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 ranged from 61.12% (Alaska) to 84.86% (Mississippi). 

On March 10, 2010, the Senate passed H.R. 4213 (American Workers, State, and Business Relief Act of 2010), which includes a provision to extend the ARRA FMAPs by two quarters, through June 30, 2011. The House is expected to consider the Senate-passed version soon. 

Health reform legislation passed in the House (H.R. 3962) and Senate (H.R. 3590) would require states with Medicaid programs to expand coverage to some currently ineligible low-income parents and childless adults. For these newly eligible individuals, states would have a 100% FMAP for at least a couple years, and then slightly reduced rates well above regular FMAPs. The President's proposal, as well as the reconciliation legislation released on March 18, 2010, followed the same general approach.


Date of Report: March 19, 2010
Number of Pages: 23
Order Number: RL32950
Price: $19.95

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