.Medicaid Formula Fairness Act of 2005 - Prohibits the Federal medical assistance percentage (FMAP) for a state for FY2006 from being less than the greater of: (1) the FMAP determined for the state for FY2005, decreased by 0.5 percentage points; or (2) the FMAP that would have been determined for the state for FY2006 if the per capita incomes for 2001 and 2002 that were used to determine the FMAP for the state for FY2005 were used.
Provides that the FMAP applicable to a state for FY2006 after the application of such limitation on reduction shall apply only for purposes of titles XIX (Medicaid) and XXI (State Children's Health Insurance (SCHIP)) of the Social Security Act (SSA) and payments under such titles that are based on a certain enhanced FMAP, and shall not apply with respect to payments under SSA title IV (Temporary Assistance for Needy Families (TANF)).
Repeals such limitation, effective as of October 1, 2006, and provides that it shall not apply to any fiscal year after FY2006.
Provides that, only for purposes of computing the fiscal year FMAP for a state, beginning with FY2006, any significantly disproportionate employer pension contribution shall be disregarded in computing the per capita income of such state, but shall not be disregarded in computing the per capita income for the continental United States (and Alaska) and Hawaii.