Overview of the Children's Health Insurance Program

The Children's Health Insurance Program (CHIP) is a partnership between the states and the federal government that provides health insurance coverage to several million children in the United States and to thousands of people who are pregnant. Eligibility guidelines, coverage, and costs vary from state to state.

CHIP is similar to Medicaid, which also operates as a partnership between the state and the federal government, but differs from Medicare, which is solely operated by the federal government. Some states have different names for their CHIP programs—for instance, in Arizona CHIP is called KidsCare, in Colorado, it's Child Health Plan Plus, and in Iowa, it's Healthy and Well Kids in Iowa.

The federally-run website Insure Kids Now lets you select your state and directs you to the applicable Medicaid and/or CHIP program.

Doctor discussing with girl's family at hospital
izusek / Getty Images

Coverage

Total enrollment figures vary depending on what time of year you look at the number of kids enrolled in CHIP. Since eligibility is based on income, families cycle in and out of CHIP depending on employment circumstances.

During the 2020 fiscal year, there were nearly 9.1 million children covered by CHIP at some point during the fiscal year.

States have the option to either create a separate CHIP program, use CHIP funding to expand Medicaid coverage for kids, or use a combination of the two approaches. As of 2022, most states have taken the combination approach, with separate CHIP as well as expanded Medicaid coverage for kids.

Eligibility

Eligibility for CHIP depends primarily on income, but it can also be based on pregnancy (in addition to income) in some states.

How Income Determines CHIP Eligibility

General eligibility for CHIP is based on income. Nearly all children covered by CHIP are in households with income that doesn't exceed 250% of the poverty level. In 2022, that amounts to $69,375 for a family of four. (Note that eligibility is based on how household income compares with the current federal poverty level numbers, whereas eligibility for premium subsidies in the exchange/marketplace are based on how household income compares with the prior year's federal poverty level numbers.) But eligibility varies from state to state.

CHIP covers kids in households with income that is too high for Medicaid eligibility, but low enough that affording private health insurance might be a struggle.

About half of the states charge premiums or enrollment fees for CHIP, although total premiums and cost-sharing can't be more than 5% of household income.

North Dakota has the lowest income cap for CHIP eligibility, with coverage (via the state Medicaid program) only extending to households with income up to 170% of the poverty level (in 2022, that's $47,175 for a family of four). Idaho, which limits CHIP eligibility to a household with income up to 185% of the poverty level, is the only other state that caps CHIP/Medicaid eligibility for children below 200% of the poverty level.

On the high end, New York provides CHIP to kids in households with income up to 400% of the poverty level ($111,000 for a family of four in 2022), and New Jersey's limit is 355% of the poverty level.

(Note that there's a built-in 5% income disregard for MAGI-based Medicaid/CHIP eligibility. So the actual limits are higher—by five percentage points—than the limits listed above. This is part of the rules that go along with how household income is calculated under the Affordable Care Act.)

As illustrated in the eligibility guidelines, children's Medicaid eligibility in some states varies based on the child's age, with higher income limits for younger kids (infants and kids up to age five). So, depending on the state, a child might be eligible for Medicaid for a year or several years—then transition to separate CHIP as they get older, even without a change in the family's income.

CHIP for People Who Are Pregnant

The vast majority of CHIP enrollees are children, but some states extended coverage based on pregnancy as well. Colorado, Kentucky, Missouri, New Jersey, Rhode Island, Virginia, and West Virginia all have CHIP coverage for people who are pregnant and who have modest incomes. There are 18 states that use CHIP funding to cover unborn children, too, which means that pregnant women with eligible incomes receive pregnancy-related coverage regardless of immigration status.

This provides an important safety net when a pregnant person is ineligible for Medicaid due to immigration status. However, CHIP-funded unborn child coverage does not have to provide comprehensive coverage to the mother for non-pregnancy-related care.

Application

Families can either apply for CHIP directly through the state's Medicaid/CHIP program or can submit an application via the state's health insurance exchange. In some states, the exchange performs a cursory eligibility determination and then sends the data to the state's Medicaid/CHIP office, which makes the official eligibility determination.

In other states, the exchange conducts the entire eligibility determination process and then transmits the enrollment data to the state's Medicaid/CHIP office. The approaches taken by each state are detailed by the Centers for Medicare and Medicaid Services.

Costs

States have more flexibility to charge premiums and cost-sharing under CHIP than they do for Medicaid. This is because CHIP covers kids in households that tend to be more affluent than Medicaid-eligible households. However, total enrollment fees, premiums, and cost-sharing (deductibles, copays, coinsurance) can't exceed 5% of the family's income.

In states that have premiums for CHIP, average premiums are about $18 per child in households with income at 151% of the poverty level and about $25 per child in households with income at 201% of the poverty level. These are just averages, and there's wide variation from one state to another.

In addition to premiums, many states have cost-sharing for their CHIP programs, with modest copayments when a child needs non-preventive medical care.

Other Coverage

CHIP is available based on household income, regardless of whether the kids have access to a parent's employer-sponsored plan. But there are 38 states where the Medicaid and/or CHIP program can provide funding to help eligible families offset the cost of enrolling kids in employer-sponsored insurance.

If the family is purchasing individual market health insurance in the exchange, premium subsidies to offset the cost of private insurance are not available for the kids if they're eligible for CHIP.

For example, Colorado provides CHIP for kids in families with household income up to 260% of the poverty level (that's $72,150 for a family of four in 2022). So if a family of four with a household income of $70,000 applies for a health plan in Colorado's exchange, they'll see premium subsidies are available for the parents, but not for the kids—this is because the kids are eligible for CHIP instead.

The family would still be allowed to purchase private coverage for the kids if they wanted to, but they'd have to pay full price for the kids' portion of the premiums.

In New York, CHIP eligibility extends all the way to 400% of the poverty level, which is also the normal cut-off for premium subsidy eligibility under the Affordable Care Act (ACA). But from 2021 through 2025, that income cap for subsidy eligibility has been eliminated by the American Rescue Plan (ARP) and Inflation Reduction Act.

So normally, kids in New York would never qualify for premium subsidies in the exchange, because kids would be eligible for CHIP instead. But since the ARP and Inflation Reduction Act are allowing families with income above 400% of the poverty level to qualify for subsidies, it's now possible (at least through the end of 2025) for a family in New York to have income that's too high to qualify for CHIP, but that allows the entire family to qualify for premium subsidies.

Funding

The vast majority of CHIP funding comes from the federal government. In fiscal year 2020, CHIP spending amounted to $19.8 billion, and 87% of that was funded by the federal government. States paid the other 13%.

CHIP must be reauthorized periodically by Congress. Current funding extends through fiscal year 2027.

CHIP was created by the Balanced Budget Act of 1997 and has been in effect ever since. It has had to be reauthorized by Congress several times. In the fall of 2017, federal CHIP funding actually expired because Congress hadn't agreed on an extension—2017 was a contentious year for healthcare debates in Congress, with ACA repeal taking center stage for much of the year.

The funding ran out on September 30, 2017, leaving states with just the funds they had remaining from previous years. This was only enough to last a few months in most states, and caused great concern that states would have to start cutting services for CHIP enrollees.

In December 2017, Congress authorized short-term funding for CHIP and a six-year reauthorization bill was enacted in January 2018. This provided federal CHIP funding through fiscal year 2023. A few weeks later, a budget agreement was adopted that added four more years of CHIP funding. Currently, federal CHIP funding is secured through fiscal year 2027.

Summary

CHIP stands for the Children's Health Insurance Program. It was created in 1997 in an effort to improve access to health insurance for U.S. children. States can establish separate CHIPs, or operate a combined Medicaid/CHIP, which is the approach that most states have taken. CHIP eligibility is based on income, with income limits ranging from 170% of the poverty level to 400% of the poverty level, depending on the state.

As of 2020, there were more than nine million people covered by CHIP. Nearly all of them were children, although some states extend CHIP eligibility to people who are pregnant as well. Some states require families to pay modest premiums in order to use CHIP, while others provide it free of charge to eligible households.

A Word From Verywell

If your family struggles to afford health insurance, make sure you check to see if your kids might be eligible for Medicaid or CHIP. In some states, kids' eligibility for these programs extends well into the middle class. You might find that it's much more affordable for your family than the cost to add your kids to your employer's health insurance plan.

13 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Medicaid.gov. Centers for Medicare and Medicaid Services. Reports and Evaluations. Annual Enrollment Reports.

  2. Centers for Medicare and Medicaid Services. Medicaid.gov. CHIP State Program Information.

  3. MACPAC. CHIP Eligibility.

  4. Medicaid and CHIP Payment Access Commission. CHIP Eligibility.

  5. Centers for Medicare and Medicaid Services. Medicaid.gov. Medicaid, Children's Health Insurance Program, & Basic Health Program Eligibility Levels.

  6. MACPAC. Key CHIP Design Features.

  7. Kaiser Family Foundation. Medicaid and CHIP Income Eligibility Limits for Pregnant Women as a Percent of the Federal Poverty Level.

  8. Medicaid.gov. CHIP Cost Sharing.

  9. MACPAC. Fact Sheet. State Children's Health Insurance Program (CHIP).

  10. U.S. Department of Labor. Premium Assistance Under Medicaid and the Children's Health Insurance Program (CHIP).

  11. Kaiser Family Foundation (KFF). Total CHIP Spending (in millions). Fiscal Year 2019.

  12. Manatt Health. State Health and Value Strategies. Children's Health Insurance Program Extended Through Fiscal Year 2027.

  13. The Kaiser Family Foundation. Summary of the 2018 CHIP Funding Extension.

Additional Reading

By Louise Norris
 Louise Norris has been a licensed health insurance agent since 2003 after graduating magna cum laude from Colorado State with a BS in psychology.