May 19 Federal Update: House Considers Major Changes to SNAP, Medicaid, Tax Policy, and Nonprofit Oversight

The House Energy and Commerce, Ways and Means, and Agriculture Committees held hearings on key provisions of the fiscal year 2026 budget bill, which passed the House Budget Committee on Sunday following a failed vote Friday. The House Rules Committee has scheduled a hearing for Wednesday, May 21 at 1 a.m. EST to review the revised proposal.

The latest Rules Committee print includes several significant changes:

• Removal of a provision that would have revoked due process for nonprofits found to have provided material support to terrorism within the past three years.
• Acceleration of Medicaid work requirements to take effect in 2027—two years earlier than previously proposed.

Lawmakers are continuing to negotiate the bill text as House leadership aims to send the budget to the Senate before Memorial Day.

Key Proposals in Committee Drafts

Medicaid Coverage and Enrollment Restrictions

• Reduces retroactive Medicaid and CHIP coverage from three months to one.
• Halts implementation of new federal rules to simplify enrollment and renewal processes.
• Requires verified citizenship or immigration status for enrollment.
• Imposes work requirements of at least 80 hours per month for some populations.
• Increases eligibility redetermination frequency and tightens address verification rules.
• The Congressional Budget Office estimates at least 8.6 million people would lose coverage by 2034.

Affordable Housing and Investment Incentives

• Increases low-income housing tax credit allocations by 12.5% through 2029.
• Extends and modifies the Opportunity Zones program.

SNAP Work Requirements and Funding Changes

• Raises state and county cost share for administration from 50% to 75%.
• Increases the general SNAP work requirement age from 60 to 64.
• Limits states’ ability to waive work requirements unless county unemployment exceeds 10% and the governor consents.
• Sunsets exemptions in 2030 for veterans, unhoused individuals, and youth formerly in foster care.

Tax Credits

• Increases the Child Tax Credit to $2,500 through 2028; reverts to $2,000 in 2029. Requires U.S. citizenship and Social Security Numbers for all household members.
• Expands IRS enforcement of the Earned Income Tax Credit, which may heighten audits of low-income workers.

Nonprofit Tax Rules and Oversight

• Redefines fringe benefits—including transit stipends, wellness programs, and moving expenses—as taxable under Unrelated Business Income Tax (UBIT).

NIH and CMS Launch Partnership to Advance Autism Research

The National Institutes of Health (NIH) and the Centers for Medicare & Medicaid Services (CMS) have formed a research partnership to investigate the root cause of autism spectrum disorder. The collaboration will begin with a data use agreement focused on analyzing healthcare utilization, chronic disease etiology and treatment, and the economic burden of chronic conditions.

Researchers will examine trends in autism diagnosis, health outcomes of specific medical and behavioral interventions, disparities in access to care by demographics and geography, and the financial impact on families and health care systems. The agencies aim to enhance data sharing to inform more equitable, effective care strategies.

U.S. Department of Education Issues Guidance on Unsafe School Choice Option

TThe U.S. Department of Education’s Office of Elementary and Secondary Education has released a Dear Colleague Letter to state education leaders, offering updated guidance on the Unsafe School Choice Option through the Elementary and Secondary Education Act of 1965 (ESEA). The provision requires states to implement a policies allowing students to transfer from schools identified as unsafe or when they have been victims of violent crimes on school grounds.

The department urged states to regularly review and update the state’s definition of a “persistently dangerous school” and improve processes for collecting school safety data. It emphasized the importance of student safety and encouraged collaboration between state and local education agencies to strengthen school safety measures and enhance the learning experience provided to students.

Executive Order Establishes “Project Homecoming” for Voluntary Departures

On May 9, President Donald Trump signed an executive order launching Project Homecoming, a federal initiative to facilitate the voluntary departure of undocumented immigrants from the United States. The order authorizes federal funding for individuals who chose to leave voluntarily, even if they do not possess official travel documents.  Those who do not participate will be subject to removal, prosecution, incarceration, fines, the garnishment of wages, and the confiscation of savings and personal property. 

House Committee Weighs Benefits and Challenges of Charter Schools

The House Education and Workforce Committee held a hearing to examine the role of charter schools in addressing challenges in the U.S. education system.

Republican lawmakers highlighted charter schools’ innovative models and growing parental support, while Democrats emphasized the need for oversight, transparency, and the protection of civil rights.

Witnesses discussed expanding high-quality charter schools to improve student achievement and proposed using federal tax-exempt private activity bonds to support this growth. Genevieve Siegel-Hawley, an education professor at Virginia Commonwealth University, presented data showing that charter schools can divert resources from public schools and pose barriers to transportation and disability services for students.

The hearing underscored ongoing debates over how best to promote educational equity and access across diverse student populations.

Updates from the Judiciary 

Federal Judge Blocks New Conditions on Transit and Homelessness Grants

A federal judge has temporarily blocked the Trump administration from imposing new conditions on hundreds of millions of dollars in federal grants related to homelessness and transit services.

The U.S. District Court for the District of Columbia issued a temporary restraining order after eight cities and counties, including Boston, New York City, San Francisco, California’s Santa Clara County, and Washington state’s Pierce and Snohomish counties, filed suit. The plaintiffs challenged new grant requirements that would have forced them to eliminate equity, diversity, and inclusion policies, cooperate with federal immigration enforcement, and restrict access to abortion-related information.

Senior U.S. District Judge Barbara Rothstein ruled that the administration’s conditions were not authorized by Congress, were unrelated to the purposes of the grants, and would not improve program administration.

The order prohibits the Department of Housing and Urban Development, the Department of Transportation, and the Federal Transit Administration from enforcing the new conditions or withholding funding until May 21.

Trump Administration Reviews Mental Health Parity Rule, Pauses Legal Challenge

The Trump Administration is reconsidering a 2024 federal rule designed to strengthen mental health parity protections for Americans with private insurance.

The U.S. Justice Department asked the U.S. District Court for Washington, D.C. to pause a lawsuit challenging the rule while the Departments of Health and Human Services, Treasury, and Labor evaluate whether to rescind it. The rule, finalized in September 2024, aimed to close loopholes in the 2008 Mental Health Parity and Addiction Equity Act (MHPAEA) by targeting non-quantitative treatment limits such as poor authorization, network access, and drug formulary restrictions.

The lawsuit was brought by the ERISA Industry Committee, representing large employers which argued that the rule exceeded the agencies’ authority. Judge Timothy J. Kelly granted a temporary pause in the case and set a follow-up hearing for Aug. 7, by which time the agencies must report their decision.

In the interim, the administration has reportedly informed the ERISA Industry Committee of its intent to halt enforcement of the rule.

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