State Children’s Health Insurance Program (CHIP): A Brief Overview

Elicia J. Herz
Specialist in Health Care Financing

Evelyne P. Baumrucker
Analyst in Health Care Financing

The Balanced Budget Act of 1997 (BBA 97; P.L. 105-33) established the State Children’s Health Insurance Program (CHIP) under a new Title XXI of the Social Security Act and provided annual appropriations for CHIP through FY2007. The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA, H.R. 2, P.L. 111-3), which was signed into law on February 4, 2009, provided CHIP appropriations through FY2013 and made other changes.

In general, CHIP allows states to cover targeted low-income children with no health insurance in families with income above Medicaid eligibility levels. States may also extend CHIP coverage to pregnant women when certain conditions are met. The highest state-reported upper income eligibility limit for children in CHIP is 350% of the federal poverty level, in New Jersey.

Under CHIP, states may enroll targeted low-income children in a CHIP-financed expansion of Medicaid, create a new separate state CHIP program, or devise a combination of both approaches. States choosing the Medicaid option must provide all Medicaid mandatory benefits and all optional services covered under the state plan. In addition, they must follow the nominal Medicaid cost-sharing rules or apply the new state plan option for premiums and service-related cost-sharing as allowed under the Deficit Reduction Act of 2005 (DRA). In general, separate state programs must follow certain coverage and benefit options outlined in CHIP law. While some cost-sharing provisions vary by family income, the total annual aggregate cost-sharing (including premiums, copayments, and other similar charges) for a family may not exceed 5% of total income in a year. Preventive services are exempt from cost-sharing.

All states, the District of Columbia, and the five territories have CHIP programs. The territories, the District of Columbia, and six states use Medicaid expansions; 18 states use separate state programs; and 26 states use a combination approach. At the national level, nearly 7.4 million children were enrolled in CHIP during FY2008. In addition, 12 states reported enrolling about 335,000 adults in CHIP through program waivers in FY2008.


Date of Report: September 21, 2010
Number of Pages: 30
Order Number: R40444
Price: $29.95

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