States have more than one option for 2027 benefits verification — but may not know it

Many states are already taking steps to prepare for the 2027 verification requirements tied to benefits programs like Medicaid and the Supplemental Nutrition Assistance Program. In doing so, some have already made early verification decisions — often under pressure and with limited visibility into alternatives — that may lock them into higher costs, less flexibility and poorer beneficiary experiences for years to come.

Expanded federal work and community engagement requirements for federally funded benefits will significantly increase how often state agencies must verify beneficiaries’ income, employment, education or volunteer activity. Eligibility redeterminations will happen more frequently, error-rate thresholds will carry real financial consequences and manual processes will become increasingly difficult to sustain at scale.

States have been making decisions, often under compressed timelines, staffing constraints and procurement realities that leave little room for experimentation or reassessment. In that environment, verification strategies tend to default to familiar patterns. Those defaults quietly narrow the range of options states consider, with long-term implications for cost, compliance and the applicant experience.

How Verification Decisions Quietly Narrow Options

When agency leaders and eligibility teams think about verification, the questions they are trying to answer are practical ones. 

How can we run verifications more efficiently and reduce administrative costs without disrupting operations or overwhelming staff? What can we deploy quickly and confidently at scale? How do we ensure we’re still meeting compliance requirements? And how do we avoid introducing unnecessary friction that delays benefits, frustrates eligible applicants, or discourages people from completing the process altogether?

Those questions often lead to a deceptively simple framing of the problem. Agencies are told — sometimes explicitly, sometimes implicitly — that relying on a commercial employment database is the only viable automated option, and that everything else amounts to manual paystub review. 

Faced with rising verification volume, cost and little appetite for manual work, many agencies conclude that their path forward is effectively predetermined. That framing is understandable, but it is also risky. It turns verification into a binary choice at the exact moment agencies need flexibility and resilience.

Faced with rising verification volume, cost and little appetite for manual work, many agencies conclude that their path forward is effectively predetermined.

Why Consent-Based Verification is the Smarter Primary Path

In a high-stakes environment where errors can delay benefits or create audit risks, agencies often stick with what’s proven and easiest to operationalize, rather than formally evaluating all available options. But today, requirements are changing, volumes are rising and costs are spiking, making that binary approach harder to sustain.

This is where consent-based verification is worth considering. As a governance-aligned model, consent-based verification gives applicants the option to securely share their own employment or income information with clear permission and transparency. That shift can ease administrative burden and create resilience as policies evolve, so verification can scale without becoming more costly or harder for people to complete. It also reduces the risk of coverage loss driven by process failure rather than true ineligibility.

Pilots as the On-Ramp to Scale

For state agencies, pilots are a standard way to introduce new capabilities without disrupting existing operations. They allow teams to integrate technology into real workflows, train staff, test performance under live conditions and build confidence before expanding statewide.

In the case of consent-based verification, these pilots are not happening in isolation. They are embedded within large eligibility and payment-integrity platforms, nonprofit implementations and federal digital service efforts that already support millions of beneficiaries across dozens of states. Many of the teams designing and running these pilots come from public-sector and program-administration backgrounds, bringing firsthand experience with eligibility operations, audit requirements and verification backlogs.

Early pilot results show why agencies are leaning into this approach. In recent Medicaid and SNAP pilots, most participants who successfully connected their payroll or gig platform completed verification in under 15 minutes, and caseworkers reported that consent-based income reports were faster and easier to review than uploaded documents or manual follow-up.

In several cases, these reports surfaced recent income changes or terminations more quickly than traditional commercial databases, helping agencies resolve eligibility questions sooner.

The takeaway for agencies is that pilots are not about proving whether consent-based verification works. They are about determining where and how it fits best within existing verification workflows, and how quickly it can be scaled without adding cost or administrative burden.

Document-Based Verification as the Practical Alternative to Manual Review

Just as consent-based verification serves as an alternative to database verification, document-based verification serves as the alternative to manual review. In policy discussions, documents are sometimes equated with manual work and administrative burden — an assumption rooted in older workflows.

But today, with automated document-based verification, agencies can extract structured income and employment data from paystubs, W-2s, 1099s and employer letters quickly and consistently, then route it through the same rules and eligibility logic they already use for other verification sources.

Without this path, applicants with nontraditional work arrangements are more likely to face additional scrutiny, longer processing times or even wrongful denials, not because they are ineligible, but because their earnings are harder to validate through automated sources.

The Case for Verification Waterfalls

As states and eligibility teams confront higher verification volumes and more complex income patterns, it’s becoming clear that no single method can cover every case efficiently.  Instead of choosing one approach and forcing every applicant through it, agencies are increasingly turning to verification “waterfalls,” sequential approaches that route each case through multiple data sources in a deliberate order.

In a waterfall model, low-cost, high-coverage methods are used first, while higher-cost or manual steps are reserved for use only when necessary. This approach is well established in other regulated industries, including mortgage lending, where organizations have faced similar challenges around rising verification costs and incomplete data.

For agencies, waterfalls reduce reliance on any single provider, improve cost predictability and significantly lower the number of cases that require manual handling. They also reduce the number of eligible households who get stuck in verification loops that delay coverage. For agencies under pressure to reduce error rates without increasing administrative costs, verification waterfalls offer a way to improve accuracy while limiting both vendor dependency and manual workload growth.

Policy Guidance is Converging — But Execution Will Vary

Guidance from the Center on Budget and Policy Priorities, along with recent analysis from KFF, has emphasized the importance of data-first verification strategies for minimizing inappropriate coverage loss as states implement new work requirements. That guidance has helped frame the policy objectives states are trying to balance: program integrity on one hand, and continuity of coverage on the other.

Where agencies may vary is in execution. Technology adoption — particularly around consent-based and document-based verification — is advancing rapidly, and the choices agencies make about how to operationalize verification will matter as much as the policy frameworks themselves. Two state agencies working under the same guidance may arrive at very different outcomes depending on whether they rely on a single data source or adopt more layered, flexible approaches.

A Risk That Will be Hard to Unwind

The most consequential verification decisions agencies will make for 2027 may never appear in a procurement document — because they are being made now, quietly, through defaults.

Choices made over the coming months, often through contract renewals, extensions or incremental adjustments, will shape verification performance, beneficiary experience and long-term program flexibility. Once those choices harden into contracts and workflows, they are hard to reverse.

State agencies that take an approach designed for adaptability, rather than optimizing for a single point-in-time solution, will be better positioned to manage changing requirements, control costs and improve outcomes over time.

Justin Stolzenberg is vice president at Argyle, the leading platform for consumer-powered income, employment and asset verifications. Formerly head of growth at education financing platform Blair, he started his career in investment banking at Houlihan Lokey and holds a bachelor’s of science from Washington University in St. Louis.