when the recipient did nothing wrong. For Social Security overpayments, the default recovery rate as of March 2025 is 100 percent of the monthly benefit until the debt is repaid, though recipients can ask for a lower rate if they cannot afford it. Supplemental Security Income overpayments use a more manageable default of 10 percent.⁹

How Abuse Gets Caught

Fraud detection in public assistance leans heavily on cross-referencing databases. Under the Privacy Act, federal agencies run computer matching programs that compare benefit rolls against income records, employment data, and other government databases to flag inconsistencies.¹⁰ One of the most important tools is the National Directory of New Hires. State agencies must check every adult SNAP household member against this database at application and recertification to catch unreported employment.¹¹

When the system flags a match, the agency cannot cut benefits on the spot. Federal rules require independent verification, notice to the household, and a chance to respond before any adverse action.¹¹ On the healthcare side, agencies rely on audits of provider billing records, whistleblower reports, and predictive analytics that spot unusual patterns across claims data.

What Happens to People Who Get Caught

The consequences of proven welfare fraud scale with the program and the amount. A first intentional SNAP program violation triggers a 12-month disqualification; a second, 24 months; a third, a permanent ban. Trafficking $500 or more in SNAP benefits results in permanent disqualification on the first offense, as does using benefits in a transaction involving firearms, ammunition, or explosives.¹²

Criminal penalties for SNAP fraud scale by dollar amount, running from a misdemeanor with up to a year in jail for amounts under $100 to a felony carrying up to 20 years in prison for amounts of $5,000 or more.¹³ Providers who defraud Medicaid or Medicare face the False Claims Act, which makes anyone who knowingly submits false claims liable for three times the government’s losses plus a civil penalty for each false claim.¹⁴ Whistleblowers who bring successful False Claims Act suits can receive between 15 and 30 percent of the government’s recovery.¹⁵

Putting the Numbers in Perspective

The honest answer depends on what you mean by welfare abuse. If the question is how often recipients deliberately cheat to get benefits they know they do not deserve, the evidence points to low single-digit percentages of program spending. SNAP trafficking runs around 1.6 percent of benefits.³ Medicaid’s roughly 5 percent improper payment rate is mostly documentation errors, not fraud.⁷

If the question is total improper payments regardless of intent, the number is larger: $162 billion across all federal programs in fiscal year 2024.¹ Using that figure as a fraud estimate overstates the problem by an order of magnitude. Most of those dollars trace back to a healthcare provider who did not attach the right form to a claim or a state agency that missed a verification deadline. Real problems, worth fixing. Different problems from someone stealing public money.

1
U.S. Government Accountability Office. Improper Payments: Information on Agencies’ Fiscal Year 2024 Estimates
2
U.S. Government Accountability Office. Improper Payments: Key Concepts and Information on Programs with High Rates or Lacking Estimates
3
Food and Nutrition Service. The Extent of Trafficking in the Supplemental Nutrition Assistance Program
4
eCFR. General Information and Definitions
5
Food and Nutrition Service. Report Nutrition Program Fraud
6
Food and Nutrition Service. SNAP Retailer Notice – Trafficking
7
Centers for Medicare & Medicaid Services. Fiscal Year 2024 Improper Payments Fact Sheet
8
Centers for Medicare & Medicaid Services. Fiscal Year 2023 Improper Payments Fact Sheet
9
Social Security Administration. Social Security to Reinstate Overpayment Recovery Rate
10
Social Security Administration. Privacy Program – Computer Matching Programs
11
eCFR. 7 CFR 272.16 – National Directory of New Hires
12
eCFR. 7 CFR 273.16 – Disqualification for Intentional Program Violation
13
Office of the Law Revision Counsel. 7 USC 2024 – Violations and Enforcement
14
Office of the Law Revision Counsel. 31 USC 3729 – False Claims
15
U.S. Department of Justice. The False Claims Act