About CHIP
Introduction
In 1997, the Children's Health
Insurance Program (CHIP) was created with strong bipartisan support (the
law was renewed in April 2009). CHIP gives states financial support to expand publicly funded coverage
to uninsured children who are not eligible for Medicaid. CHIP is a
block grant program that provides states with a set amount of funding
that must be matched with state dollars.
This primer provides a general overview of the program rules. Additional resources on CHIP are available in the
Publications section. Also see
Facts & Statistics for eligibility and program rules by state.
Structure
CHIP builds off Medicaid and the child health coverage that was in
place through the program immediately before CHIP was created. More
specifically, states can use their federal CHIP funds to finance
coverage for children whose family incomes are too high to qualify for
Medicaid under the rules the state had in place as of June 1997. States
can use their CHIP funds to expand Medicaid beyond the June 1997
levels, cover children through a separate program, or combine the two
approaches.
As of January 2011, 13 states (including the District of Columbia) opted to use CHIP funds to expand their Medicaid programs. In 38 states, CHIP funds are used to run a combination or separate health insurance program.
Eligibility
Federal CHIP eligibility rules set the guidelines determining which children states can cover with federal CHIP funds. In Medicaid-expansion states, children who cannot be covered with CHIP funds may, in certain situations, be covered with Medicaid funds. The key eligibility rules are:
Income
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States have broad flexibility to set their CHIP
income eligibility levels. Most states cover children up to or above
200 percent of the federal poverty level (see federal poverty guidelines). States can establish asset or resource requirements, but
they need not do so. States expanding coverage up to 300 percent of the FPL receive an enhanced match rate. States that expand further receive the Medicaid match for their coverage.
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Ages
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States may cover children up to 18 years of age.
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Insurance Status
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Children must be uninsured to qualify for CHIP-funded
coverage. Some states require children to be uninsured for a certain period of time before they can enroll, but this is not a federal
requirement.
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Coordination
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States with separate CHIP-funded programs must
coordinate their enrollment procedures with Medicaid to prevent
children from "falling through the cracks" and remaining uninsured, as
well as to ensure that children are enrolled in the appropriate
program. These coordination rules require state CHIP programs to
screen children who are applying for coverage for Medicaid and CHIP
eligibility and to assure that the Medicaid-eligible children are
enrolled into Medicaid, rather than simply turning them away from CHIP. This "screen and enroll" requirement also applies to Medicaid
programs to assure they screen for CHIP eligibility. Most states with
a separate CHIP-funded program use a joint Medicaid/CHIP application.
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Citizenship/
Immigration Status
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CHIP covers citizens and certain legal immigrants.
States have the option of covering lawfully present
immigrant children who have not been in the country for five years
(with exceptions for refugees). Federal funds may not be used to cover undocumented children (except
for emergency or pregnancy-related services). Some states use state funding to children regardless of immigration status.
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Renewal
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Federal law generally requires states to review
eligibility circumstances at least every 12 months. States can either
review eligibility when financial circumstances change or they can
enroll children for periods of up to 12 months, regardless of changes
in income, through a continuous eligibility option.
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Documentation
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States have discretion in requiring families to
provide documentation of income or other eligibility requirements. The only eligibility criteria that federal law requires families to document is immigration status and citizenship status (unless the state implements an option to use electronic means for documenting citizenship).
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Parents and Adults
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CHIP law does not allow coverage of
parents and adults. A handful of states obtained waivers from the federal government to use their CHIP funds to cover uninsured adults and parents but these waivers are no longer allowed in CHIP. The existing adult waivers expired January 1, 2010 and the existing parent waivers expire September 30, 2011. States may be able to receive funding outside of CHIP to continue coverage for those already enrolled. |
Financing
CHIP is a block grant program in which the federal government makes a
capped amount of new funding available for each fiscal year. This
capped funding is divided annually among the states into state-specific
allotments, determined by a formula set out in the law.
CHIP funds generally must be used to provide coverage to uninsured,
low-income children who do not qualify for regular Medicaid. States
also can use a limited amount of funds for administrative costs and
other non-coverage initiatives, such as outreach.
The federal government pays for 65 percent to 82 percent of each
state's CHIP initiatives (depending on the state). The match rate is
based on the regular Medicaid
match rate, but is significantly higher.
Unlike Medicaid the amount that a state can draw down for CHIP is capped. States facing funding shortfalls can obtain additional funding through a child enrollment contingency fund and allotment increases are available for states with approved plans to expand eligibility or benefits.
Benefits
If a state has elected to use its child health funds to expand Medicaid
coverage, the
Medicaid program rules on benefits and the scope of
coverage will apply to the group of children covered under the
expansion in the same manner that they apply to children already
eligible under the Medicaid program. If a state elects to use its CHIP funds to cover children under a separate state program, however,
states have other options for meeting minimum federal benefit
standards.
States can choose health benefits coverage equivalent to those offered
under:
- the standard Blue Cross/Blue Shield preferred provider option
service plan offered to federal employees;
- a health plan available to a
state's public employees; or
- the HMO within the state that has the
highest commercial enrollment (excluding Medicaid enrollment).
A state
can also choose one of these three plans to serve as a "benchmark" for
an alternative package of benefits. Finally, federal officials have the
authority to allow states to use alternative benefit packages if they
determine that they are appropriate for low-income children.
Under the 2009 CHIP law states must also provide
dental services in their CHIP plans and can use CHIP funds to provide coverage or cost sharing help to children who have private insurance.
Cost Sharing
States may impose
cost sharing (i.e., deductibles, coinsurance, and
co-payments) for some children enrolled in CHIP, within federal
guidelines.
In general, states cannot adopt cost sharing or premium policies that impose costs that exceed five percent of family income or that favor higher-income families over lower-income families. They also are prohibited from imposing cost sharing for well-baby and well-child care, including immunizations. Finally, states cannot count money raised through premiums or cost sharing as state dollars for purposes of meeting the block grant's matching requirements.
Research has shown that premiums in Medicaid and CHIP depress enrollment because of the financial burden they impose on families, potentially increasing the number of uninsured children.
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