GAO Flags $186B in Improper Payments Across 64 Programs in FY 2025

The Government Accountability Office (GAO)’s most recent audit of the U.S. government’s consolidated financial statements revealed $186 billion in improper payments in fiscal year (FY) 2025, an increase of $24 billion from the previous fiscal year.  

The improper payments were made across 64 programs and 15 agencies.  

An improper payment does not necessarily mean that funds were lost or stolen; often, the term is used to describe payments that either should not have been made or were made in the incorrect amount, according to GAO. 

In its report, issued Monday, GAO said the federal government has made about $3 trillion in improper payments since FY 2003.  

About $153 billion of the improper payments made in FY 2025 are overpayments, the agency said. The remainder consists of underpayments, unknown payments, and “technically improper payments.” 

The year-over-year increase in improper payments is mostly attributable to programs that reported estimates in FY 2025 but did not report estimates in FY 2024, GAO said. 

“The improper payment estimates do not represent the full extent of government-wide improper payments,” GAO said, adding that agency inspector generals have “reported that agencies’ improper payment estimates are unreliable for some programs.” 

Specifically, GAO said that FY 2025 estimates do not include certain programs considered by agencies as “susceptible to significant improper payments.” 

Most of FY 2025’s improper payments stemmed from Medicare and Medicaid, which respectively paid $57 billion and $37 billion in improper payments. The remaining total includes the Earned Income Tax Credit ($21 billion), Supplemental Nutrition Assistance Program ($10 billion), and the Shuttered Venue Operators Grant Program ($10 billion). All other programs make up $51 billion of improper payments. 

According to GAO, the Department of Health and Human Services attributed the increase in Medicaid improper payments “to increased errors in eligibility redeterminations and provider screening while phasing out COVID-era flexibilities in the Medicaid program.” 

To reduce improper payments, GAO said it proposed 10 reforms in 2022, including flagging large new programs as high-risk and creating a data analytics center to detect fraud. The agency said only one recommendation has been enacted: A February 2026 law makes permanent a program sharing death data to prevent payments to deceased individuals.