More Background: Federal Medical Assistance Percentage

The Federal Medical Assistance Percentage (FMAP) reflects the federal government's share of state medical assistance programs. It is determined annually by a formula that compares a state's average per capita income level with the national income average. States with a higher per capita income level are reimbursed a smaller share of their costs. By law, the FMAP cannot be lower than 50 percent or higher than 83 percent. In Fiscal Year (FY) 2016, FMAPs average 59.0 percent overall and varied from 50 percent in 13 states and the territories to 78.9 percent in Mississippi. The Balanced Budget Act (BBA) of 1997 (Public Law 105-33) permanently raised the FMAP for the District of Columbia from 50 to 70 percent. For children covered through the CHIP program, the federal government pays states a higher share, or enhanced FMAP, which averages 93.2 percent in FY 2016.

The federal government also reimburses states for 100 percent of the cost of services provided to American Indians and Alaska Natives through facilities of the Indian Health Service, for 100 percent of the cost of the Qualifying Individuals (QI) program (described later), and for 90 percent of the cost of family planning services, and shares in each state's expenditures for the administration of the Medicaid program. Most administrative costs are matched at 50 percent, although higher percentages are paid for certain activities and functions, such as development of mechanized claims processing systems.

Except for the CHIP program, the QI program, DSH payments, and payments to territories, federal payments to states for medical assistance have no set limit (cap). Rather, the federal government matches (at FMAP rates) state expenditures for the mandatory services, as well as for the optional services that the individual state decides to cover for eligible beneficiaries, and matches (at the appropriate administrative rate) all necessary and proper administrative costs.

See Social Security Administration, Annual Statistical

Supplement to the Social Security Bulletin (http://www.ssa.gov/policy/docs/statcomps/supplement/), for additional information.