Increased Federal Matching Rates for Extra Administrative Costs of Eligibility Determination Under Welfare Reform

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193) has substantial implications for Medicaid eligibility systems and responsibilities. Section 114 of the law (Section 1931(h) of the Social Security Act) provides a special fund of $500 million for enhanced Federal matching for States' expenditures attributable to the administrative costs of Medicaid eligibility determinations due to the law. The specific features of this provision are described below:

Federal Financial Participation (FFP) Rates

The normal FFP rate for States' administrative costs for eligibility determinations in the Medicaid program is 50 percent. However, under this new law, the Secretary is given discretion to increase the FFP rate above 50 percent, up to a fixed national cap of $500 million for this enhanced funding. This enhanced funding is for extra administrative costs applicable to the increased cost of eligibility determinations due to welfare reform.

National Limitation on Total Funding

The total Federal funds available for enhanced match are limited to $500 million.

Time Limitations

The $500 million is available nationally for expenditures during the Fiscal Years 1997 through 2000. For each state, however, the enhanced funding is available for only the first 12 calendar quarters in which a State's Temporary Assistance to Needy Families (TANF) program is in effect after August 21, 1996.

Related Fact Sheets:

Link Between Medicaid and Temporary Assistance for Needy Families (TANF) – Fact Sheet #1

Link Between Medicaid and Coverage of SSI Children under Welfare Reform – Fact Sheet #2

Link Between Medicaid and the Immigration Provisions of the Personal Responsibility and Work Opportunity Act of 1996 – Fact Sheet #3