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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
FACT SHEET FOR H.B. 2728
department
of economic security; continuation
(NOW: DES; benefits; administration; continuation)
Purpose
Continues the Department of Economic Security (DES) for four years and modifies various DES programs and services, including Unemployment Insurance (UI) benefits and the Supplemental Nutrition Assistance Program (SNAP). Requires hospitals that accept payment from the Arizona Health Care Cost Containment System (AHCCCS) to include on patient admission forms a place to indicate citizenship status and prescribes quarterly reporting requirements. Establishes AHCCCS enrollment verification requirements to confirm member eligibility and standards for qualified hospitals to make presumptive eligibility determinations. Requires the Arizona Department of Administration (ADOA) to collect a list of all vacant full-time equivalent positions (FTEs) that have been vacant for at least 150 days and requires each budget unit to eliminate any vacant positions each fiscal year, with outlined exceptions
Background
DES was established in 1972, assuming the authority, power and duties of the Employment Security Commission of Arizona and its divisions, the State Department of Public Welfare, the Division of Vocational Rehabilitation, the State Office of Economic Opportunity and the State Office of Manpower Planning. DES provides protective and assistance services to Arizona's children, adults and families. DES administers programs related to children's services, guardianship and adoption, child support enforcement, developmental disabilities, vocational rehabilitation, domestic violence, adult protective services, medical assistance eligibility, nutritional assistance, independent living, employment assistance, and unemployment insurance (Arizona State Library; A.R.S. § 41-1954).
The Senate and
House of Representatives Health and Human Services Joint Committee of Reference
(COR) held a public meeting on January 30, 2026, to review and evaluate the
Auditor General's performance audit and sunset review report, consider DES's
responses to the statutorily outlined sunset factors and receive public
testimony. The COR recommended that the Legislature continue DES for four years
until July 1, 2030, and that statutory changes be made to improve DES's ability
to efficiently and accurately perform their duties as prescribed by law (COR
Report). DES terminates on July 1, 2026, unless legislation is enacted for
its continuation (A.R.S.
§ 41-3026.21).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Continuation
1. Continues, retroactive to July 1, 2026, the DES until July 1, 2030.
2. Repeals the Board on January 1, 2031.
UI Benefits
3. Adds, to the eligibility requirements for UI benefits, that an unemployed individual must actively seek and apply for suitable work and conduct at least five work search actions each week to qualify as actively seeking and applying for suitable work including:
a) submitting resumes to employers;
b) completing job applications and submitting the applications to employers;
c) attending job fairs that are recognized by DES and the unemployed individual's attendance is verifiable by DES;
d) attending interviews with potential employers;
e) attending a DES-approved training program that includes a resume writing session, which counts as one work search action for the week the individual attended the program; and
f) providing a weekly report to DES that details the unemployed individual's work search actions for every week a benefit is sought, if the unemployed individual is applying for a weekly benefit.
4. Removes the requirement that an unemployed individual, to be eligible for UI benefits, must:
a) engage in a systemic and sustained effort to obtain work during at least four days of the week; and
b) make at least one job contact per day on four different days of the week.
5. Prohibits DES, in determining the validity of claims in accordance with statute, from paying benefits for an initial or ongoing claim until the initial claim is cross-checked or an ongoing claim is cross-checked on a weekly basis.
6. Requires the initial or ongoing claims to be cross-checked against the following data sets:
a) the National Association of State Workforce Agencies' Integrity Data Hub;
b) the U.S. Department of Health and Human Services National Directory of New Hires;
c) DES's new hire reporting system;
d) the Arizona Department of Corrections, Rehabilitation and Reentry's inmate data bases or a third-party, commercially available incarceration data network;
e) the Social Security Administration's Prisoner Update Processing System;
f) the Centers for Disease Control and Prevention National Vital Statistics System's death records database;
g) the
Depart of Health Services Bureau of Vital Records death records database or a
third-party, commercially available death records database; and
h) current employment and income information deliverable simultaneously via verification services from external data sources.
7. Requires DES to make the most effective determination of the potential validity of claims by prioritizing cross-checking the most current data sets, including those from a commercially available third-party database, before cross-checking older data sets.
8. Stipulates that if a cross-check results in information indicating that a claim is ineligible or fraudulent then:
a) that claim may not be paid; and
b) the claimant must be disqualified from receiving benefits and referred for prosecution.
9. Requires DES to examine any initial claim for benefits and confirm its validity before benefits are paid if the initial claim:
a) was submitted electronically through an internet protocol address located outside of Arizona or the United States;
b) references a mailing or residential address for which another current claim was submitted; or
c) is associated with a direct deposit for a bank account already used for another current claim.
10. Allows DES to refer a matter for prosecution if a fraudulent claim was filed.
11. Specifies that an unemployed individual is disqualified from UI benefits if DES finds that the individual has failed without cause to:
a) actively seek and apply for suitable work;
b) accept an offer of suitable work; or
c) accept reemployment for suitable work at the same employer, if offered.
12. Requires an employer to report DES when an individual who was previously employed with the employer:
a) refuses to return to work;
b) refuses to accept an offer of suitable work;
c) fails, without cause, to appear for a scheduled interview; or
d) fails to respond to an offer of employment.
13. Requires DES to allow employers to submit the prescribed report digitally or through email.
14. Requires DES to conduct an independent review of each report from an employer regarding a former employee to determine whether an unemployed individual should be disqualified from receiving UI benefits.
Hospital Immigration Status Reporting
15. Requires a hospital that accepts AHCCCS to include a place on the hospital's admission or registration form for a patient, or the patient's representative, to state or indicate whether the patient is lawfully or unlawfully present in the United States or a U.S. citizen.
16. Stipulates that the inquiry must be followed by a statement that the patient's response will not affect the patient's care or result in a report of the patient's immigration status to immigration authorities.
17. Requires each hospital to submit a report to the Department of Health Services (DHS) within 30 days after the end of each calendar quarter that states the number of hospital admissions or emergency department visits within the previous quarter made by patients who provided citizenship status or declined to answer.
18. Requires, on or before March 1 of each year, DHS to submit a report to the Governor, President of the Senate and Speaker of the House of Representatives that:
a) includes the total number of hospital admissions and emergency department visits for the previous calendar year in which the patient or patient's representative who provided citizenship status or declined to answer; and
b) describes information relating to the costs of uncompensated care for aliens who are not lawfully present in the United States, the impact of the uncompensated care on the cost or ability of hospitals to provide services to the public, hospital funding needs and other related information.
19. Requires DHS to provide a copy of the report to the Secretary of State.
20. Allows DHS to adopt rules relating to:
a) the format and information to be contained in quarterly reports; and
b) the acceptable format for hospitals to use in requesting information regarding a patient's immigration status on admission and registration forms.
21. Prohibits rules prescribed by DHS from requiring the disclosure of a patient's name or any other personal identifying information.
Eligibility and Enrollment Verification
(Effective January 1, 2027)
22. Requires AHCCCS to enter into a data matching agreement with the Arizona Department of Revenue (ADOR) to identify members who have lottery or gambling winnings of $3,000 or more.
23. Requires AHCCCS to review the information on lottery or gambling winnings on at least a monthly basis.
24. Requires AHCCCS, if a member fails to disclose winnings of $3,000 or more and is identified through the database match, to consider the member’s failure to disclose the information a violation of AHCCCS's terms of eligibility.
25. Requires AHCCCS, at least monthly, to:
a) receive and review death record information from the Department of Health Services concerning members and adjust system eligibility accordingly; and
b) review information concerning members that indicates a change in circumstances that may affect eligibility, including potential changes in residency as identified by out-of-state electronic benefit transfer card transactions.
26. Requires AHCCCS, at least quarterly, to redetermine eligibility of able-bodied adults who are not American Indians or Alaska Natives and to receive and review information indicating changes in circumstances that may affect eligibility from:
a) the Department of Economic Security, including changes to unemployment benefits, employment status and wages; and
b) ADOR, including potential changes in income, wages or residency as identified by tax records.
27. Prohibits AHCCCS from:
a) accepting self-attestation of income, residency, age, household composition, caretaker or relative status or receipt of other health insurance coverage without independent verification before enrollment, unless required by federal law;
b) requesting authority to waive or decline to periodically check any available income-related data sources to verify eligibility; or
c) accept eligibility determinations of the system from a federally-facilitated exchange established in accordance with federal law.
28. Allows AHCCCS to accept assessments from a federally-facilitated exchange established in accordance with federal law.
29. Requires AHCCCS to independently verify eligibility and make eligibility determinations from the assessments accepted from a federally-facilitated exchange.
30. Requires AHCCCS to review a member’s eligibility if it receives information concerning that member indicating a change in circumstances that may affect eligibility.
31. Allows AHCCCS to:
a) execute a memorandum of understanding with any other state department in Arizona for information required to be shared in accordance with the eligibility verification requirements; and
b) contract with one or more independent vendors to provide additional data or information that may indicate a change in circumstances and affect an individual’s eligibility.
32. Requires AHCCCS, by April 1, 2026, to submit to the Centers for Medicare and Medicaid Services (CMS), any waiver requests necessary to implement eligibility verification requirements.
33. Requires AHCCCS to request approval from CMS for a section 1115 waiver to allow AHCCCS to eliminate mandatory hospital presumptive eligibility and restrict presumptive eligibility determinations to children and pregnant women eligibility groups.
34. Requires AHCCCS, if approval for the section 1115 waiver is denied, to resubmit a subsequent request for approval within 12 months after each denial.
35. Prohibits AHCCCS, unless required by federal law, from designating itself as a qualified health entity for the purpose of making presumptive eligibility determinations or for any purpose not expressly authorized by state law.
36. Requires a qualified hospital, when making presumptive eligibility determinations, to do all of the following:
a) notify AHCCCS of each presumptive eligibility determination within five working days after the date the determination is made;
b) assist individuals who are determined presumptively eligible for AHCCCS coverage with completing and submitting a full application for AHCCCS eligibility;
c) notify each applicant in writing and on all relevant forms with plain language and large print that if the applicant does not file a full application for coverage eligibility with AHCCCS before the last day of the following month, presumptive eligibility coverage will end of the last day of the following month; and
d) notify each applicant that if the applicant files a full application for coverage eligibility with AHCCCS before the last day of the following month, presumptive eligibility coverage will continue until an eligibility determination is made on the application that is filed.
37. Requires AHCCCS to apply the following standards to establish and ensure the accurate presumptive eligibility determinations are made by each qualified hospital:
a) whether the qualified hospital submitted to AHCCCS the presumptive eligibility card within five working days after the determination date;
b) whether a full application for system eligibility was received by AHCCCS before the expiration of the presumptive eligibility period; and
c) whether the individual was found to be eligible under the system if a full application was received by AHCCCS.
38. Requires AHCCCS to notify a qualified hospital in writing within five working days after AHCCCS determines that the hospital fails to meet the established standards for any presumptive eligibility determination made by the hospital.
39. Requires the determination notice to include:
a) for a first violation:
i. a description of the standard that was not met and an explanation of why it was not met; and
ii. confirmation that a second finding will require that all applicable hospital staff participate in mandatory training by AHCCCS on hospital presumptive eligibility rules;
b) for a second violation:
i. a description of the standard that was not met and an explanation of why it was not met; and
ii. confirmation that all appliable hospital staff will be required to participate in a mandatory training by AHCCCS on hospital presumptive eligibility rules, including the date, time and location of the training as determined by AHCCCS;
iii. a description of available appeals procedures by which a qualified hospital may dispute the findings and remove the finding from the qualified hospital’s record by providing clear and convincing evidence that the standard was met; and
iv. confirmation that if the qualified hospital subsequently fails to meet any of the standards for presumptive eligibility for any determination, the qualified hospital will no longer by qualified to make presumptive eligibility determinations under the system;
c) for a third violation:
i. a description of the standard that was not met and an explanation of why it was not met;
ii. a description of available appeals procedures by which a qualified hospital may dispute the finding and remove the finding from the hospital’s record by providing clear and convincing evidence that the standard was met; and
iii. confirmation that, effective immediately, the hospital is no longer qualified to make presumptive eligibility determinations under the system.
Budget Unit Vacancies
40. Requires ADOA to collect a list from each budget unit of all vacant FTEs that have been vacant for at least 150 days and include the information in the annual FTEs report.
41. Requires a budget unit, each fiscal year, to eliminate any positions within the budget unit that have been vacant for more than 150 days.
42. Requires the budget unit's allocated FTEs to be adjusted to reflect the elimination of any vacant positions.
SNAP Eligibility Verifications
43. Requires DES, when determining or evaluating SNAP eligibility, to:
a) enter into a data matching agreement with ADOR to identify households with lottery or gambling winnings of $3,000 or more; and
b) treat the data obtained as verified on receipt, as permissible under federal law.
44. Requires DES, to the extent that the ADOR data is not verified on receipt, to refer households with lottery or gambling winnings that are equal to or greater than the resource limit for elderly or disabled households as defined under federal law to DES for further investigation.
45. Requires DES, on at least a monthly basis, to review information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility as provided by:
a) DHS; and
b) the Arizona Department of Corrections, Rehabilitation and Reentry.
46. Requires DES, on at least a monthly basis, to review DES information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility, including potential changes in residency as identified by out-of-state electronic benefit transfer (EBT) card transactions.
47. Requires DES, on at least a quarterly basis, to review DES's information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility, including potential changes in residency, unemployment benefits, employment status or wages.
48. Requires DES, on at least a quarterly basis, to review information that is provided by ADOR and that identifies households that have had a change in circumstances that may affected SNAP eligibility, including potential changes in income, wages or residency as identified by tax records.
49. Requires DES to post on the DES website on a quarterly basis the following aggregate amounts obtained from noncompliance and fraud investigations related to SNAP, excluding confidential and personally identifiable information:
a) the number of SNAP cases that were investigated for international program violations or fraud;
b) the number of SNAP cases that were referred to the Attorney General’s Office for prosecution;
c) the amount of improper payments and expenditures;
d) the amount of monies recovered;
e) the amount of monies spent for improper payments and ineligible recipients as a percentage of cases that were investigated and reviewed; and
f) the amount of monies spent by the EBT card that occurred outside of Arizona, categorized by state.
50. Requires DHS and DES, to assess a recipient’s continued eligibility for SNAP, to review:
a) earned income information, death registration information, incarceration records, supplemental security income information, beneficiary records, earnings information and pension information that is maintained by the U.S. Social Security Administration;
b) income and employment information that is maintained in the National Directory of New Hires database and child support enforcement data that is maintained by the U.S. Department of Health and Human Services;
c) payment and earnings information that is maintained by the U.S. Department of Housing and Urban Development; and
d) national fleeing felon information that is maintained by the Federal Bureau of Investigation.
51. Requires DES to review an individual's case if DES receives information that identifies an individual who is enrolled in SNAP and indicates a change in circumstances that may affect that individual's SNAP eligibility.
52. Requires DES to use the data from an EBT card to identify any individual who has made a purchase exclusively out-of-state over a 90-day period.
53. Requires DES to contact the identified individual within 30 days to determine whether that individual resides in Arizona.
54. Requires DES to remove the individual within 30 days after contact if the individual does not reside in Arizona.
55. Requires DES, within 15 days after the removal, to refer the individual to the U.S. Attorney’s Office for the district of Arizona.
SNAP Work and Training Requirements
56. Prohibits DES from seeking, applying for, accepting or renewing any waiver of work requirement under SNAP for able-bodied adults without dependents unless it is:
a) required by federal law; or
b) authorized by state law.
57. Prohibits DES from exercising the state's option to provide exemptions from the SNAP work requirement unless authorized by state law.
58. Requires DES to require able-bodied adults under 60 years old who are receiving SNAP benefits to participate in a mandatory employment and training program, as prescribed by federal law, unless the recipient is:
a) in compliance with work registration requirements under Title IV of the Social Security Act or the Federal-State Unemployment Compensation System;
b) a parent or other member of a household who is responsible for the care of an incapacitated person or a dependent child under six years old;
c) a bona fide student enrolled at least half time in a recognized school, training program or institution of higher education, unless the recipient is ineligible to participate under federal law;
d) a regular participant in a drug addiction or an alcoholic treatment and rehabilitation program;
e) employed a minimum of 30 hours per week or is receiving weekly earnings equal to the minimum hourly rate under the federal Fair Labor Standards Act of 1939, multiplied by 30 hours; or
f) 16, 17 or 18 years old and attending school, enrolled in an employment training program on at least a half-time basis or is not the head of a household.
59. Specifies that a person who is noncompliant with the work registration requirements of Title IV of the Social Security Act or the Federal-State Unemployment Compensation System is noncompliant with employment and training program requirements.
SNAP Payment Error Rate
60. Requires DES, by December 30, 2030, to reduce the SNAP payment error rate to no more than three percent.
61. Requires DES, beginning in FY 2027, to submit a quarterly report to the Legislature, within 30 days after the end of the quarter, detailing DES's monthly progress towards reducing the payment error rate, including strategies used and barriers encountered.
62. Requires DES, if it fails to meet the annual interim targets or final target, to:
a) submit a corrective action plan to the Legislature within 60 days that includes an analysis of why the targets were not met and timeliness for correcting the payment error rate;
b) pay 50 percent of any federal liabilities imposed due to the excess payment error rate, with the remaining federal liabilities being paid out of the state GF; and
c) implement a corrective action plan.
63. Specifies that, if DES fails to comply with the Auditor General's corrective plan, DES administrative funding is reduced by 10 percent until resolved.
64. Requires the Auditor General, by November 15, 2027, to complete a special audit determining what factors contributed to the payment error rate, including recommendations to reduce the payment error rate.
65. Directs DES to implement the Auditor General's recommendations within 12 months, unless the recommendations are waived by the Joint Legislative Budget Committee.
67. Allows the Legislature to allocate additional funding for program improvements if DES corrects the payment error rate ahead of schedule.
68. Repeals the SNAP payment error rate requirements on January 1, 2033.
SNAP Eligible Purchases
69. Requires the Director to request a waiver from the USDA granting the authority to restrict the purchase of noneligible foods using SNAP benefits.
70. Stipulates that, if the waiver is not granted, the Director:
a) must resubmit the request annually; and
b) may pursue the USDA pilot or demonstration authority as allowed under federal law.
71. Requires DES to provide clear guidance to SNAP recipients and retailers and allow a reasonable implementation period to ensure compliance with the restriction of noneligible food purchases.
72. Specifies that the restriction on noneligible food purchases does not reduce benefit amounts, restrict access to eligible foods or limit participation in SNAP.
73. Defines eligible foods as any food item that may be purchased using SNAP benefits, including:
a) whole meats, poultry and fish, including frozen, fresh or canned products;
b) dairy products, including milk, cheese, yogurt, butter, cream and milk alternatives;
c) eggs and egg substitutes;
d) fruits and vegetables, including fresh, frozen, dried or canned products without added sweeteners;
e) grains and grain products, including flour, rice, pasta, cereals and tortillas;
f) cooking oils and fats;
g) water products without added sweeteners or sugar substitutes;
h) 100 percent fruit or vegetable juice; and
i) any food item approved for purchase under the federal Women, Infants and Children food program.
74. Defines noneligible foods as:
a) sugar-sweetened beverages, including soda and energy drinks;
b) candy and confectionery products;
c) snack foods of minimal nutritional value as defined by the USDA; and
d) prepared hot foods intended for immediate consumption.
Miscellaneous
75. Defines terms.
76. Contains a purpose statement.
77. Contains a statement of legislative findings.
78. Makes technical and conforming changes.
79. Becomes effective on the general effective date, with a retroactive provision and delayed effective date, as noted.
House Action
HHS 2/19/26 DP 9-0-0-3
3rd Read 3/3/26 32-22-5-0-1
Prepared by Senate Research
March 16, 2026
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