Senate panel advances bill tightening SNAP and Medicaid eligibility, citing federal penalty risk

Senate Bill 1, carried by Senator Garten, advanced out of the Senate Appropriations Committee on a 9–3 vote after hours of testimony from state officials, advocacy groups and food-bank representatives. The bill eliminates broad-based categorical eligibility in SNAP, mandates stricter citizenship and immigration verification for public benefits and directs Indiana to align certain Medicaid rules with new federal requirements that carry financial penalties for high error rates.

Supporters framed SB 1 as a budget-protection measure. Senator Garten said the changes are meant to “restore trust” in safety-net programs and prevent the state from facing large federal cost-sharing penalties tied to eligibility errors. “This bill continues that tradition by rooting out and protecting from future waste, fraud and abuse,” he said during the committee hearing.

Liza Sherman and Secretary Rowe of the Indiana Family and Social Services Administration described fiscal drivers and implementation considerations. Secretary Rowe told the committee the Medicaid program has grown substantially and said the administration expects to return roughly $466 million to the general fund this biennium through program reforms. He and Senate staff pointed to Indiana’s SNAP payment error rate (about 9.5% in federal fiscal year 2024) and warned that continued high error rates under the federal reconciliation changes could trigger state liability for hundreds of millions of dollars in benefit costs.

Outside witnesses were sharply divided. Jonathan Ingram of the Foundation for Government Accountability called BBCE “fraud by design” and urged closing that pathway to reduce improper payments. “Those households are about three times more likely to have eligibility errors,” he said, citing state and federal quality-control data and saying the change would lower both gross program cost and the state’s error rate.

By contrast, Emily Bryant of Feeding Indiana’s Hungry warned that withdrawing BBCE would increase administrative burdens for caseworkers, risk correct recipients losing benefits and could worsen food insecurity. She emphasized that error rates measure both underpayments and overpayments and are not synonymous with intentional fraud.

Committee members pressed the author and agency officials on several implementation questions: how many people might lose benefits, what safeguards will exist for redeterminations, how appeals will be handled and whether the state is administratively prepared for thousands of redeterminations. Secretary Rowe said CMS is finalizing federal rules this spring and that the state will rely on redetermination and appeal procedures; he acknowledged uncertainty about how many enrollees will be affected.

The committee adopted an amendment from the bill’s sponsor that would codify an existing executive-order change known as “SmartSNAP,” which blocks purchases of sugary drinks and candy with SNAP benefits, and establishes an Indiana Rural Health Transformation Fund to receive certain federal dollars with oversight and continuous appropriation.

The committee vote sends SB 1 to the full Senate. The bill’s supporters say it is primarily about compliance with new federal standards and avoiding fiscal penalties; opponents say it risks harming eligible, low-income Hoosiers and increasing administrative costs that drive higher error rates.