Medicaid: The Federal Medical Assistance Percentage (FMAP)

Chris L. Peterson
Specialist in Health Care Financing

Medicaid is a health insurance program jointly funded by the federal government and the states. Generally, eligibility for Medicaid is limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). 

Generally determined annually, the FMAP is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita income relative to the national average (and vice versa for states with higher per capita incomes). For FY2010, the original FMAPs—that is, excluding the impact of the temporary FMAP increase included in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5)—range from 50.00% to 75.67%. 

In recent years, the fiscal situation of the states has focused attention on Medicaid expenditures, as well as on changes in the federal share, or FMAP. In the 108th Congress, the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27) provided temporary fiscal relief for states and local governments through a combination of FMAP increases and direct grants. In the 109th Congress, provisions to exclude certain Hurricane Katrina evacuees and their incomes from FMAP calculations and to prevent Alaska's FY2006-FY2007 FMAPs from decreasing were included in the Deficit Reduction Act of 2005 (P.L. 109-171). In the 110th Congress, a temporary FMAP increase was included in economic stimulus legislation that was debated but not adopted at the end of 2008. 

In the 111th Congress, ARRA included a temporary FMAP increase for nine quarters, subject to certain requirements. The Administration estimated that the provision will increase federal payments to states by more than $90 billion. For the first quarter of FY2010, the FMAPs reflecting the ARRA increase range from 61.12% (Alaska) to 84.86% (Mississippi). 

Separate from the temporary FMAP increase, a provision excluding certain employer pension and insurance fund contributions from the calculation of Medicaid FMAPs beginning with FY2006 was included in the Children's Health Insurance Program Reauthorization Act of 2009 (P.L. 111- 3). For purposes of calculating Medicaid FMAPs only, the provision will have the effect of reducing certain states' per capita personal income relative to the national average, which in turn could increase their Medicaid FMAPs. HHS has yet to release guidance or revised FMAPs reflecting this provision. .


Date of Report: February 25, 2010
Number of Pages: 17
Order Number: RL32950
Price: $29.95

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