Federal Government Shuts Down – Information and Potential MSP Impact

October 1, 2025 / 6 min read

As of October 1, 2025, the Federal Government has partially shut down as Congressional leaders and President Trump failed to reach an agreement to keep the government open. Historically, there have been 21 federal government shutdowns since 1976, which have ranged in some instances from mere hours to a few days, to several weeks in other situations.^[1]The last shutdown occurred in December 2018 – January 2019 and lasted for approximately 35 days.^[2]

Overall, as discussed more below, the shutdown is not expected to cause an interruption in a beneficiary’s Medicare or social security benefits. Further, per Verisk’s recent outreach to the Commercial Repayment Center (CRC), the Benefits Coordination and Recovery Center (BCRC), and Workers’ Compensation Review Center (WCRC), we have confirmed that these entities are funded for the fiscal year, and the shutdown is not expected to impact the CMS MSP contractor operations. If this status should change for whatever reason, we will update as necessary

The below provides information regarding the government shutdown and its potential impact as follows:

What is a government shutdown?

In general, government shutdown occurs when Congress fails to pass, and the President fails to sign, the necessary Appropriations Bills to keep the government operating.^[3] Briefly, each year Congress must pass, and the President must sign into law, twelve appropriations bills, one for each Appropriations subcommittee.^[4]So far this year, Congress has not enacted any of the twelve bills for Fiscal Year 2026 that comprise the federal discretionary spending budget.^[5]Without these bills, or the passage of a continuing resolution, the Federal Government shuts down.^[6] When the government shuts down, federal agencies must discontinue all non-discretionary functions until new funding legislation is signed into law, while essential services and mandatory spending programs continue.^[7]

What services are impacted?

In general, as part of a shutdown, each federal agency develops its own shutdown plan, following guidance released in previous shutdowns and coordinated by the Office of Management and Budget (OMB).^[8]Each federal agency’s plan identifies which government activities may not continue until appropriations are restored, requiring furloughs and the halting of many agency activities.^[9] “Essential” services, many of which are related to public safety, continue to operate, with payments covering any obligations incurred only when appropriations are enacted.^[10]

According to the Committee for a Responsible Federal Budget, services deemed as “essential” in prior shutdowns have included: border protection, in-hospital medical care, air traffic control, law enforcement, and power grid maintenance, while some legislative and judicial staff have also been largely protected.^[11]The Committee notes that “mandatory” spending is not subject to annual appropriations, including such programs as Social Security, Medicare, and Medicaid.^[12]From another angle, it is noted that certain programs that are funded through advanced appropriations, such as those within the Veterans Health Administration, have been minimally affected during recent shutdowns.^[13] This source further explains that “[w]hereas discretionary spending must be appropriated every year, mandatory spending is authorized either for multi-year periods or permanently. Thus, mandatory spending generally continues during a shutdown. However, some services associated with mandatory programs may be diminished if there is a discretionary component to their funding.”^[14]

How could the shutdown impact Social Security?

The shutdown is not expected to result in a disruption of social security benefits since these benefits are covered by mandatory spending which has already been approved by Congress without an expiration date.^[15] Thus, Social Security recipients including retirees, disabled Americans and the dependents of deceased workers are not expected to experience any interruption in their monthly payments.^[16] However, it is noted that other social security services could be disrupted, including benefit verifications, earnings record corrections and updates, overpayments processing, and replacing Medicare cards.^[17]

How could the shutdown impact Medicare?

Regarding Medicare, the shutdown is not expected to result in the interruption of Medicare benefits as these benefits are part of mandatory spending which is not subject to the appropriations process.^[18]However, staff reductions could result in interruption of some other services,^[19]with one source reporting that 49% of CMS’s staff could be furloughed during the shutdown.^[20]

On this point, CMS’s FY 2025 Lapse Plan Center for Medicare and Medicaid Services (CMS) provides information regarding its expected operations in situations where there is a lapse in appropriations.^[21]This document states, in part, that the “Medicare Program will continue during a lapse in appropriations. Other non-discretionary activities including Health Care Fraud and Abuse Control and Center (HCFAC) for Medicare & Medicaid Innovation (CMMI) activities will also continue.”^[22]Further, it is noted that “CMS will have sufficient funding for Medicaid to fund the first quarter of FY 2026, based on the advance appropriation provided for in the Full-Year Continuing Appropriations and Extensions Act, 2025. CMS will maintain the staff necessary to make payments to eligible states for the Children's Health Insurance Program (CHIP). CMS will continue Federal Marketplace activities, such as eligibility verification, using Federal Marketplace user fee carryover.”[23]

However, CMS’s contingency plan outlines several activities that will not continue during a shutdown. For example, CMS notes that “policy and rule-making” could be impacted stating “CMS payment rule development and other policy decisions would depend on the funding source and duration of a lapse in appropriation. With limited staff to review and provide operational support, we would expect delays in rule-making and other policy development.” ^[24]Other impacted activities noted by CMS include health care facility survey and certification, contract oversight, outreach and education (which would include Medicare card, and other mailings), and beneficiary casework.^[25]

In terms of staffing, CMS’s contingency plan states, in part, that “[i]n the event of a lapse of appropriation, 3,311 (53%) of CMS staff will be retained, including 3,105 (50%) who are exempt (their activities or position are already funded or otherwise exempt) and 206 (3%) who are excepted staff (their activities are deemed necessary by implication).”^[26] It is also noted that per the Department of Health and Human Services’ (DHHS ) FY 2025 HHS Contingency Staffing Plan | HHS.gov, DHHS projects that 55% of DHHS employees will be retained and 45% will be furloughed.

How could the shutdown impact Medicare secondary payer (MSP) compliance?

As noted above, per Verisk’s recent outreach to the Commercial Repayment Center (CRC), the Benefits Coordination and Recovery Center (BCRC), and Workers’ Compensation Review Center (WCRC), we have confirmed that these entities are funded for the fiscal year, and the government shutdown is not expected to impact the CMS MSP contractor operations. If this status should change for whatever reason, we will update as necessary.

Questions?

Please do not hesitate to contact the authors if you have any questions. In the interim, the Verisk policy team will continue to monitor the situation and provide updates as warranted.

[1] Neely, Samantha. (2025, September 29). What stops during a government shutdown? What to know as shutdown deadline approaches. USA Today. https://www.usatoday.com/story/news/2025/09/29/donald-trump-deadline-congress-government-shutdown-florida/86415712007/ On this point, this resource notes that “[t]here have now been four ‘true’ shutdowns where operations were affected for more than one business day. The first two happened in the winter of 1995-1996, when President Bill Clinton and the Republican Congress were unable to agree on spending levels, causing the government to shut down twice, for a total of 26 days. The third was in 2013, when a House and Senate standoff over funding for the Affordable Care Act (ACA) resulted in a 16-day shutdown. The fourth shutdown in December 2018 and January 2019 – technically only a partial shutdown because five of the 12 appropriations had previously been enacted – centered on a dispute over border wall funding and was the longest-lasting shutdown at 35 days.” Id.

[2] Jalonick, Mary Clare. (2025, September 29). A look at previous government shutdowns and how they ended. Federal News Network. https://federalnewsnetwork.com/government-shutdown/2025/09/a-look-at-previous-government-shutdowns-and-how-they-ended/

[3] Government Shutdowns Q&A: Everything You Should Know. (2025, September 16). Committee for a Responsible Federal Budget. https://www.crfb.org/papers/government-shutdowns-qa-everything-you-should-know#whatisashutdown

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id

[11]Id.

[12] Id.

[13] Id.

[14] Id. Expanding on this point, this source notes, by way of example, that “during the 1996 shutdowns and the 2013 shutdown, Social Security checks continued to go out, but staff who handled new enrollments and other services, such as changing addresses or handling requests for new Social Security cards, were initially furloughed in 1996. In 2013, certain activities were discontinued, including verifying benefits and providing new and replacement cards, but the processing of benefit applications or address changes continued. During the 2018-2019 shutdown, USDA had to rely on a special authority included in the previous CR to allow it to continue issuing SNAP benefits.” Id.

[15] Hubbard, Kaia, et al. (2025, September 29). Government shutdown looms as leaders make little progress at White House meeting with Trump. CBS News. https://www.cbsnews.com/live-updates/government-shutdown-latest-trump-congress-white-house/

[16] Id.

[17] Id.

[18] Government Shutdowns Q&A: Everything You Should Know. Committee for a Responsible Federal Budget. https://www.crfb.org/papers/government-shutdowns-qa-everything-you-should-know#whatisashutdown

[19] D’Amico, Esther. (n.d.) How Medicare Would Be Affected By A Government Shutdown. Kiplinger. https://www.kiplinger.com/retirement/medicare/medicare-affected-government-shutdown

[20] Id.

[21] Centers for Medicare and Medicaid Services. (2025, September 25). FY 2026 Lapse Plan Center for Medicare and Medicaid Services (CMS). HHS.gov. https://www.hhs.gov/about/budget/fy-2026-cms-contingency-staffing-plan/index.html

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.