Under the Affordable Care Act, states will be eligible for greatly increased federal-match payments beginning in 2014 if they expand their Medicaid programs to cover adults with incomes up to 133% of the Federal Poverty Level (FPL). In a letter dated December 10, 2012, Secretary of Health and Human Services (HHS) Kathleen Sebelius said that states have "flexibility in Medicaid and the Children's Health Insurance Program (CHIP) to provide premium assistance for Exchange plans as well as to adopt 'bridge plans' that offer coverage through both Medicaid and Exchanges…" The Secretary also noted, however, that flexibility is limited regarding federal funding for Medicaid expansion. The Affordable Care Act, she stated, does not create an option for enhanced federal-match funding for a partial or phased-in Medicaid expansion. In other words, states cannot partially expand their Medicaid programs and still receive 100% federal-match for two years, and 90% thereafter.
The text of the Secretary's letter and accompanying documents are available at: http://www.healthcare.gov/blog/2012/12/marketplaces121012.html.