Children's Health Insurance Program (CHIP)

The Children's Health Insurance Program provides health coverage to children in families that earn too much to qualify for Medicaid but cannot afford private insurance. Created in 1997, CHIP covers approximately 7 million children through a federal-state partnership where the federal government provides enhanced matching funds and states design and administer their programs. CHIP is the third-largest source of health insurance for children in America, behind employer-sponsored coverage and Medicaid.

Current Law (2026)

Legal Authority

• 42 U.S.C. § 1397aa — Purpose and State child health plans (provides funds to states to initiate and expand health insurance coverage for uninsured, low-income children)
• 42 U.S.C. § 1397bb — State child health plan requirements (plans must describe eligibility, outreach strategies, coordination with Medicaid, and how the program reaches targeted low-income children)
• 42 U.S.C. § 1397cc — Coverage requirements (child health assistance must be at least equivalent to benchmark coverage; includes well-baby and well-child care, immunizations, and emergency services at minimum)
• 42 U.S.C. § 1397dd — Allotments (establishes the formula for distributing federal CHIP funds among states, based on the number of low-income uninsured children and state cost factors)
• 42 U.S.C. § 1397ee — Payments to states (sets the enhanced federal matching rate — significantly higher than regular Medicaid match)
• 42 U.S.C. § 1397jj — Definitions and special rules (defines "targeted low-income child," "child health assistance," and sets parameters for eligibility groups)

How It Works

CHIP fills a critical gap in the American health insurance system — complementing Medicaid at the lower end and ACA coverage at the higher end. Before CHIP's creation, millions of children fell into a coverage gap — their parents earned too much for Medicaid eligibility but too little to afford private insurance, and employer-sponsored family coverage was often unavailable or unaffordable. CHIP was designed to close this gap.

States have three structural options for their CHIP programs. They can expand Medicaid eligibility to include CHIP-eligible children (a Medicaid expansion approach), create a separate CHIP program with its own eligibility rules and benefits, or use a combination of both. This flexibility allows states to build on their existing Medicaid infrastructure or design standalone programs tailored to their populations.

The enhanced federal match is CHIP's most important financial feature. While Medicaid's regular federal matching rate averages about 70% nationally, CHIP's enhanced match averages about 85% — meaning the federal government pays roughly 85 cents of every dollar spent on CHIP. This substantially higher match rate was designed to incentivize states to participate and maintain coverage.

Eligibility is set by each state within federal parameters. Most states cover children in families with incomes up to 200-300% of the federal poverty level, though some cover higher. The "targeted low-income child" must be uninsured and not eligible for Medicaid. States may not use CHIP to substitute for employer-sponsored coverage (the "crowd-out" prohibition), though enforcement of this provision varies.

Benefits must meet minimum standards. States using the separate CHIP structure must provide coverage at least equivalent to one of three benchmarks: the Federal Employees Health Benefits Program (FEHBP), the state employee health plan, or the HMO with the largest commercial enrollment in the state. All CHIP programs must cover well-child visits, immunizations, and emergency services. Cost-sharing is limited — prohibited entirely for children below 150% FPL and capped at 5% of family income above that level.

Outreach and enrollment simplification are statutory requirements. States must actively reach out to uninsured children who may be eligible, and must simplify enrollment processes to reduce administrative barriers to coverage. Many states use joint Medicaid/CHIP applications, 12-month continuous eligibility, and express lane eligibility (using data from other programs to facilitate enrollment). Families above CHIP income limits may qualify for subsidized coverage through the ACA Health Insurance Marketplace, including premium tax credits.

How It Affects You

CHIP plans must cover a comprehensive range of pediatric services consistent with essential health benefits standards, including dental and vision care.

State Variations

Implementing Regulations

• 42 CFR Part 457 — Allotments and Grants to States (161 sections across 12+ subparts — the complete administrative framework for the CHIP program at the federal-state interface):
  • § 457.1 — Program description: Title XXI of the Social Security Act, enacted 1997 by the Balanced Budget Act; authorizes federal grants to states for child health assistance to uninsured, low-income children; jointly financed by federal and state governments; administered by the states; the enhanced FMAP (federal matching rate) is typically 15-25 percentage points higher than the state's regular Medicaid FMAP, making CHIP one of the most heavily federal-matched programs in the safety net
  • Subpart A — Introduction; State Plans and Outreach (20 sections): states must have an approved CHIP state plan specifying program design (separate CHIP, Medicaid expansion CHIP, or combination); § 457.110 — enrollment assistance obligation: states must make accurate, easily understood information available to families and provide assistance in making informed decisions about health plans; information must be available in multiple languages for non-English-speaking populations
  • Subpart C — Eligibility, Screening, Applications, and Enrollment (19 sections): federal standards for who qualifies (targeted low-income children under age 19); states may not impose prior insurance coverage waiting periods longer than 90 days; no enrollment caps permitted during open enrollment periods; CHIP/Medicaid eligibility coordination required to prevent improper enrollment and coverage gaps
  • Subpart D — Coverage and Benefits (14 sections): CHIP benefits must meet one of four benchmark benefit standards (equivalent to the federal employees health benefit plan, a state employees plan, the largest HMO in the state, or a Secretary-approved alternative); dental, vision, and mental health benefits are typically required for benchmark-equivalent coverage
  • Subpart E — Enrollee Financial Responsibilities (12 sections): CHIP may impose premiums, deductibles, and cost-sharing, subject to federal caps: total cost-sharing cannot exceed 5% of annual family income; children at or below 100% FPL may not be charged premiums or enrollment fees; cost-sharing for services cannot exceed amounts that would adversely affect access for low-income populations
  • Subpart F — Payments to States (14 sections): federal CHIP allotments are calculated from a statutory formula; states must submit quarterly expenditure reports to CMS; federal funds are capped by allotment — states that exhaust their CHIP allotment can draw on redistribution funds from other states
  • Subpart I — Program Integrity (13 sections): states must have systems to prevent, detect, and reduce improper payments; eligibility verifications, audit requirements, and anti-fraud controls; coordination with the Medicaid Payment Error Rate Measurement (PERM) system
  • Subpart L — Managed Care (25 sections — largest): most CHIP enrollees receive benefits through managed care; subpart L sets requirements for managed care contracts, capitation rate actuarial soundness, network adequacy, enrollee rights (including access to information and grievance procedures), and state oversight; § 457.1000 — waiver authority for exceeding the 10% cost cap on administrative expenditures; § 457.1010-1015 — states may purchase family coverage (rather than just child-only coverage) if the state demonstrates cost-effectiveness, defined as family coverage cost ≤ child-only coverage cost for the same population
  • § 457.1110 — Privacy protections: states must establish procedures to protect all individual medical records and health/enrollment information in any form; HIPAA and additional CHIP-specific protections apply
• 45 CFR Part 155 — Exchange standards (§ 155.345 — coordination with Medicaid, CHIP, Basic Health Program)
• 45 CFR Part 1302 — Head Start performance standards (§ 1302.42 — child health status and care coordination)
• 42 CFR Part 441 — Medicaid services (§ 441.306 — cooperative arrangements with Maternal and Child Health program)

Pending Legislation

• HR 6242 — Guarantee pregnancy-triggered enrollment, 12-month postpartum Medicaid/CHIP continuity. Status: Introduced.
• S 3274 — Pregnancy-triggered special enrollment, permanent 12-month postpartum Medicaid and CHIP. Status: Introduced.
• HR 6516 — Quarterly PARIS data matches to find dual Medicaid/CHIP and ACA Exchange enrollment. Status: Introduced.

Recent Developments

• Medicaid continuous enrollment unwinding (2023-2024): The COVID-era "continuous enrollment" requirement — which prevented states from disenrolling Medicaid and CHIP beneficiaries during the public health emergency — ended on March 31, 2023. States began "unwinding" — redetermining eligibility for millions of Medicaid/CHIP enrollees — through 2024. Millions of children were disenrolled (many due to administrative/procedural reasons rather than actual income changes). This created a large-scale enrollment disruption, with research finding many eligible children losing coverage during the unwinding period and requiring re-enrollment through CHIP or the ACA Marketplace
• Historic low uninsured rate for children threatened: Before the unwinding, the children's uninsured rate had reached a historic low (approximately 5%). Post-unwinding, the uninsured rate for children increased in many states. Federal and state outreach efforts in 2024-2026 focused on re-enrolling eligible children who lost coverage during the redetermination process
• Reconciliation threat to CHIP funding (2025-2026): The 119th Congress's budget reconciliation process included proposals to cap Medicaid growth through per-capita caps or block grants, which would affect CHIP funding because CHIP and Medicaid funding are interlinked for states using Medicaid expansion CHIP. As of April 2026, the final reconciliation outcome remained uncertain, but advocates flagged CHIP as potentially at risk from Medicaid spending caps even if CHIP is not explicitly targeted
• CHIP reauthorized through FY 2029: The most recent CHIP reauthorization extended funding and the enhanced federal match rate through fiscal year 2029. The program is not currently facing an imminent authorization cliff, unlike its previous multi-year funding battles
• Continuous eligibility expansion: CMS guidance encouraged states to adopt 12-month continuous eligibility for CHIP enrollees (meaning children stay covered for a full year regardless of income changes within that year), reducing churn. Most states have adopted some form of continuous eligibility as of 2026