FMAP stands for Federal Medical Assistance Percentage, the formula that determines how much the federal government pays toward each state’s Medicaid costs. Every state splits its Medicaid bill with the federal government, and FMAP sets the ratio. Poorer states get a larger federal share, while wealthier states cover more on their own.
How FMAP Works
Medicaid is a joint federal-state program, meaning neither level of government funds it alone. FMAP is the mechanism that decides the split. If a state has an FMAP of 70%, the federal government covers 70 cents of every dollar that state spends on Medicaid, and the state picks up the remaining 30 cents.
The Social Security Act requires the Secretary of Health and Human Services to calculate and publish new FMAP rates every year. These rates take effect on October 1 (the start of the federal fiscal year) and run through September 30. The Department of HHS publishes them in the Federal Register, typically the prior November, giving states time to build the numbers into their budgets.
The Formula Behind the Numbers
FMAP is calculated using a straightforward comparison: a state’s per capita income versus the national average. The general formula is:
FMAP = 1 − [(state per capita income² ÷ U.S. per capita income²) × 0.45]
By squaring both income figures, the formula amplifies the gap between wealthy and less wealthy states, so differences in income translate into meaningfully different matching rates. A state where residents earn well below the national average will see its FMAP pushed closer to the maximum, while a high-income state gets pushed toward the floor.
The law sets a statutory minimum of 50% and a maximum of 83%. No state receives less than half its Medicaid costs from the federal government, no matter how wealthy. And no state receives more than 83%, no matter how low its income. In practice, wealthier states like Connecticut, New Jersey, and New York typically sit at or near the 50% floor, while states like Mississippi and West Virginia receive matching rates in the high 70s or low 80s.
Enhanced FMAP for Children’s Coverage
The Children’s Health Insurance Program (CHIP) uses a boosted version of the same formula called the enhanced FMAP, or eFMAP. Congress deliberately set CHIP’s matching rate about 15 percentage points higher than a state’s regular Medicaid rate as an incentive to expand coverage for children. Nationally, the average eFMAP is around 71%. So a state with a standard 50% Medicaid match would receive roughly 65% for its CHIP spending.
The Affordable Care Act pushed CHIP matching rates even higher for a period, adding 23 percentage points on top of the already enhanced rate. That brought the average federal share for CHIP to about 93% during those years, making children’s coverage an especially good deal for state budgets.
ACA Medicaid Expansion Rates
When the Affordable Care Act expanded Medicaid eligibility to adults earning up to 138% of the federal poverty level, Congress set a separate, much higher matching rate for that newly eligible population. The federal government initially covered 100% of costs for expansion enrollees, then gradually stepped down to 90%, where it has remained. This 90% rate applies uniformly to all expansion states regardless of their regular FMAP, making it significantly more generous than the standard formula.
COVID-19 Temporary Increase
During the pandemic, Congress added a temporary 6.2 percentage point bump to every state’s regular FMAP through the Families First Coronavirus Response Act of 2020. In exchange, states had to maintain enrollment for nearly all Medicaid beneficiaries, a rule known as the “continuous enrollment condition.” States could not disenroll people during this period, which caused Medicaid rolls to swell significantly.
The continuous enrollment condition ended on March 31, 2023, at which point states began redetermining eligibility for millions of enrollees. The temporary FMAP increase was phased down alongside this unwinding process. This episode illustrated how FMAP adjustments can serve as a policy lever during national emergencies: the federal government temporarily absorbs more cost, and in return, states agree to keep people covered.
How States Fund Their Share
Once FMAP determines the federal portion, states must come up with the rest. They do this through a mix of sources: state general revenue (tax dollars), contributions from local governments, and specialized revenue streams like health care-related taxes on hospitals and other providers. The mix varies considerably from state to state, shaped by historical patterns in how each state funds public services like education and corrections.
Provider taxes are a particularly common tool. States often levy a tax on hospitals or nursing facilities and use that revenue to draw down the federal match, then channel the combined funds back to those same providers in the form of higher reimbursement rates. Without this flexibility, many states say they would struggle to maintain provider payments and balance their budgets. The arrangement has been controversial at times, with federal officials concerned that some financing structures effectively inflate the federal share, but states have resisted restrictions, arguing they need the flexibility.
Different Rules for U.S. Territories
Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Commonwealth of the Northern Mariana Islands operate under a fundamentally different set of rules. Their FMAP rates are not calculated using the standard formula. More importantly, while federal Medicaid funding to the 50 states and Washington, D.C. is open-ended (meaning the federal government matches whatever a state spends), territorial Medicaid programs are subject to annual federal funding caps.
Once a territory hits its cap, it must cover the full cost of Medicaid services on its own or, in some cases, suspend services or stop paying providers until the next fiscal year begins. This creates a structural disadvantage: territories serve populations with high poverty rates but lack the uncapped federal support available to states. Congress has periodically provided supplemental funding to territories, but the underlying cap structure remains in place.
Why FMAP Matters for You
FMAP shapes the scope and quality of Medicaid in your state in ways you might not see directly. When a state’s FMAP is high, each dollar of state spending unlocks significantly more federal money, making it cheaper for the state to offer broader benefits or pay providers more. When FMAP is low, expanding coverage is more expensive for the state budget, which can translate into tighter eligibility rules, lower provider reimbursement, and longer wait times.
Changes to FMAP rates ripple through state budgets every year. A small shift in a state’s per capita income relative to the national average can mean tens of millions of dollars more or less in federal funding. That’s why FMAP is a perennial focus in congressional debates over Medicaid spending, and why proposals to restructure Medicaid financing (such as block grants or per capita caps) often center on how the federal matching rate would change.