Millions of Americans who rely on government safety net programs could soon see major changes as new rules from President Donald Trump's sweeping budget law take effect next month. The changes affect both the Supplemental Nutrition Assistance Program (SNAP) and Medicaid, the nation's health insurance program for low-income Americans. While experts say the reforms could improve accountability and reduce federal spending, they’re also likely to increase hardship for vulnerable households while shifting billions of dollars in costs to states.
SNAP serves more than 40 million people each month, while Medicaid provides health coverage to tens of millions of low-income Americans and people with disabilities. Beginning October 1, several new rules outlined in the One Big Beautiful Bill Act will take effect, creating new financial pressures for states and new eligibility requirements for many beneficiaries. Starting October 1, the federal government's share of SNAP administrative costs will fall from 50 percent to 25 percent, meaning states will now be responsible for 75 percent of the costs of running the program.
The change was mandated by the One Big Beautiful Bill and is being implemented by the U.S. Department of Agriculture. According to USDA's proposed rule, the reduction in the federal reimbursement rate takes effect in fiscal year 2027, which begins October 1, 2026.
The administrative expenses affected include costs to pay caseworkers as well as fraud prevention efforts and even the call centers and tech platforms used to process benefits. State officials have warned that the shift could force difficult budget decisions. While the law does not directly reduce benefits, states facing higher costs may respond by reducing their admin staff, which could slow enrollment processing.
Beginning in October 2027, certain states will also be required for the first time to contribute toward the cost of SNAP benefits themselves if their payment error rates exceed federal thresholds. Historically, SNAP benefits have been funded entirely by the federal government. October 1 will also bring major changes to Medicaid eligibility for many lawful non-citizens.
Under guidance issued by the Centers for Medicare & Medicaid Services (CMS), federal Medicaid funding for full-scope coverage will generally be limited to: As a result, many groups that have traditionally been eligible for federally funded Medicaid coverage, including refugee and trafficking survivors, may lose access to federally funded coverage beginning October 1 unless their state provides alternative coverage using state funds. However, emergency Medicaid coverage will still be available, and states may continue certain coverage options for eligible children and pregnant individuals under existing federal law. Another major Medicaid change is on the horizon due to the One Big Beautiful Bill.
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