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About SCHIP

Introduction

In 1997, the State Children’s Health Insurance Program (SCHIP) was created with strong bipartisan support. SCHIP gives states financial support to expand publicly funded coverage to uninsured children who are not eligible for Medicaid. SCHIP 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. Links to more detailed information is provided in the Resources section.

Structure

SCHIP builds off Medicaid and the child health coverage that was in place through the program immediately before SCHIP was created. More specifically, states can use their federal SCHIP 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 SCHIP funds to expand Medicaid beyond the June 1997 levels, cover children through a separate program, or combine the two approaches.

As of January 2008, 14 states (including the District of Columbia) opted to use SCHIP funds to expand their Medicaid programs. In 37 states, SCHIP funds are used to run a combination or separate health insurance program. (Kaiser Commission on Medicaid and the Uninsured, January 2008)

Eligibility

Federal SCHIP eligibility rules set the guidelines determining which children states can cover with federal SCHIP funds. In Medicaid-expansion states, children who cannot be covered with SCHIP funds may, in certain situations, be covered with Medicaid funds. The key eligibility rules are:

Income	States have broad flexibility to set their SCHIP 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.
Ages	States may cover children up to 18 years of age.
Insurance Status	Children must be uninsured to qualify for SCHIP-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.
Coordination	States with separate SCHIP-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 SCHIP programs to screen children who are applying for coverage for Medicaid and SCHIP eligibility and to assure that the Medicaid-eligible children are enrolled into Medicaid, rather than simply turning them away from SCHIP. This “screen and enroll” requirement also applies to Medicaid programs to assure they screen for SCHIP eligibility. Most states with a separate SCHIP-funded program use a joint Medicaid/SCHIP application.
Citizenship/ Immigration Status	SCHIP can cover citizens and certain legal immigrants. Federal funds may not be used to cover undocumented children or lawfully present immigrant children who have not been in the country for five years (with exceptions for refugees). Some states use state funding to provide coverage to legal immigrant children, no matter when they entered the country, and to children regardless of immigration status.
Renewal	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.
Documentation	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 are citizenship and immigration status.
Parents and Adults	Generally, SCHIP law does not allow coverage of parents and adults. However, a handful of states have obtained waivers from the federal government to use their SCHIP funds to cover uninsured adults and parents. See Family Coverage Under SCHIP Waivers.

See the CMS Directive page which provides details on new restrictions placed on states increasing coverage to children in families with income above 250% of the federal poverty level.

Financing

SCHIP 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.

SCHIP 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. Under waivers, some states use SCHIP funds for other purposes, including coverage for parents.

The federal government pays for 65 percent to 83 percent of each state’s SCHIP initiatives (depending on the state). The match rate is based on the regular Medicaid match rate, but is significantly higher. Unlike Medicaid, however, the amount that a state can draw down for SCHIP is capped. See federal matching rates.

See the SCHIP Financing page for more information.

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 child health 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.

For more information see: Benefits That Make A Difference: Comparing Medicaid and the State Children's Health Insurance Program Federal Benefit Standards, October 2005.

Cost Sharing

States may impose cost sharing (i.e., deductibles, coinsurance, and co-payments) for some children enrolled in SCHIP, 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.

For more information see: The Deficit Reduction Act: A Review of Key Medicaid Provisions Affecting Children and Families.

Research has shown that premiums in Medicaid and SCHIP depress enrollment because of the financial burden they impose on families, potentially increasing the number of uninsured children. For more information see:

• Increasing Premiums and Cost Sharing in Medicaid and SCHIP: Recent State Experiences, Kaiser Commission on Medicaid and the Uninsured (May 2005).
• The Effect of Increased Cost Sharing in Medicaid: A Summary of Research Findings, Center on Budget and Policy Priorities (July 7, 2005).

Resources

Additional resources on SCHIP are available in the Research section. Also see Facts & Statistics for eligibility and program rules by state.
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