DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
 
Frequently Asked Questions:  
Office of Management and Budget (OMB) Circular A-87 
 
Q1. What is the Office of Management and Budget (OMB) Circular A-87 Exception?  
A1. OMB Circular A-87 requires costs associated with building shared state-based Information 
Technology (IT) systems that support multiple health and human service programs be allocated 
across all benefitting programs in proportion to their use of the system. The OMB A-87 
Exception revised this approach by allowing human service programs (e.g. SNAP, TANF, 
LIHEAP, etc.) and others to utilize a wide range of IT components, needed by Medicaid but also 
of use to these other programs, at no additional cost except for interfaces or other uniquely 
required services specific to those programs. The A-87 Exception applies only to design, 
development, and implementation. Maintenance and operations work should continue to be 
allocated in accordance with the A-87 Circular. OMB Circular A-87  Cost Principles for State, 
Local, and Indian Tribal Governments, has been Relocated to 2 CFR, Part 225 
Q2. When does the OMB A-87 Exception expire?  
A2. On July 20, 2015, the U.S. Department of Health and Human Services and the U.S. 
Department of Agriculture announced a three-year extension of the Exception to the OMB A-87 
cost allocation requirements from December 31, 2015 to December 31, 2018. We are currently 
making plans for the OMB A-87 exception to end. 
Q3. What is the impact of the Expiration for states utilizing the exception for system 
integration development?  
A3.  States will need to incur costs for goods and services furnished no later than December 31, 
2018 to make use of this Exception. Therefore, if work is completed by December 31, 2018, it 
can be funded under the OMB A-87 Exception and states should follow typical invoicing and 
claiming processes.  However, if an amount has been obligated by December 31, 2018, but the 
good or service is not furnished by that date, then such expenditure must be cost allocated by 
program in proportion to their use of the system in accordance with OMB A-87.  
   
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  Q4. How should states account for OMB A-87 exception in their Advance Planning 
Documents (APD)? 
A4. For FFY2019 annual APDs and budget tables, including the Medicaid Detailed Budget 
Table (MDBT), must be completed as follows: 
  For Q1 FFY2019, states can allocate costs in accordance with the OMB A-87 Exception 
  For Q2-Q$ FFY2019, and all APDs going forward, states should allocate costs as required 
under the OMB A-87 Circular 
If a state has already submitted their annual APDs without providing separate budgets they will 
need to complete an APDU with a revised MDBT and cost allocation plan. The update should 
address how cost allocation will be done prior to, and after, December 31, 2018. Budget tables 
should be completed as described above.  
The Data and Systems Group (DSG) that approves APDs does not approve cost allocation 
methodology. States working to develop their new methodologies should send operational cost 
allocation plans to Cost Allocation Services and the regional office fiscal staff for all benefiting 
programs.  
 
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