Medicaid: The Federal Medical Assistance Percentage (FMAP)

April Grady
Specialist in Health Care Financing

Medicaid is a health insurance program jointly funded by the federal government and the states. Historically, eligibility for Medicaid was generally limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities; however, recent changes will soon require coverage for childless adults as well. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The remainder is referred to as the nonfederal share, or state share. 

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 FY2011, regular 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 74.73%. 

The temporary FMAP increase in ARRA is available for nine quarters, subject to certain requirements. The Administration has estimated that the provision will increase federal Medicaid payments to states by more than $90 billion. The ARRA FMAPs end December 31, 2010, but many states assumed that a six-month extension would be provided when they planned their SFY2011 budgets (most of which began on July 1). 

Although H.R. 4213 had been the recent vehicle for a six-month extension of ARRA FMAPs, the House and Senate ultimately agreed to a version of the bill that excluded it. Future congressional action on an extension is uncertain. 

The recently enacted Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, as amended by P.L. 111-152) also contains a number of provisions that affect FMAPs. Most notably, it provides FMAPs of up to 100% for certain newly eligible individuals. It also provides—subject to various requirements—increased FMAPs for certain disaster-affected states, primary care payment rate increases, specified preventive services and immunizations, smoking cessation services for pregnant women, specified home and community-based services, and health home services for certain people with chronic conditions.

Date of Report: June 23, 2010
Number of Pages: 23
Order Number: RL32950
Price: $29.95

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