Children's Health Insurance Program (CHIP)

The Children's Health Insurance Program, universally abbreviated CHIP, is a federal grant program that pays states to provide health coverage to uninsured children in families whose income is above their state's Medicaid limit. HealthCare.gov describes it as an "[i]nsurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance," and notes that in some states it also covers pregnant women. Its statutory home is Title XXI of the Social Security Act. Setting aside a carve-out added in 2025 for a separate rural health transformation program, 42 USC 1397aa(a) states the purpose as "to provide funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children."

The name has changed twice, and the current one is the original. The program was created in 1997 as the Children's Health Insurance Program. In 1999 Congress directed, in an appropriations act, that official communications use "SCHIP" and "State children's health insurance program" instead. In 2009 that direction was repealed by Public Law 111-3, and the statutory note recording the sequence is still printed under 42 USC 1397aa. So a document saying SCHIP is not wrong about the program, only about the decade. One artifact of the round trip survives: the United States Code subchapter that contains the program is still headed "State Children's Health Insurance Program", because a codification heading is not the same thing as the program's name. That is worth knowing before concluding, from the Code alone, that "SCHIP" is the official term.

It is not Medicaid, and the distinction is structural rather than cosmetic. Medicaid is Title XIX of the Social Security Act and is an open-ended federal match on state spending. CHIP is Title XXI, which pays states out of capped annual allotments under an appropriation Congress authorizes only for a fixed run of years: 42 USC 1397dd(a) appropriates "such sums as are necessary to fund allotments to States" for each of federal fiscal years 2024 through 2028, then names two specific semi-annual allotment amounts for fiscal year 2029, and stops. That is why CHIP funding is periodically a live question in Washington in a way Medicaid funding is not, and it is the single most important thing to understand about the program's design.

Each state builds its own version, and the statute expressly allows three shapes. 42 USC 1397aa(a) directs that assistance be provided primarily through coverage meeting the requirements of 42 USC 1397cc, through benefits under the state's Medicaid plan, "or a combination of both." A state must submit a state child health plan to obtain funds. The practical consequence is that CHIP in one state can behave like Medicaid, with Medicaid's rules and Medicaid's card, while in the next state it is a separate program with its own name, its own benefit package, its own provider network and its own premiums. HealthCare.gov puts the same point briefly: each state offers CHIP coverage and works closely with its state Medicaid program.

Income eligibility is set by the states, which is why no single number answers the question. Federal law defines a targeted low-income child by reference to the state's own Medicaid standards and the upper limit the state adopts in its child health plan, so the ceiling differs from state to state and moves with the annually published federal poverty guidelines. The reliable answer for a particular family is their own state's, and InsureKidsNow.gov, the federal program's own site, is where the state programs and their contacts are listed. Applying through the state Medicaid agency also produces an answer for both programs, since an application that is too high for Medicaid is assessed for CHIP.

What a family can be charged is capped by statute. 42 USC 1397cc(e) requires any premiums, deductibles, coinsurance and other cost sharing to be set out in a public schedule, bars a state from varying them in a way that favors higher-income children over lower-income ones, and forbids cost sharing altogether on preventive services and on pregnancy-related assistance. A separate protection limits charges to nominal amounts for children in families below a poverty-line threshold written into the statute. And for everyone else, "the total annual aggregate cost-sharing with respect to all targeted low-income children in a family under this subchapter may not exceed 5 percent of such family's income for the year involved." There is also a payment protection that is easy to miss: a state must give at least a 30-day grace period from the start of a new coverage period before terminating for non-payment of a premium, and must send notice of the consequences and of the right to challenge the termination within 7 days of the grace period beginning. The implementing regulation applies the aggregate ceiling to every enrollee rather than only to the higher-income group the statute addresses: 42 CFR 457.560 bars a state from imposing premiums, enrollment fees, copayments, coinsurance, deductibles or similar charges that "in the aggregate, exceed 5 percent of a family's total income for the length of a child's eligibility period in the State", and requires the state to tell the family its own cumulative maximum at enrollment and at reenrollment.

Applications are accepted year round. Unlike Marketplace coverage, CHIP has no annual enrollment window, and HealthCare.gov states that a qualifying family's coverage "can begin immediately, any time of year." A family whose income falls, or whose other coverage ends, does not have to wait for a date.

1. Congress appropriates a set amount to Title XXI, and the Secretary allots it among the states.

2. A state submits a child health plan describing whether it will run CHIP as a Medicaid expansion, as a separate program, or as a combination, and setting its upper income limit and its cost-sharing schedule.

3. A family applies, at any time of year, usually through the state Medicaid agency or through the Marketplace, which routes the application to the state.

4. The state determines eligibility against its own income limit and enrolls the children in whichever program fits.

5. The family pays what the public schedule says, subject to the federal limits: nothing for preventive services or pregnancy-related assistance, and no more than 5 percent of annual family income in total across all of the family's enrolled children.

A hypothetical. Suppose a family's income for the year is $52,000 and their state's CHIP charges an annual enrollment fee plus copayments for office visits and prescriptions. The federal aggregate cap is 5 percent of $52,000, which is $2,600, so the total of everything the family is charged for all of its enrolled children across the year cannot exceed $2,600, however the state's schedule is constructed. If the enrollment fee is $200 and copayments through the year come to $340, the family has paid $540 and is nowhere near the ceiling; the cap matters in the year a child is seriously ill, which is precisely when a percentage-of-income ceiling is worth having. Preventive visits and pregnancy-related care are outside the charges entirely, since federal law bars cost sharing on them.

Pros

• It covers children in the income band that is above Medicaid and below affordable private coverage, which is the gap the program was built for.
• Cost sharing is capped by federal statute at 5 percent of family income for the year, across all of the family's enrolled children.
• Preventive services and pregnancy-related assistance carry no cost sharing at all.
• Applications are accepted year round, so a change in circumstances does not have to wait for an enrollment window.
• A single application to the state agency is assessed for both Medicaid and CHIP.

Cons

• Because each state designs its own program, benefits, provider networks, premiums and the income ceiling all differ, and moving states can mean losing or changing coverage.
• Federal funding runs on capped allotments authorized only through fiscal year 2029 rather than on an open-ended commitment, so the program's financing is periodically reopened.
• In states that run CHIP separately from Medicaid, the benefit package can be narrower than Medicaid's and can carry premiums Medicaid would not.
• It covers children, and adults in the household generally need a separate route to coverage, which can leave one family split across two systems.
• Coverage can be terminated for non-payment of a premium after the statutory grace period, which is a risk Medicaid coverage does not usually carry.