HR1 in Plain Language: What State, County and City Leaders Need to Know Now

The One Big Beautiful Bill Act (H.R. 1) was signed into law on July 4, 2025. Since then, federal agencies have been issuing implementation guidance in waves, state legislatures are convening emergency sessions to address budget exposure, and county administrators are quietly trying to figure out what it all means for their teams and the residents they serve.

This article is for government leaders at every level — state agency directors, county administrators, and city managers — who are trying to understand what HR1 actually requires, who it affects most directly, and what it means for the communities they serve.

The operational weight falls unevenly: state agencies and counties bear the most immediate compliance burden. But city leaders are not insulated, and the reasons why are worth understanding clearly.

1. The SNAP Cost-Share Shift: A New Financial Risk for States and Counties

For nearly 50 years, the federal government paid 100 percent of SNAP food benefit costs, while states and counties split administrative expenses roughly 50/50. That model is changing.

Under H.R. 1, states with SNAP payment error rates above 6 percent will be required to pay a share of benefit costs beginning in federal fiscal year 2028. The scale of that share depends on how far above 6 percent a state's error rate falls:

• Error rate between 6–8%: state pays 5% of benefit costs

• Error rate between 8–10%: state pays 10%

• Error rate at or above 10%: state pays the maximum 15%

The stakes are significant. As of 2024, only eight states had error rates below the 6 percent threshold. The other 42 face exposure to new benefit cost obligations on top of an administrative cost-share that is also shifting — from 50/50 to 75/25 (state/federal) beginning in October 2026.

Maryland offers a concrete illustration of what that exposure looks like. State analysts project the administrative shift alone will cost Maryland roughly $58 million more annually — but that is before accounting for a potential $240 million per year in benefit cost-sharing liability if the state’s error rate (which has exceeded 10% in recent years) is not reduced. Even a small change matters: Utah’s legislative office calculated that an increase of just 0.26 percent in its error rate could cost the state an additional $20 million annually.

The error rates that will determine FY 2028 cost-sharing obligations are being measured right now — in FY 2025 and FY 2026. States have very little time to reduce errors before the financial exposure is locked in.

NACo has formally raised concerns that states may pass these cost obligations down to county governments, even when county offices have been performing their eligibility work accurately. The National Governors Association and APHSA jointly called on Congress in January 2026 to delay the cost-share start date, citing the compounding difficulty of implementing a major policy shift while facing shutdown-related disruptions and delayed federal guidance.

2. Medicaid Work Requirements: A December 2026 Deadline with Real Administrative Weight

H.R. 1 makes work and community engagement requirements mandatory for Medicaid expansion enrollees — adults ages 19 to 64 who are covered through the ACA expansion or an equivalent demonstration waiver. Prior to this law, only states with approved Section 1115 waivers could impose such requirements. Now they are federal law for all 41 expansion states.

The deadline for states to implement these requirements is December 31, 2026, though states may choose to move faster through existing waiver authority. CMS issued initial guidance in December 2025, with fuller rulemaking expected by June 1, 2026.

To remain eligible, Medicaid expansion enrollees must demonstrate at least one of the following each month:

• At least 80 hours of qualifying work, job training, or community service

• Enrollment in an educational program

• Monthly income equivalent to 80 hours at the federal minimum wage ($580/month as of July 2025)

Exemptions apply for parents of children 13 and under, medically frail individuals, pregnant and postpartum women, people recently released from incarceration, and those already meeting SNAP or TANF work requirements, among others. But the exemptions require documentation, and the verification burden falls on state and county agencies.

The evidence from states with prior work requirement experience is sobering. When Arkansas implemented Medicaid work requirements under a 2018 waiver, substantial coverage losses followed, with no significant increase in employment. Most people who lost coverage were found to already be working, caring for family members, or medically exempt — they simply could not navigate the paperwork. Georgia, currently the only state with an active Medicaid work requirement, has seen similar administrative strain.

At least seven other states have waiver requests pending, and most states are still in the early stages of building the data systems and verification workflows they will need by December 2026. Federal implementation grants — $100 million allocated equally across states and another $100 million allocated by eligible population size — are available but modest relative to the infrastructure required.

3. Semiannual Redeterminations: Twice the Volume, Same Staff

Before H.R. 1, most Medicaid expansion enrollees had their eligibility verified annually. The new law requires that verification to happen every six months.

That means twice as many redetermination cycles per enrollee per year. For a county human services department already managing high caseloads with limited staff, this is not a small operational shift. It is a near-doubling of one of the most labor-intensive processes in benefits administration.

The challenge is compounded by the fact that coverage gaps often result not from ineligibility but from process failure — missed deadlines, incomplete paperwork, or notices that never reached the right address. The Medicaid unwinding from 2023 to 2025, which returned the program to pre-pandemic enrollment verification rules, offers a preview. Millions of people lost coverage during unwinding; many were later found to have been eligible all along.

Semiannual redeterminations will require agencies to increase throughput, not just capacity. The agencies that will fare best are those with structured, documented workflows — not those relying on institutional memory or manual processes.

4. Error Rate Penalties and the Operational Case for Accuracy

The SNAP error rate provisions deserve special attention because they connect day-to-day operational performance directly to long-term fiscal exposure — in ways that many local administrators may not yet fully appreciate.

SNAP’s Quality Control system measures how accurately agencies determine eligibility and calculate benefit amounts. Error rates above 6 percent are common: the national average in 2024 was 10.9 percent. Under H.R. 1, those error rates are now a direct liability — not just a program quality indicator.

The measurement window that matters is now. FY 2025 ended September 30, 2025. FY 2026 is currently underway. These are the two fiscal years whose data will determine the cost-sharing obligations that take effect in FY 2028. Guidance from USDA has also been slow, incomplete, and occasionally contradictory — a federal court issued a preliminary injunction in late 2025 extending a hold-harmless period for errors related to noncitizen eligibility changes, after USDA initially gave states less than one day to implement changes affecting families who remained eligible.

States and counties that have already invested in structured eligibility workflows, documentation systems, and audit-ready records are better positioned to absorb these changes than those managing through ad hoc processes and tribal knowledge.

5. When States and Counties Strain, Cities Feel It Too

The operational weight of HR1 lands first on state agencies and counties — they hold the formal eligibility infrastructure for SNAP and Medicaid, and they are the ones accountable for error rates, redetermination volumes, and work requirement verification systems. City governments are not on the hook for that directly.

But “not directly responsible” is not the same as “not affected.” City leaders should be paying attention now, because the downstream consequences of state and county strain tend to arrive at city hall faster than anyone expects.

Increased Demand on City-Funded Safety Nets

When state and county programs tighten — whether through eligibility restrictions, documentation failures, or deliberate budget cuts — residents don’t disappear. They look for help elsewhere. City emergency assistance programs, municipal food pantries, city-funded housing stabilization funds, and community health centers all absorb caseloads that federal programs shed. The Medicaid unwinding of 2023–2025 offered a preview: millions lost coverage, and city-level service providers saw demand climb well before state agencies had finished processing redeterminations.

HR1’s semiannual redetermination requirement, work verification burdens, and eligibility restrictions for certain immigrant populations will produce similar dynamics — at scale, starting in 2026 and accelerating through 2027 and 2028.

Workforce Programs Sit Directly in the Crosshairs

Many cities run or fund workforce development programs — job training, subsidized employment, apprenticeship pipelines, and re-entry initiatives. These programs are now operationally entangled with HR1 in ways that are easy to miss.

Medicaid work requirements allow enrollment in workforce programs to count as qualifying activity. That sounds like an opportunity, but it also creates a documentation and verification obligation: program participants need to be tracked, reported, and matched against Medicaid eligibility systems. Cities that run these programs without clean data infrastructure risk creating compliance gaps for both their own programs and for the residents they serve.

SNAP’s expanded work requirements — now covering Able-Bodied Adults Without Dependents up to age 64 — similarly shift pressure onto workforce systems that cities often fund or co-administer. Residents who lose SNAP benefits due to work requirement non-compliance don’t stop needing services; they become more economically unstable, which compounds demand on other city programs.

Consolidated City-Counties and Direct Administrators

In consolidated city-county jurisdictions (Philadelphia, Denver, San Francisco, Indianapolis, Jacksonville, and others) this distinction largely disappears. City governments in these places administer SNAP and Medicaid directly, and the full weight of HR1’s error rate penalties, redetermination requirements, and work verification obligations falls squarely on city departments.

If your jurisdiction is a consolidated city-county, this post should be read as directly applicable to your operations, not as background context.

The Planning Window Is Short

The fiscal and operational impacts of HR1 will not fully materialize until 2027 and 2028. But the decisions that determine whether cities are positioned to absorb them are being made right now — in budget cycles, in workforce development RFPs, in eligibility system investments, and in inter-agency data-sharing agreements with county partners.

City leaders who wait until residents show up at the door will have waited too long. The time to coordinate with county human services partners, assess city safety net capacity, and identify documentation gaps in workforce programs is before the volume arrives.

6. What Government Leaders Should Be Doing Now

Every jurisdiction’s situation is different. But there are common questions that city and county leaders should be working through with their human services directors and finance teams:

• What is our current SNAP payment error rate, and what does that imply for our FY 2028 cost exposure? Has that been calculated in concrete dollars?

• Do we have the system and staff capacity to double our Medicaid redetermination volume by January 2027?

• What is our plan for documenting and verifying Medicaid work requirement compliance and which partner agencies or data sources will we rely on?

• Are our existing eligibility workflows documented, auditable, and consistent or are they fragile and person-dependent?

• For city leaders: have we assessed how much additional demand our safety net programs can absorb, and are we coordinating with county human services partners on shared caseload impacts?

• How are we tracking federal guidance updates from CMS and FNS, given how frequently the rules have been clarified, corrected, and contested?

NACo launched a formal initiative in early 2026 to help counties build the peer networks, tools, and strategies they need to manage this transition. APHSA has published crosswalks comparing H.R. 1 provisions to existing human services policies, with specific attention to TANF, SNAP, and Medicaid program interactions. State legislative sessions are underway in many jurisdictions, with major Medicaid and SNAP budget questions front and center.

The counties that handle this well will not be the ones that reacted fastest. They will be the ones that built operational infrastructure capable of running complex, high-stakes programs accurately, under new rules, with less federal margin for error.

The Path Forward

H.R. 1 is not a policy problem that can be solved with a press release or a new vendor contract. It is an operational challenge that will test whether the systems local governments rely on to serve residents can hold up under significantly higher documentation, verification, and compliance demands, with significantly less federal support to absorb errors.

The jurisdictions best positioned for this moment are those treating program administration as infrastructure — not as overhead. Not as something you run on spreadsheets and institutional memory, but as something you can audit, defend, and scale.