“The federal government and the states jointly finance Medicaid.56 The federal government reimburses states for a portion (i.e., the federal share) of each state’s Medicaid program costs. Because federal Medicaid funding is an open-ended entitlement to states, there is no upper limit or cap on the amount of federal Medicaid funds a state may receive. In FY2021, Medicaid expenditures totaled $748 billion. The federal share totaled $518 billion and the state share was $231 billion.57“
Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated Feb 8, 2023, last accessed July 7, 2023.
“The federal government’s share of most Medicaid expenditures is established by the federal medical assistance percentage (FMAP) rate, which generally is determined annually and varies by state according to each state’s per capita income relative to the U.S. per capita income.58 The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes.
“FMAP rates have a statutory minimum of 50% and a statutory maximum of 83%.59 For a state with an FMAP of 60%, the state gets 60 cents back from the federal government for every dollar the state spends on its Medicaid program. In FY2023, FMAP rates range from 50% (12 states) to 77.86% (Mississippi).60“
Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated Feb 8, 2023, last accessed July 7, 2023.
“The federal government provides broad guidelines to states regarding allowable funding sources for the state share (also referred to as the nonfederal share) of Medicaid expenditures. However, to a large extent, states are free to determine how to fund their share of Medicaid expenditures. As a result, there is significant variation from state to state in funding sources.
“States can use state general funds (i.e., personal income, sales, and corporate income taxes) and other state funds (e.g., provider taxes,66 local government funds, tobacco settlement funds) to finance the state share of Medicaid. Federal statute allows as much as 60% of the state share to come from local government funding.67 Federal regulations also stipulate that the state share not be funded with federal funds (Medicaid or otherwise).68 In state FY2021, on average, 70% of the state share of Medicaid expenditures was financed by state general funds, and the remaining 30% was financed by other state funds.69“
Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated Feb 8, 2023, last accessed July 7, 2023.
“Federal statutes and regulations address the circumstances under which enrollees may share in the costs of Medicaid, (1) in terms of participation-related cost sharing (e.g., monthly premiums), (2) point-of-service cost sharing (e.g., co-payments [i.e., flat dollar amounts paid directly to providers for services rendered]), and (3) share of cost for certain LTSS.
“For the first two types of enrollee cost sharing, states can require certain beneficiaries to share in the cost of certain Medicaid services, but there are limits on (1) the amounts that states can impose, (2) the beneficiary groups that can be required to pay, and (3) the services for which cost sharing can be charged.47
“In general, premiums and enrollment fees often are prohibited. However, premiums may be imposed on certain enrollees, such as individuals with incomes above 150% of FPL, certain working individuals with disabilities, and certain children with disabilities.
“States can impose cost sharing at the point of service, such as co-payments,48 coinsurance,49 deductibles,50 and other similar charges, on most Medicaid-covered benefits up to federal limits that vary by income. Some subgroups of beneficiaries are exempt from cost sharing (e.g., children under 18 years of age and pregnant women).
“The aggregate cap on participation-related cost sharing (e.g., monthly premiums) and point-of-service cost sharing (e.g., co-payments) is generally up to 5% of monthly or quarterly household income.51
“For the third type of enrollee cost sharing, which applies to certain enrollees receiving Medicaid-covered LTSS, states are required to apply enrollees monthly income toward the cost of their care under post-eligibility treatment of income (PETI) rules.52 These reductions in monthly income are not subject to the 5% aggregate cost-sharing cap described above. The amounts an enrollee may retain for their personal use vary by care setting (i.e., nursing facility versus home and community-based).”
Source: Alison Mitchell, et al. Medicaid: An Overview. CRS R43357. Congressional Research Service: Washington, DC. Updated Feb 8, 2023, last accessed July 7, 2023.
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Page last updated March 17, 2025 by Doug McVay, Editor.