Children's Health Insurance Program (CHIP)

Key facts

Legal basis

Title XXI of the Social Security Act

Created by

Balanced Budget Act of 1997

Federal oversight

CMS, with each state administering its own program

Financing

Capped federal allotments at an enhanced federal match rate (E-FMAP)

State design options

Medicaid expansion, separate CHIP program, or a combination

What is CHIP?

CHIP was created in 1997 as the State Children's Health Insurance Program (SCHIP) to reach children in working families who earned too much to qualify for Medicaid. Congress reauthorized it in 2009 and later extended federal funding through fiscal year 2027.

Like Medicaid, CHIP is run by states under federal rules overseen by CMS. Unlike Medicaid, where federal matching funds are open-ended, CHIP is funded through capped annual federal allotments, although its federal match rate is higher than the Medicaid rate. Some states also use CHIP to cover pregnant women.

How CHIP is structured

Each state sets its own income limits and chooses how to deliver CHIP. Income cutoffs can differ by age group within a state and vary widely between states. Where premiums and cost sharing are charged, the total cannot exceed 5% of family income.

• Medicaid expansion CHIP: children are enrolled in the state Medicaid program and receive Medicaid benefits and protections.
• Separate CHIP: the state runs a distinct program with its own benefit package, which can include premiums and cost sharing within federal limits.
• Combination: the state uses a Medicaid expansion for some income or age groups and a separate program for others.

Why CHIP matters

For pediatric practices, children's hospitals and pediatric dental providers, the combined Medicaid and CHIP share of patients is often a large part of payer mix, and state CHIP rules influence network participation and payment.

Many states deliver CHIP through the same managed care organizations that run their Medicaid programs, so plan formularies and prior authorization policies often mirror Medicaid. CMS reports Medicaid and CHIP enrollment together in monthly national and state figures, so analysts should check whether a count includes CHIP before comparing sources. Because CHIP funding is time-limited, its extension is a recurring federal policy decision.