Medicaid Financing: An Overview of the Federal Medicaid Matching Rate (FMAP)

Since its enactment in 1965, the Medicaid program has used the Federal Medical Assistance Percentage (FMAP) to determine the federal government’s share of the cost of covered services in state Medicaid programs. On average, the federal share has been 57 percent. Beginning in 2014, the Affordable Care Act (ACA) establishes highly enhanced FMAPs for the cost of services to low-income adults with incomes up to 138% of the Federal Poverty Level (FPL) who are not currently covered. The federal government will pick up 100 percent of such costs in 2014 through 2016, phasing down to 90 percent in 2020 and beyond. To place these new FMAPs in context, this primer provides an overview of the FMAP and temporary changes to the formula over the history of the Medicaid program.

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