State Children’s Health Insurance Program:
An Overview
Evelyne P. Baumrucker
Analyst in Health Care Financing
Alison Mitchell
Analyst in Health Care Financing
March 20, 2015
Congressional Research Service
7-5700
www.crs.gov
R43627
State Children’s Health Insurance Program: An Overview
Summary
The State Children’s Health Insurance Program (CHIP) is a means-tested program that provides
health coverage to targeted low-income children and pregnant women in families that have annual
income above Medicaid eligibility levels but have no health insurance. CHIP is jointly financed
by the federal government and states, and the states are responsible for administering CHIP. In
FY2013, CHIP enrollment totaled 8.4 million individuals and CHIP expenditures totaled $13.2
billion.
Congress is actively discussing the future of the CHIP program because federal funding for CHIP
is set to end after FY2015, even though the program is still authorized. With the current fiscal
year being the final year federal CHIP funding is provided in statute, Congress’s action or
inaction on the CHIP program may affect health insurance options and resulting coverage for
targeted low-income children that are eligible for the current CHIP program.
Under the current CHIP program, the federal government sets basic requirements for CHIP, but
states have the flexibility to design their own version of CHIP within the federal government’s
basic framework. As a result, there is significant variation across CHIP programs. Currently, state
upper-income eligibility limits for children range from a low of 175% of the federal poverty level
(FPL) to a high of 405% of FPL. States may also extend CHIP coverage to pregnant women when
certain conditions are met.
States may design their CHIP programs in three ways: a CHIP Medicaid expansion, a separate
CHIP program, or a combination approach where the state operates a CHIP Medicaid expansion
and one or more separate CHIP programs concurrently. CHIP benefit coverage and cost-sharing
rules depend on program design. CHIP Medicaid expansions must follow the federal Medicaid
rules for benefits and cost sharing, which entitles CHIP enrollees to Early and Periodic Screening,
Diagnostic, and Treatment (EPSDT) coverage (effectively eliminating any state-defined limits on
the amount, duration, and scope of any benefit listed in Medicaid statute) and exempts the
majority of children from any cost sharing. For separate CHIP programs, the benefits are
permitted to look more like private health insurance, and states may impose cost sharing, such as
premiums or enrollment fees, with a maximum allowable amount that is tied to annual family
income.
The federal government reimburses states for a portion of every dollar they spend on CHIP
(including both CHIP Medicaid expansions and separate CHIP programs) up to state-specific
annual limits called allotments. The federal share of FY2013 total expenditures was $9.2 billion
and the state share was $4.0 billion.
In considering the future of CHIP, Congress has a number of policy options, which include
extending federal CHIP funding and continuing the program or letting CHIP funding expire. If
Congress decides to extend federal CHIP funding, there would be a number of policy decisions
regarding how long to extend funding and whether to make programmatic changes. If federal
CHIP funding expires, Congress would also have a number of policy options including taking no
action, moving CHIP enrollees into the Medicaid program, or providing CHIP enrollees
subsidized coverage in the health insurance exchanges. Under each of these policy options, at
least some CHIP enrollees would continue to have coverage through CHIP, Medicaid, or the
health insurance exchanges, but the benefits and cost sharing would be different under each of
these coverage options.
Congressional Research Service
State Children’s Health Insurance Program: An Overview
If Congress does not act and federal CHIP funding ends in FY2015, states still need to adhere to
the maintenance of effort (MOE) requirements that are in effect through FY2019. The MOE
requires states to maintain income eligibility levels for CHIP children through September 30,
2019 as a condition for receiving federal Medicaid payments (notwithstanding the lack of
corresponding federal CHIP appropriations for FY2016 through FY2019). The MOE
requirements impact CHIP Medicaid expansion programs and separate CHIP programs
differently.
• For CHIP Medicaid expansion programs, when federal CHIP funding is
exhausted, the CHIP-eligible children in these programs continue to be enrolled
in Medicaid but financing switches from CHIP to Medicaid.
• For separate CHIP programs, states are provided a couple of exceptions to the
MOE: (1) after September 1, 2015, states may enroll CHIP-eligible children
into qualified health plans in the health insurance exchanges or (2) states may
impose waiting lists or enrollment caps in order to limit CHIP expenditures. In
addition, in the event that a state’s CHIP allotment is insufficient to fund CHIP
coverage for all eligible children, a state must establish procedures to screen
children for Medicaid eligibility, and enroll those who are Medicaid-eligible.
For children not eligible for Medicaid, the state must establish procedures to
enroll CHIP children in qualified health plans in the health insurance
exchanges that have been certified by the Secretary of Health and Human
Services (HHS) to be “at least comparable” to CHIP in terms of benefits and
cost sharing.
Congressional Research Service
State Children’s Health Insurance Program: An Overview
Contents
Introduction ...................................................................................................................................... 1
Program Design ............................................................................................................................... 2
Eligibility ......................................................................................................................................... 5
Children ..................................................................................................................................... 6
CHIP Medicaid Expansions ................................................................................................ 6
Separate CHIP Programs ..................................................................................................... 6
CHIP Eligibility Changes Under the ACA .......................................................................... 7
Upper Income Eligibility Levels in CHIP ........................................................................... 8
Pregnant Women and Unborn Children ................................................................................... 11
Benefits .......................................................................................................................................... 12
CHIP Medicaid Expansions ..................................................................................................... 12
Separate CHIP Programs ......................................................................................................... 13
Cost Sharing ................................................................................................................................... 15
CHIP Medicaid Expansions ..................................................................................................... 15
Separate CHIP Programs ......................................................................................................... 15
CHIP Financing and Expenditures ................................................................................................. 16
E-FMAP .................................................................................................................................. 16
Available Federal Funding ....................................................................................................... 17
Federal Appropriation ....................................................................................................... 18
State Allotments ................................................................................................................ 19
Shortfall Funding............................................................................................................... 19
Federal CHIP Funds Finance Some Medicaid Expenditures ............................................ 21
CHIP Expenditures .................................................................................................................. 21
The Future of CHIP ....................................................................................................................... 22
Extending Federal CHIP Funding ........................................................................................... 23
Letting Federal CHIP Funding Expire ..................................................................................... 24
If Congress Takes No Action ............................................................................................. 25
Comparing the Coverage Options ........................................................................................... 26
Figures
Figure 1. Number of Children Ever Enrolled in CHIP by Program Type, FY1998-FY2013 .......... 5
Figure 2. Federal Funding for CHIP .............................................................................................. 18
Figure 3. CHIP Expenditures, Actual and Projected ...................................................................... 21
Figure B-1. Upper Income Eligibility Levels for Infants, as a Percentage of the FPL in
Medicaid, CHIP, and Subsidized Exchange Coverage by State ................................................. 32
Figure B-2. Upper Income Eligibility Levels for Children Aged 1 Through 5, as a
Percentage of the FPL in Medicaid, CHIP, and Subsidized Exchange Coverage by State ......... 34
Figure B-3. Upper Income Eligibility Levels for Children Aged 6 Through 18, as a
Percentage of the FPL in Medicaid, CHIP, and Subsidized Exchange Coverage by State ......... 36
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State Children’s Health Insurance Program: An Overview
Figure B-4. Upper Income Eligibility Levels for Pregnant Women and Unborn Children,
as a Percentage of the FPL in Medicaid, CHIP, and Subsidized Exchange Coverage by
State ............................................................................................................................................ 38
Tables
Table 1. Key Differences in Federal Rules Regarding Selected Program Features Between
CHIP Medicaid Expansion Programs and Separate CHIP Programs ........................................... 3
Table 2. Number of Children Ever Enrolled in CHIP by Income Level, FY2013 ......................... 10
Table A-1. CHIP Program Type, Income Eligibility and Enrollment Information, by State ......... 27
Table A-2. E-FMAP Rates and CHIP Expenditures by State ......................................................... 29
Appendixes
Appendix A. CHIP Data by State ................................................................................................... 27
Appendix B. Upper Income Eligibility Levels in Medicaid, CHIP, and Subsidized
Exchange Coverage .................................................................................................................... 31
Contacts
Author Contact Information........................................................................................................... 39
Acknowledgments ......................................................................................................................... 39
Congressional Research Service
State Children’s Health Insurance Program: An Overview
Introduction
The State Children’s Health Insurance Program (CHIP) is a federal-state program that provides
health coverage to certain uninsured low-income children and pregnant women in families that
have annual income above Medicaid eligibility levels, but have no health insurance. CHIP is
jointly financed by the federal government and states, and the states are responsible for
administering CHIP. Participation in CHIP is voluntary and all states, the District of Columbia,
and the territories1 participate. The federal government sets basic requirements for CHIP, but
states have the flexibility to design their own version of CHIP within the federal government’s
basic framework. As a result, there is significant variation across CHIP programs.
CHIP was established as part of the Balanced Budget Act of 1997 (BBA 97; P.L. 105-33) under a
new Title XXI of the Social Security Act (SSA). Since that time, other federal laws have provided
additional funding, and made significant changes to CHIP. Most notably, the Children’s Health
Insurance Program Reauthorization Act of 2009 (CHIPRA, P.L. 111-3) increased appropriation
levels for CHIP, and changed the formula for allotments (i.e., federal funds allocated to each state
for the federal share of their CHIP expenditures), eligibility, and benefit requirements.2 The
Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) largely maintains
the current CHIP structure through FY2019 and requires states to maintain their Medicaid and
CHIP child eligibility levels through FY2019 as a condition for receiving Medicaid federal
matching funds. However, the ACA does not provide federal appropriations beyond FY2015.3
With the current fiscal year being the final year federal CHIP funding is provided in statute,
Congress is actively discussing the future of the CHIP program. Congress could extend federal
CHIP funding and either leave the program unchanged or make programmatic changes.
Alternatively, Congress could let CHIP funding expire and take no action, let CHIP expire and
move CHIP enrollees into the Medicaid program, or provide CHIP enrollees subsidized coverage
in the health insurance exchanges. Under these policy options, CHIP-eligible children might get
coverage through CHIP, Medicaid, or the health insurance exchanges, but the benefits and cost
sharing would be different under each of these coverage options.
Congress’s action or inaction on the CHIP program will affect the health insurance options
available to targeted low-income children and their resulting health coverage. The health
insurance market is far different today than when CHIP was established. CHIP was designed to
work in coordination with Medicaid to provide health coverage to low-income children.4 In
general, CHIP allows states to cover CHIP children with no health insurance in families with
annual income above state Medicaid eligibility levels. Before CHIP was established, no federal
1 The five territories are American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico,
and the Virgin Islands.
2 For more information on the changes enacted under CHIPRA, see CRS Report R40226, P.L. 111-3: The Children’s
Health Insurance Program Reauthorization Act of 2009, by Evelyne P. Baumrucker, Elicia J. Herz, and Jane G.
Gravelle.
3 For more information about the changes enacted under the ACA, see CRS Report R41210, Medicaid and the State
Children’s Health Insurance Program (CHIP) Provisions in ACA: Summary and Timeline, by Evelyne P. Baumrucker
et al.
4 For more information about Medicaid, see CRS Report R43357, Medicaid: An Overview, coordinated by Alison
Mitchell.
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State Children’s Health Insurance Program: An Overview
program provided health coverage to children with family with annual incomes above Medicaid
eligibility levels. The ACA further expanded the options for children in certain low-income
families with incomes above CHIP eligibility levels by offering subsidized coverage for insurance
purchased through health insurance exchanges. If CHIP funding is not extended after FY2015,
current CHIP enrollees could be eligible for Medicaid or potentially for subsidized coverage in
the health insurance exchanges. However, not all CHIP-eligible children would be eligible for
these programs, and without the availability of CHIP, some of the children and pregnant women
currently eligible for CHIP could end up being uninsured.
This report describes the basic elements of CHIP, focusing on how the program is designed, who
is eligible, what services are covered, how enrollees share in the cost of care, and how the
program is financed. The report ends with a brief discussion of the future of CHIP.
Program Design
States may design their CHIP programs in three ways. They may cover eligible children under
their Medicaid programs (i.e., CHIP Medicaid expansion),5 create a separate CHIP program, or
adopt a combination approach where the state operates a CHIP Medicaid expansion and one or
more6 separate CHIP programs concurrently.7 In all cases, federal CHIP funding is available to
pay for the costs for services provided to CHIP children.8
State choices for program design impact the coverage that enrollees receive. When states provide
Medicaid coverage to CHIP children (i.e., CHIP Medicaid expansion), Medicaid rules (Title XIX
of SSA) typically apply. When states provide coverage to CHIP children through separate CHIP
programs, Title XXI of SSA rules typically apply. States that want to make changes to their
programs beyond what both laws allow may seek approval from the Centers for Medicare and
Medicaid Services (CMS) through the use of the Section 1115 waiver authority.9
5 CHIP Medicaid expansions are not impacted by the ACA Medicaid expansion, under which states have the option to
extend Medicaid coverage to most nonelderly, nonpregnant adults with income up to 133% of the federal poverty level
(FPL). For more information about the ACA Medicaid expansion, see CRS Report R43564, The ACA Medicaid
Expansion, by Alison Mitchell.
6 For example, the state of Florida’s CHIP combination program includes a CHIP Medicaid expansion (i.e., Medicaid),
and three separate CHIP programs (i.e., MediKids, Healthy Kids, and the Children’s Medical Services Network).
7 States decide on CHIP program design based on a variety of factors including willingness to expand an individual
entitlement in the state, desire to offer a program that looks more like private health insurance coverage, etc.
8 Administrative data permits the federal government and states to track CHIP program enrollment and spending. States
use the Statistical Enrollment Data System (SEDS) to report aggregate CHIP and Medicaid child enrollment by
program type (Medicaid, CHIP Medicaid expansion, and separate CHIP program), age, gender, and race/ethnicity,
among other criteria. States report actual expenditures for Medicaid and CHIP Medicaid expansion programs on the
Form CMS 64. Actual expenditures for separate CHIP programs are reported on the Form CMS-37.
9 Under §1115 of the Social Security Act, the Secretary of Health and Human Services (HHS) may waive CHIP
program requirements so states can test new program design options that further the goals of the CHIP program. CHIP
1115 waivers are time limited (up to five years) and must be allotment-neutral to the federal government. In other
words, they cannot cost the federal government more than what is available under the state’s annual allotment(s)
applicable to the fiscal years for which the demonstration is operational. For a list of states with operational CHIP
Section 1115 waiver programs, see http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/
Waivers/Waivers.html.
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Where relevant, differences between Title XIX and Title XXI of the SSA program rules regarding
eligibility, benefit coverage, cost sharing and financing are summarized in Table 1, and
highlighted throughout the report.
Table 1. Key Differences in Federal Rules Regarding Selected Program Features
Between CHIP Medicaid Expansion Programs and Separate CHIP Programs
Program Feature
CHIP Medicaid Expansion
Separate CHIP Program
Eligibility
Who is eligible?
CHIP children are an optional
Eligibility may vary based on
eligibility group in Medicaida and
geography, age, annual family income,
enrol ees must be covered
residency, disability status, access to
statewide.
other health insurance, and duration
of CHIP eligibility.
Entitlement
Nature
Individual
Entitlement.b
Not an individual entitlement.
Implications of the ACA
When federal CHIP funding is
States with separate CHIP programs
maintenance of effort (MOE)c
exhausted, CHIP Medicaid expansion are provided with exceptions to the
children must continue to be
MOE. When federal CHIP funding is
enrolled in Medicaid through
exhausted, states must establish
September 30, 2019, but the
procedures to screen and enrol
financing switches from CHIP to
eligible children in Medicaid. For
Medicaid.
children not eligible for Medicaid, the
state must establish procedures to
enroll CHIP children in qualified
health plans in the health insurance
exchanges that have been certified
by the Secretary of Health and
Human Services (HHS) to be “at
least comparable” to CHIP in terms
of benefits and cost sharing. If there
are no certified plans, the MOE does
not obligate states to provide
coverage to these children.
Benefits
CHIP children are entitled to Early
States have more latitude in
and Periodic Screening, Diagnostic,
designing their benefit coverage.
and Treatment (EPSDT) coverage,
which effectively eliminates any
state-defined limits on the amount,
duration, and scope of any benefit
listed in Medicaid statute.
Cost Sharing
Premiums and cost sharing are
In general, premiums and cost-
generally prohibited for CHIP
sharing may be imposed. Allowable
children under age 18.
amounts are dependent on annual
family income and are subject to an
out-of-pocket aggregate limit of 5%
of annual family income.
Financing
Entitlement Nature
Capped entitlement to states
Capped entitlement to states
appropriated through FY2015.
appropriated through FY2015.
Federal matching rate
Based on Enhanced-Federal Medical
Based on Enhanced-Federal Medical
Assistance Percentage (E-FMAP)
Assistance Percentage (E-FMAP)
Rate.d
Rate.d
Source: CRS analysis of Titles XIX and XXI of the Social Security Act.
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State Children’s Health Insurance Program: An Overview
Notes: CHIP gives states the flexibility to design their programs as an expansion of Medicaid or as a separate
CHIP program, or to adopt a combination approach where the state operates a CHIP Medicaid expansion and
one or more separate CHIP programs concurrently. State choices for program design have implications for the
federal government, states and beneficiaries. Key differences across various program features are summarized in
this table.
a. §1902(gg)(2) includes a Medicaid maintenance of effort (MOE) that requires continuous eligibility standards
for Medicaid eligible children (including CHIP Medicaid expansion children) through September 30, 2019 as
a condition of receiving federal Medicaid funding.
b. Under Medicaid, individuals who meet the program eligibility requirements and enroll in the program are
guaranteed Medicaid coverage.
c. The ACA CHIP MOE (§2105(d)(3)) requires states to maintain income eligibility levels for CHIP through
September 30, 2019, as a condition for receiving payments under Medicaid (notwithstanding the lack of
corresponding federal appropriations for FY2016 through FY2019).
d. The federal government funds a larger share of CHIP expenditures than Medicaid. From FY2016 through
FY2019, the E-FMAP is set to increase by 23 percentage points (not to exceed 100%) for most CHIP
expenditures.
As of July 1, 2014, 8 states, the District of Columbia, and the territories had CHIP Medicaid
expansions, 13 states had separate CHIP programs10 and 29 states used a combination approach.11
(See Appendix A, Table A-1 for 50-state information on CHIP program design.) FY2013 state-
reported CHIP enrollment data (the most recent data available) show that the bulk of CHIP
enrollees received coverage through separate CHIP programs (approximately 70%). The
remainder received coverage through a CHIP Medicaid expansion.12 This enrollment distribution
has largely held true over the course of the program’s history (see Figure 1 below). This
landscape will likely change to some extent due to modifications to CHIP eligibility rules enacted
under the ACA. (For more information on these and other eligibility related requirements, see the
Eligibility subsection.)
10 As of July 1, 2014, 2 states (Washington and Connecticut) had separate CHIP programs with no Medicaid
expansions. The remaining 11 states (Alabama, Arizona, Georgia, Kansas, Oregon, Mississippi, Pennsylvania, Texas,
Utah, West Virginia, and Wyoming) are considered to have separate CHIP programs, but technically these programs
are part of combination CHIP programs due to the ACA requirement to transition CHIP children aged 6 through 18 in
families with annual income less than 133% of the federal poverty level (based on modified adjusted gross income, or
MAGI) to Medicaid, beginning January 1, 2014.
11 Centers for Medicare & Medicaid Services (CMS), Children’s Health Insurance Program Plan Activity, as of July 1,
2014.
12 Medicaid and CHIP Payment and Access Commission, Report to the Congress on Medicaid and CHIP, March 2014.
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Figure 1. Number of Children Ever Enrolled in CHIP by Program Type, FY1998-
FY2013
Source: CHIP child enrollment counts by program type for fiscal years 1998 through 2011 are from MACPAC,
Overview of Medicaid and CHIP, January 2013. FY2012 CHIP child enrol ment counts by program type are from
MACPAC, Report to the Congress on Medicaid and CHIP, March 2013, and FY2013 enrol ment counts are from
MACPAC, Report to the Congress on Medicaid and CHIP, March 2014.
Notes: Data are reported by individual states and are representative of children ever enrol ed in Medicaid and
CHIP as of a specified date. States may subsequently revise their current and/or historical data.
Eligibility
This section describes CHIP eligibility rules. In general, CHIP extends coverage to certain low-
income children and pregnant women without health insurance in families with annual family
income too high to qualify them for Medicaid. Specifically, Title XXI of the SSA defines a
targeted low-income child as one who is under age 19 with no health insurance,13 and who would
not have been eligible for Medicaid under the federal and state rules in effect when CHIP was
first initiated in 1997.14 (Hereafter, targeted low-income children are referred to as CHIP children,
CHIP-eligible or CHIP-enrolled, as applicable.) States have broad discretion in setting their
income eligibility standards, and eligibility varies across states. Children under age 19 represent
the vast majority of CHIP program enrollment.15
13 States are permitted to require a period of uninsurance (i.e., waiting period) of up to 90 days before a child who is
otherwise eligible is permitted to enroll in CHIP. See 78 Federal Register 42160, July 15, 2013.
14 §2110(b) of the Social Security Act.
15 In the early years of the CHIP program, states were permitted and encouraged to extend coverage to uninsured
pregnant women, parents, and childless adults age 19 and over generally through the use of the Section 1115 waiver
authority. However, Congress acted to largely limit this practice through a series of laws. The Deficit Reduction Act of
2005 (P.L. 109-171) prohibited the use of CHIP funds from coverage of non-pregnant childless adults in any new
waivers approved after February 8, 2006. CHIPRA terminated CHIP coverage of nonpregnant childless adults by the
end of calendar year 2009, prohibited new states from obtaining waivers to extend CHIP coverage to uninsured parents,
and phased out coverage of parents altogether by FY2014. States can still extend coverage to adult pregnant women
(regardless of their age) under CHIP through a variety of mechanisms. For more information on the predominate
(continued...)
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State Children’s Health Insurance Program: An Overview
Children
CHIP Medicaid Expansions
States with a CHIP Medicaid expansion program must follow the eligibility rules of the Medicaid
program (See Table 1). Because CHIP eligibility builds on top of Medicaid eligibility, the
Medicaid child eligibility rules that were in effect when CHIP was established in 1997 represent
the Medicaid eligibility ceiling for children.16
States with CHIP Medicaid expansion programs may cover CHIP children by expanding their
Medicaid programs in the following ways: (1) by establishing a new optional eligibility group for
such children as authorized in Title XXI of SSA, and/or (2) by liberalizing the financial rules for
any of several existing Medicaid eligibility categories. Many states with CHIP Medicaid
expansion programs chose the latter, opting to cover CHIP children under existing Medicaid
eligibility pathways, especially Medicaid’s poverty-related child groups, rather than by
establishing the Title XXI of SSA optional coverage group. Such a strategy reduces the
administrative burden of creating and implementing a new coverage group.17 Regardless of the
state’s approach, CHIP children are an optional eligibility group in Medicaid and enrollees must
be covered statewide.
Separate CHIP Programs
States are permitted to determine the eligibility criteria for the group of CHIP children who may
enroll in separate CHIP programs (See Table 1).18 Title XXI of the SSA allows states to use the
following factors in determining eligibility: geography (e.g., sub-state areas or statewide), age
(e.g., subgroups under 19), income, residency, disability status (so long as any standard relating to
disability status does not restrict eligibility),19 access to or coverage under other health insurance
(...continued)
pathways states use to extend CHIP coverage to pregnant woman, see the Eligibility subsection entitled, “Pregnant
Women and Unborn Children.”
16 Federal Medicaid statute establishes mandatory coverage floors (defined as a percentage of the federal poverty level)
for its poverty-related pregnant women and children eligibility groups. States are permitted to extend coverage above
these federal minimum thresholds which is why there is variability across states in terms of the income eligibility
threshold at which CHIP begins.
17 Because individuals can have other health insurance and still be covered by Medicaid, this approach also allows
states to bring into Medicaid otherwise ineligible higher-income children regardless of their other health insurance
status. For example, under this strategy, states can provide Medicaid benefits to additional children for whom existing
health insurance is limited (sometimes referred to as under-insured). When states liberalize the financial rules for
existing Medicaid eligibility groups, the federal share of the costs for services provided to the subset without other
health insurance—the CHIP-eligible children—is paid for out of CHIP funds. The federal share of the costs for services
delivered to the remaining children with other health insurance is paid for by Medicaid. CHIP Medicaid expansion
children represent an optional eligibility pathway under Medicaid.
18 §2102(b) of the Social Security Act.
19 States are permitted to offer different benefit packages for children with special needs, as long as the eligibility
criteria for that coverage comply with the Americans with Disabilities Act (ADA) requirements for non-discrimination.
Source: The Administration’s Responses to Questions About the State Children’s Health Insurance Program, July 29,
1998, Fifth Set.
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(to establish whether such access/coverage precludes CHIP eligibility),20 and duration of CHIP
eligibility (states must re-determine eligibility at least annually).21
States can set the upper income level for CHIP children up to 200% of the federal poverty level
(FPL), or 50 percentage points above the applicable pre-CHIP Medicaid income level. However,
prior to January 1, 2014, states were able to use income disregards,22 which effectively permitted
states to expand eligibility to children under age 19 at whatever level they chose. Two states, New
Jersey, and New York, plus one California county used this income-counting methodology23 to
expand their CHIP programs to 355% FPL, 405% FPL, and 416% FPL, respectively.24 The
income-disregard option was eliminated under the ACA.
CHIP Eligibility Changes Under the ACA
Beginning January 1, 2014, the ACA required the federal government and states to rely on
modified adjusted gross income (MAGI)25 income counting rules when determining eligibility for
CHIP26 as well as most of Medicaid’s nonelderly populations27 and subsidized exchange
coverage. Under the MAGI rules, a state looks at each individual’s MAGI, deducts 5% (which the
20 A CHIP child must not be found eligible for Medicaid, or other group health coverage, for example. See 42 C.F.R.
§457.310.
21 States are permitted to continue coverage for CHIP-eligible children for a period of 12 months regardless of changes
in family composition or income that may otherwise affect their eligibility status. While no explicit statutory authority
for 12 months of continuous coverage currently exists in CHIP statute, HHS reports that 33 states provided 12 months
of continuous coverage to CHIP children in FY2012. Source: MACPAC, Report to the Congress on Medicaid and
CHIP, March 2013.
22 Income disregards (including block of income disregards) and deductions effectively increase the amount of income
a child’s family can have and still be eligible for coverage, as they serve to eliminate from a family’s countable income
certain expenses, costs or amounts of income.
23 Medicaid and CHIP financial eligibility requirements place limits on the maximum amount of income (and
sometimes assets) individuals may possess to become eligible (often referred to as standards or thresholds). Additional
guidelines specify how states should calculate these amounts (i.e., counting methodologies).
24 Under the State Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA, P.L. 111-3), new states
(in addition to California, New Jersey, and New York) were discouraged from expanding CHIP income eligibility
through a policy that required a reduction in federal CHIP payments for coverage of children in families with income
above 300% FPL. CHIPRA also included other provisions to provide financial incentives to states to find and enroll
Medicaid eligible children at lower income levels through the use of CHIP Performance Bonus Payments. These
payments were directed at states that adopted 5 out of 8 enrollment facilitation strategies and that successfully enrolled
Medicaid-eligible children over target enrollment levels. These bonus payments expired at the end of FY2013.
25 MAGI is defined as the Internal Revenue Code’s (IRC’s) adjusted gross income (AGI) plus certain foreign earned
income and tax-exempt interest. AGI reflects a number of deductions, including trade and business deductions, losses
from sale of property, and alimony payments, increased by tax-exempt interest and income earned by U.S. citizens or
residents living abroad.
26 §2102(b)(1)(B)(v) of the Social Security Act.
27 Under the ACA, certain groups are exempt from income eligibility determinations for Medicaid based on MAGI.
Prior law’s income determination rules will continue to be used for determining eligibility for the following groups: (1)
individuals who are eligible for Medicaid through another federal or state assistance program (e.g., foster care children
and individuals receiving SSI), (2) the elderly, (3) certain disabled individuals who qualify for Medicaid on the basis of
being blind or disabled without regard to whether the individual is eligible for SSI, (4) the medically needy, and (5)
enrollees in a Medicare Savings Program (e.g., Qualified Medicare Beneficiaries for whom Medicaid pays Medicare
premiums or coinsurance and deductibles). In addition, MAGI does not affect eligibility determinations through
Express Lane enrollment (to determine whether a child has met Medicaid or CHIP eligibility requirements), for
Medicare prescription drug low-income subsidies, or for determinations of eligibility for Medicaid long-term services
and supports.
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law provides as a standard disregard), and compares that income to the new income standards set
by each state. The transition to MAGI effectively limits CHIP upper income eligibility levels for
states by eliminating a state’s ability to use income disregards to extend coverage to children in
families at higher income levels.28 Also under the ACA, states are permitted to use CHIP federal
matching funds to cover children who lose Medicaid eligibility as a result of the elimination of
income disregards.29
As a part of a separate provision, the ACA required states to transition CHIP children aged 6
through 18 in families with annual income less than 133% FPL (based on MAGI) to Medicaid,
beginning January 1, 2014.30,31 According to a recent Medicaid budget survey, 21 states
transitioned children from CHIP to Medicaid in 2014 as a result of this requirement.32 The
purpose of this transition was to ensure uniform child coverage under Medicaid up to 133% FPL
(effectively 138% after adjustment for the 5% disregard) across all states.
The ACA also required states to maintain income eligibility levels for CHIP through September
30, 2019, as a condition for receiving payments under Medicaid (notwithstanding the lack of
corresponding federal appropriations for FY2016 through FY2019).33 This provision is often
referred to as the ACA Maintenance of Effort (MOE) requirement. (Implications of the MOE
requirement for the future of CHIP are discussed in more detail in the financing section below.)
Upper Income Eligibility Levels in CHIP
Statewide upper income eligibility thresholds for CHIP-funded child coverage vary substantially
across states, ranging from a low of 175% FPL to a high of 405% FPL. Appendix A, Table A-1
28 Under the transition to MAGI, states were given a limited opportunity to expand CHIP eligibility above 200% of the
FPL (not to exceed 300% FPL) using the old income counting rules by submitting a state plan amendment (SPA)
before December 31, 2013.
29States must provide coverage through a separate CHIP program to children who lose Medicaid as a result of the
elimination of income disregards permitted under §2101(f) of the ACA. Coverage for this population will be paid for
out of the state’s CHIP allotment at the CHIP enhanced match rate and will cease when the last child protected has
been afforded 12 months of coverage (expected to be no later than April 1, 2016). While coverage of children protected
by 2101(f) is mandated through a separate CHIP program, states may instead continue to provide coverage of these
children in the state’s Medicaid program. However, if a state chooses the option to maintain Medicaid eligibility for
such children, funds through Title XIX of SSA and regular FMAP rates will apply. Sources: Centers for Medicare and
Medicaid Services, Medicaid/CHIP Affordable Care Act Implementation: Children’s Health Insurance Program
(CHIP) coverage for children who lose Medicaid eligibility due to the elimination of income disregards as a result of
the conversion to MAGI. Section 2101(f) of the Affordable Care Act: Answers to Frequently Asked Questions; April 25,
2013; and CMS Answers to Frequently Asked Questions: Telephonic Applications, Medicaid and CHIP Eligibility
Policy and 75/25 Federal Matching Rate, August 9, 2013.
30Coverage for such children will continue to be paid for out of the state’s CHIP annual allotment at the enhanced CHIP
matching rate.
31 CMS granted approval for Pennsylvania to delay the transition of CHIP children in families with income less than
133% FPL based on MAGI until FY2015.
32 Vernon K. Smith, Kathleen Gifford, and Eileen Ellis, Health Management Associates and Robin Rudowitz and Laura
Snyder, Kaiser Family Foundation, Medicaid in an Era of Health and Delivery System Reform: Results from a 50-State
Medicaid Budget Survey for State Fiscal Years 2014 and 2015, October 2014.
33 Specifically, with the exception of waiting lists for enrolling children in CHIP or enrolling CHIP-eligible children in
certified exchange plans when federal CHIP funding is no longer available, states cannot implement eligibility
standards, methodologies, or procedures that are more restrictive than those in place on March 31, 2010. §2105(d)(3) of
the Social Security Act.
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shows state-reported child upper income eligibility levels based on MAGI (adjusted for the 5%
disregard), as of January 1, 2014.
To summarize, Table A-1 shows:
• 18 states and the District of Columbia provide coverage above 301% FPL; of
these, two states extend coverage above 400% FPL, including New York
(405% FPL) and California (416% FPL34 in one county);
• 9 states provide coverage between 251% FPL and 300% FPL;
• 20 states provide coverage between 201% FPL and 250% FPL; and
• 3 states extend coverage at levels less than 200% FPL, including Idaho (190%
FPL), North Dakota (175% FPL), and Arizona (100%).35
Despite the fact that 27 states extend CHIP coverage to children in families with annual income
greater than or equal to 251% FPL, CMS administrative data show that CHIP enrollment is
concentrated among families with annual income at lower levels. FY2013 show that
approximately 89% of CHIP child enrollees were in families with annual income at or below
200% FPL, and approximately 97% of child enrollees were in families with annual income at or
below 250% FPL. (See Table 2.) Families with higher income levels are more likely to have
access to employer-sponsored insurance coverage.36 With the enactment of the ACA, families
may also have access to subsidized coverage through the exchange. However, such coverage is
not always affordable for low-income families. (For more information on the definition of
affordability of employer-sponsored insurance coverage as it relates to a family’s ability to
qualify for subsidized exchange coverage, see the discussion of the “family glitch issue” in the
subsection entitled, The Future of CHIP.)
34 Most counties in California are in the state’s CHIP Medicaid expansion program which extends coverage up to 266%
FPL. However, the state had a separate CHIP program that extended CHIP coverage up to 321% FPL in three counties,
and up to 416% FPL in one county. During FY2013, children in the state’s separate CHIP program were transitioned to
the state’s CHIP Medicaid expansion program.
35 Federal authority for Arizona’s CHIP program to cover children in families with annual income above 100% FPL
expired on January 31, 2014. As a result, children in families with income between 100-133% FPL transitioned to
Medicaid effective January 1, 2014. Children in families with income over 133% FPL were encouraged to apply for
coverage through the health insurance exchange where premium subsidies are available for eligible households. While
the state’s CHIP program to extend coverage for CHIP-eligible children in families with annual income less than 100%
FPL remains in effect, enrollment of new children has been frozen since January 1, 2010. As a result of the enrollment
freeze, enrollment in Arizona’s CHIP program has dropped from 45.8 thousand in January 2010 to approximately 2.3
thousand in February 2014. Source: Tricia Brooks, Martha Heberlein, and Joseph Fu, Georgetown University Health
Policy Institute, Center for Children and Families, Dismantling CHIP in Arizona: How Losing KidsCare Impacts a
Child’s Health Care Costs, May 2014.
36 For more information on the access to private insurance coverage among low-income children in CHIP, see
Mathematica Policy Research, CHIPRA Mandated Evaluation of the Children’s Health Insurance Program: Final
Findings, August 1, 2014.
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Table 2. Number of Children Ever Enrolled in CHIP by Income Level, FY2013
Income Range (% FPL)
Ever Enrolled
Percentage
0-200 7,243,295
88.5%
201 - 250
724,785
8.9%
251 - 300
165,120
2.0%
301 & Higher
51,791
0.6%
Total
8,184,991
100.0%
Source: Centers for Medicare and Medicaid Services, Child Health Insurance Program Budget Report, based on
Form 21E and 64.21E Combined, as of April 2014.
FPL: Federal poverty level.
Figure B-1 through Figure B-4 of Appendix B show the 50-state upper income eligibility levels
for children and pregnant women in Medicaid, CHIP, and subsidized exchange coverage, as of
January 1, 2014. Variability exists across states in the income eligibility ranges (i.e., income
eligibility floors and ceilings) associated with each of the programs. The federal Medicaid statute
establishes mandatory coverage floors (defined as a percentage of the federal poverty level) for its
poverty-related pregnant women and children eligibility pathways. However, states are permitted
to extend Medicaid coverage above these federal minimum levels; this is why there is variability
across states in terms of the income eligibility levels at which CHIP begins. For example, the
state of Alabama extends Medicaid eligibility to infants in families with annual income less than
or equal to 141% FPL, while the state of Iowa extends Medicaid eligibility to infants in families
with annual income less than or equal to 240% FPL. In another example, CHIP coverage for
children extends to a higher income eligibility threshold than subsidized health insurance
exchange coverage in one county in California and in the state of New York (i.e., 416% FPL and
405% FPL, respectively).
It is important to note, however, that not all children with family income at the specified levels
are eligible for each of the programs due to program rules that differ for each of these programs.
For instance, CHIP is only available to uninsured children, subsidized exchange coverage is not
available to individuals with access to minimum essential coverage,37 and insurance status is not
considered when determining Medicaid eligibility.
These figures show both the range of CHIP income eligibility relative to the other programs, and
how the programs are envisioned to work together in extending coverage to low-income children
and families. CHIP in some states covers a relatively small segment of the income eligibility
continuum while CHIP in other states covers a larger segment of the continuum. This is
particularly true for infants and pregnant woman. States have used the optional Medicaid
eligibility pathways to set higher Medicaid income eligibility levels for infants and pregnant
women relative to older children (see Figure B-1 through Figure B-4 of Appendix B). As a
37 The definition of minimum essential coverage is broad. It includes Medicare Part A, Medicaid, the State Children’s
Health Insurance Program (CHIP), Tricare, the TRICARE for Life program, the veteran’s health care program, the
Peace Corps program, a government plan (local, state, federal) including the Federal Employees Health Benefits
Program (FEHBP) and any plan established by an Indian tribal government, any plan offered in the individual, small
group or large group market, a grandfathered health plan, and any other health benefits coverage, such as a state health
benefits risk pool, as recognized by the HHS Secretary in coordination with the Treasury Secretary.
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result, CHIP has been used to provide health coverage to older uninsured children to a greater
extent.
In general, the Medicaid program is a much larger program than CHIP. Child enrollment in
Medicaid, for example, was 38.7 million as compared to 8.1 million in CHIP in FY2013.38 The
figures in Appendix B, however, are not weighted to reflect program enrollment by state. For
example, it is possible that a state with a large uninsured child population but a CHIP program
with a relatively narrow income eligibility range may result in a much larger number of CHIP
program enrollees than a state with a relatively small uninsured child population and a CHIP
program with a much broader income eligibility range.39
Pregnant Women and Unborn Children
Nineteen states provide coverage to pregnant women under CHIP. The three main ways that states
may extend CHIP coverage to pregnant women (regardless of their age) are through (1) the state
plan option for pregnant women; (2) the Section 1115 waiver authority and/or (3) the unborn
child pathway.40 The latter is the predominant pathway used by states for this purpose.
As of January 2014, four states (Colorado, New Jersey, Oregon, and Rhode Island) extended
coverage to pregnant women under Section 1115 waiver authority or the CHIP pregnant women
state plan option.41 Under CHIPRA, states are permitted to cover pregnant women through a state
plan amendment42 when certain conditions are met (e.g., the Medicaid income standard for
pregnant women must be at least 185% FPL but in no case lower than the percentage level in
effect on July 1, 2008; no preexisting conditions or waiting periods may be imposed; and CHIP
cost-sharing protections apply). The period of coverage associated with the state plan option
includes pregnancy through the postpartum period (roughly through 60 days postpartum), and
38 The enrollment figures reported here represent “ever enrolled” counts which measure the number of children covered
by CHIP or Medicaid for any period of time during a given year. These enrollment counts differ significantly from
estimates based on “point-in-time” or average annual enrollment measures. Source: MACPAC Report to Congress on
Medicaid and CHIP, March 2014, Table 4.
39 For example, it is possible that a state with a large uninsured child population but a CHIP program with a relatively
narrow income eligibility range may result in a much larger number of CHIP program enrollees than a state with a
relatively small uninsured child population and a CHIP program with a much broader income eligibility range. For
example, in Texas, the CHIP eligibility range appears small by comparison with the CHIP eligibility range in Louisiana
(See Figure B-1, Figure B-2, and Figure B-3). However, in FY2013, CMS administrative data show CHIP child
enrollment totaling approximately 1 million in Texas as compared with approximately 150,000 in Louisiana (See Table
A-1).
40 Prior to the enactment of CHIPRA, legal immigrants arriving in the United States after August 22, 1996, were
ineligible for Medicaid or CHIP benefits for their first five years in the United States. With the enactment of CHIPRA,
states are permitted to provide Medicaid and/or CHIP coverage to children under the age of 21 and pregnant women
who are (1) lawfully residing in the United States and (2) otherwise eligible for such coverage. The CHIP state plan
option is available to states that (1) elect this state plan option under Medicaid and (2) in the case of lawfully residing
pregnant women, elect the CHIP state plan option to provide assistance for pregnant women. As of March 24, 2014, 28
states and the District of Columbia extend Medicaid and/or CHIP coverage to lawfully residing children, and 23 states
and the District of Columbia extend Medicaid and/or CHIP coverage to lawfully residing pregnant women. See CMS,
Medicaid and CHIP Coverage of Lawfully Residing Children and Pregnant Women, at http://www.medicaid.gov/
medicaid-chip-program-information/by-topics/outreach-and-enrollment/lawfully-residing.html.
41 MACPAC, Report to Congress on Medicaid and CHIP, March 2014, Table 9, pp 80-82.
42 States that wish to make changes to their Medicaid or CHIP state plans must submit a state plan amendment (SPA) to
CMS for approval.
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benefits include all services available to CHIP children in the state as well as prenatal, delivery,
and postpartum care. Infants born to such pregnant women are deemed eligible for Medicaid or
CHIP, as appropriate, and are covered up to age one year.
As of January 2014, 15 states provide CHIP coverage to pregnant women ages 19 and older by
extending coverage to unborn children as permitted through federal regulation. Coverage
available to such women may be limited to prenatal and delivery services, but is still used in 15
states because it permits the extension of CHIP coverage to a pregnant woman regardless of her
immigration status.43 See Figure B-4 for state-specific CHIP eligibility levels for unborn
children, pregnant women and deemed newborns, as of January 1, 2014.
Benefits
CHIP Medicaid Expansions
As is the case with eligibility, CHIP benefit coverage depends on program design (See Table 1).
States that use CHIP Medicaid expansion programs must provide CHIP-eligible children with the
full range of mandatory Medicaid benefits, as well as all optional services that the state chooses
to cover as specified in their state Medicaid plans.44 As an alternative to providing all of the
mandatory and selected optional benefits under traditional Medicaid, states may enroll state-
specified groups, including children in CHIP Medicaid expansions, in Alternative Benefit Plans
(ABPs).45 When certain conditions are met, states may also provide premium assistance for health
insurance offered through private insurance arrangements for Medicaid children (including CHIP
children) and their parents.
For CHIP children, benefits available through Medicaid’s Early and Periodic Screening,
Diagnostic, and Treatment (EPSDT) Program must be provided, whether through traditional state
plan coverage or otherwise. The EPSDT program covers health screenings and services, including
assessments of each child’s physical and mental health development; laboratory tests (including
lead blood level assessment); appropriate immunizations; health education; and vision, dental,
and hearing services. States are required to provide all federally allowed treatment to correct
problems identified through screenings. EPSDT sets Medicaid benefit coverage for children
(including CHIP children) apart from other sources of health insurance in that it permits coverage
of all services listed in Medicaid statute (regardless of whether a given benefit is covered in the
state plan) and it effectively eliminates any state-defined limits on the amount, duration, and
scope of this benefit.
43 MACPAC, Report to Congress on Medicaid and CHIP, March 2014, Table 9, pp 80-82.
44 Medicaid’s mandatory and optional benefits are identified in federal statute and regulations, and include a wide range
of preventive, primary, and acute medical services, as well as long-term services and supports (LTSS). States define the
specific features of each covered benefit within broad federal guidelines.
45 The ACA requires Medicaid ABP coverage to include the same essential health benefits (EHBs) provided in
exchange plans. For more information about Medicaid benefit coverage, see CRS Report R43357, Medicaid: An
Overview, coordinated by Alison Mitchell.
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Separate CHIP Programs
States that offer separate CHIP programs have more latitude in designing their programs.46 Such
states are allowed to determine which services to cover, and may place limits on the services that
they offer.
Separate CHIP program rules permit states to elect any of three benefit options:47
1. Benchmark benefit package: includes one of the following three base benchmark
plans:
• the standard Blue Cross/Blue Shield preferred provider option offered under
the Federal Employees Health Benefits Program (FEHBP),
• the health coverage that is offered and generally available to state employees
in the state involved, and/or
• health coverage that is offered by a health maintenance organization (HMO)
with the largest commercial (non-Medicaid) enrollment in the state involved.
2. Benchmark-equivalent coverage: defined as a package of benefits that has the
same actuarial value48 as one of the base benchmark benefit packages listed
above. A state choosing to provide benchmark-equivalent coverage must cover
each of the benefits in the “basic benefits category,” including inpatient and
outpatient hospital and physicians’ surgical and medical services, lab, x-ray, and
well-baby and well-child care, including age-appropriate immunizations.
Benchmark-equivalent coverage must also include at least 75% of the actuarial
value of coverage under the benchmark plan for each of the benefits in the
“additional service category.” These additional services include prescription
drugs, vision services, and hearing services. States are encouraged to cover other
categories of service not listed above; and/or
3. Secretary-approved coverage: defined as any other health benefits plan that the
Secretary of Health and Human Services (HHS) determines will provide
appropriate coverage to the targeted population of uninsured children.49
Regardless of the choice of program design, all states must cover emergency services, well baby
and well child care including age-appropriate immunizations, and dental services.50 If offered,
mental health services must meet federal mental health parity requirements.51 As with Medicaid,
46 §2103 of the Social Security Act.
47 §2103 of the Social Security Act.
48 Actuarial value is a summary measure of a plan’s generosity, expressed as a percentage of medical expenses
estimated to be paid by the issuer for a standard population and set of allowed charges.
49 Three states, Florida, New York and Pennsylvania were permitted to use the state’s health coverage plan that was in
place at the time of CHIP’s enactment. These benefit packages are often referred to as “grandfathered plans.”
50 Dental services were added as a required benefit for separate CHIP programs under CHIPRA, and include services
necessary to prevent disease and promote oral health, restore oral structures to health and function, and treat emergency
conditions. (Dental benefits have always been required for CHIP Medicaid expansion children via EPSDT.)
51 In the case of a state separate CHIP program that provides medical and surgical benefits as well as mental health or
substance abuse disorder benefits, the predominant financial requirements (e.g., deductibles, copayments) and
treatment limitations (e.g., number of visits, days of coverage) applicable to such mental health or substance abuse
disorder benefits must be no more restrictive than the predominant financial requirements and treatment limitations
(continued...)
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abortions cannot be covered, except in the case of a pregnancy resulting from rape or incest, or
when an abortion is necessary to save the mother’s life. Finally, when certain conditions are met
(e.g., CHIP minimum benefits and CHIP cost-sharing protections), states can also offer premium
assistance to pay a beneficiary’s share of costs for group (employer-based) health insurance for
CHIP children and their parents.52 According to a recent study of CHIP benefit coverage, eleven
states offered premium assistance programs with CHIP federal matching funds in 2013.53
Data from this study that looked at benefit coverage in 42 separate CHIP programs (in 38 states)
indicate that in 2013:
• 25 states chose Secretary-approved coverage;
• 9 states offered benchmark-equivalent coverage;
• 3 states offered coverage available in the largest HMO in the state;
• 3 states offered existing state-based coverage;
• 1 state offered FEHBP-equivalent coverage; and
• 1 state offered state employee coverage.
According to this study, benefits offered under separate CHIP programs ranged from benefit
coverage modeled after the state’s Medicaid plan54 to more limited benefit coverage available
through the commercial market. The study also found that coverage for basic medical services
(e.g., physician, hospital, laboratory and radiological services) were largely covered without
“significant” limitations. States did impose limitations on other types of services (e.g., physical,
occupational and speech therapy; orthodontia; hearing aids; and corrective lenses). Finally, only a
few services were not covered at all (e.g., care coordination for children with special needs, non-
emergency medical transportation).55
In FY2013, managed care was the predominant delivery system under CHIP. Administrative data
show that approximately 84% of separate CHIP enrollees received coverage under some form of
managed care, while the remaining 16% received coverage under a fee-for-service arrangement.56
(...continued)
applicable to covered medical and surgical benefits. In addition, there can be no separate cost-sharing requirements or
treatment limitations applicable only to mental health or substance abuse disorder benefits. State CHIP Medicaid
expansions that include coverage of EPSDT services (as defined in Medicaid statute) are deemed to satisfy these
mental health parity requirements. For more information, see CMS Letter to Medicaid Directors and State Health
Officials, RE: Application of the Mental Health Parity and Addiction Equity Act to Medicaid MCOs, CHIP, and
Alternative Benefit (Benchmark) Plans, SHO # 13-001, ACA #24, January 16, 2013, available at
http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO-13-001.pdf.
52 Historically, it has proved prohibitive for many employer plans and states to meet all of these requirements. To
circumvent these restrictions, most states operating CHIP or Medicaid premium assistance programs do so under
Section 1115 waiver authority.
53 Anita Cardwell, et al., National Academy for State Health Policy and Georgetown University Health Policy Institute,
Center for Children and Families; Benefits and Cost Sharing in Separate CHIP Programs, May 2014.
54 For example, of the 25 states with Secretary approved coverage, 14 states modeled their coverage after the state’s
Medicaid program, and 11 of these 14 states offered EPSDT as a part of the state’s separate CHIP program benefits.
55 Anita Cardwell, et al., National Academy for State Health Policy and Georgetown University Health Policy Institute,
Center for Children and Families; Benefits and Cost Sharing in Separate CHIP Programs, May 2014.
56 MACPAC, Report to Congress on Medicaid and CHIP, March 2014.
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Cost Sharing
As with eligibility and benefits, cost-sharing rules depend on a state’s CHIP program design (See
Table 1). Cost sharing refers to the out-of-pocket payments made by beneficiaries of a health
insurance plan, and may include premiums (usually on a monthly basis), enrollment fees,
deductibles, copayments, coinsurance, and other similar charges.
CHIP Medicaid Expansions
CHIP Medicaid expansion children must follow the cost-sharing rules of the Medicaid program.57
Under these rules, the majority of such children are exempt from cost sharing.58 However, CHIP
Medicaid expansion children may still be subject to service-related cost sharing for non-
emergency care provided in an emergency room and for non-preferred prescription drugs.
In addition, CHIP Medicaid expansion children enrolled in certain Medicaid waiver programs
may be subject to cost sharing.
Separate CHIP Programs
If a state implements a separate CHIP program, premiums or enrollment fees may be imposed for
program participation, but the maximum allowable amount is dependent on annual family
income.59 Preventive services and pregnancy-related assistance are exempt from cost sharing for
all CHIP families regardless of income, and special rules also apply to Indian children.
• Families with annual income under 150% FPL: Premiums may not exceed the
amounts set forth in federal Medicaid regulations. Additionally, these families
may be charged service-related cost sharing, but such cos sharing is limited to
(1) nominal amounts defined in federal Medicaid regulations for the subgroup
with annual income below 100% FPL, and (2) slightly higher amounts defined
in CHIP regulations for families with annual income between 100%-150%
FPL.
• Families with annual income above 150% FPL: Cost sharing (program
participation fees and service-related cost sharing) may be imposed in any
amount, provided that cost sharing for higher-income children is not less than
cost sharing for lower-income children, subject to the out-of-pocket aggregate
limit of 5% of annual family income on all types of cost sharing combined. In
addition, states are required to inform families of these limits and provide a
57 §1916 of the Social Security Act.
58 For more information about Medicaid cost sharing rules, see CRS Report R43357, Medicaid: An Overview,
coordinated by Alison Mitchell. An exception to this rule applies for CHIP-eligible pregnant women and infants with
annual income greater than 150% FPL. Such individuals may be charged premiums or enrollment fees in “nominal”
amounts. Nominal amounts are set in regulation and range from $1 to $20 per month, depending on monthly family
income and family size. States are permitted to charge premiums/enrollment fees that exceed these nominal amounts
for certain groups, including CHIP-eligible pregnant women.
59 §2103(e) of the Social Security Act.
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mechanism for families to stop paying once the cost-sharing limits have been
reached.60
The above-referenced study on 42 separate CHIP programs (in 38 states)61 indicates that only two
states (Oregon and South Dakota) did not impose any form of cost sharing in 2013. Thirty
separate CHIP programs imposed premiums or program participation fees. According to the
study, the median monthly premium per child ranged from $10 for families with annual income
less than 150% FPL (in 9 programs) to $33 for families with annual income greater than 301%
FPL (in 14 programs). Twenty-eight separate CHIP programs imposed service-related cost
sharing in amounts that ranged from a low of $0.50 for an office visit or prescription drug in
Georgia, to $200.00 for an inpatient hospital visit in Alabama. While Title XXI sets the annual
aggregate limit for all cost sharing charges at 5% of a family’s annual income, the study found
that 20 programs had cost-sharing limits lower than the 5% cap.62
CHIP Financing and Expenditures
The federal government and the states jointly finance CHIP.63 The federal government reimburses
states for a portion of every dollar they spend on CHIP (for both CHIP Medicaid expansions and
separate CHIP programs) up to state-specific limits called allotments. In FY2013, CHIP
expenditures totaled $13.2 billion. The federal share totaled $9.2 billion and the state share was
$4.0 billion.64
E-FMAP
The federal government pays about 70% of CHIP expenditures, and the federal government’s
share of CHIP expenditures (including both services and administration) is determined by the
enhanced federal medical assistance percentage (E-FMAP) rate. The E-FMAP rate is derived
each year by the HHS Secretary using a set formula, and it varies by state.65 By statute, the E-
FMAP (or federal matching rate) can range from 65% to 85%, and in FY2015, the E-FMAP
60 CHIP cost-sharing limits do not take into account cumulative out-of-pocket costs that may be required for “split
families” for whom, in addition to CHIP, one or more family member(s) may be eligible for subsidized exchange
coverage, and/or enrolled in Medicaid and are simultaneously subject to the cost sharing requirements associated with
each program. This issue is often referred to as “premium stacking.”
61 Anita Cardwell, Joanne Jee, and Catherine Hess, National Academy for State Health Policy and Joe Touschner,
Martha Heberlein, and Joan Alker, Georgetown University Center for Children and Families; Benefits and Cost
Sharing in Separate CHIP Programs, May 2014.
62 For more recent information on state changes to cost sharing requirements under Medicaid and CHIP, see Vernon K.
Smith, Kathleen Gifford, and Eileen Ellis, Health Management Associates and Robin Rudowitz and Laura Snyder,
Kaiser Family Foundation, Medicaid in an Era of Health and Delivery System Reform: Results from a 50-State
Medicaid Budget Survey for State Fiscal Years 2014 and 2015, October 2014. This information has not been
summarized here.
63 For more information about federal CHIP financing, see CRS Report R43949, Federal Financing for the State
Children’s Health Insurance Program (CHIP), by Alison Mitchell.
64 U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, Form CMS-64 data.
65 The E-FMAP is calculated by reducing the state share under the FMAP rate (which is the federal matching rate for
most Medicaid expenditures) by 30%. For more information about the FMAP rate and how it is calculated, see CRS
Report R43847, Medicaid’s Federal Medical Assistance Percentage (FMAP), FY2016, by Alison Mitchell.
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ranges from 65% (13 states) to 82% (Mississippi). See Table A-2 for states’ E-FMAP rates for
FY2015.
The ACA included a provision to increase the E-FMAP rate by 23 percentage points (not to
exceed 100%) for most CHIP expenditures from FY2016 through FY2019. This would increase
the statutory range of the E-FMAP rate to 88% through 100%. With this 23 percentage point
increase, the federal share of CHIP will be significantly higher, which means states are expected
to spend through their limited federal CHIP funding (i.e., state CHIP allotments) faster when the
enhanced rate takes effect.
Available Federal Funding
There are three aspects of CHIP federal funding: the national total appropriation amounts, state
allotments, and expenditures.
• The federal appropriation is the total amount of federal funds appropriated for
CHIP in a fiscal year.
• The state allotments are the federal funds allocated to each state for the federal
share of their CHIP expenditures.
• Federal CHIP expenditures are the actual amount of federal funds spent on
CHIP.
As Figure 2 shows, in FY2013, the federal appropriation for CHIP was $17.4 billion, the CHIP
allotments to states totaled $8.9 billion, and CHIP federal expenditures totaled $9.2 billion. In
FY2013, the federal appropriation was significantly higher than the state CHIP allotments
because the formula establishing the state CHIP allotment amounts does not factor in the federal
appropriation (explained in more detail below). Also, the FY2013 CHIP federal expenditures
were slightly higher than the state CHIP allotments. States have two years to spend their allotment
funds, and the FY2013 federal CHIP expenditures consist of federal funding from each of the
FY2012 and FY2013 state CHIP allotments.
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Figure 2. Federal Funding for CHIP
(FY2013)
$17.4 billion
$8.9 billion
$9.2 billion
Federal Appropriation
State Allotments
Expenditures
Source: §2104(a)(16) of the Social Security Act; Department of Health and Human Services’ Centers for
Medicare & Medicaid Services, “Children’s Health Insurance Program (CHIP); Final Allotments to States, the
District of Columbia, and U.S. Territories and Commonwealths for Fiscal Year 2013,” 78 Federal Register 45208,
July 26, 2013; Centers for Medicare & Medicaid Services’ Office of the Actuary.
Federal Appropriation
The federal appropriation for CHIP is provided in Section 2104(a) of the Social Security Act. This
amount is the overall annual ceiling on federal CHIP spending to the states, the District of
Columbia, and the territories. CHIPRA increased the annual appropriation amounts substantially
beginning in FY2009 and provided appropriations through FY2013. Then, the ACA provided
annual appropriation amounts for an additional two years, and FY2015 is the last year a CHIP
appropriation amount is provided. For FY2014 and FY2015, the annual appropriation amounts
are $19.1 billion and $21.1 billion,66 respectively.
If the federal appropriation is not large enough to cover state allotments in any given year, the
state allotments would be reduced proportionally. Since FY2009, the federal appropriation
amount has been more than sufficient to cover the state allotments.67
66 The FY2015 appropriation is the combination of two half-year appropriations of $2.85 billion from §2104(a) of the
Social Security Act plus a one-time appropriation in the amount of $15.36 billion from §108 of CHIPRA.
67 From FY2002 through FY2008, the federal appropriation amounts were insufficient to cover the full cost of some
states’ CHIP programs. For FY2002 through FY2005, the amount of redistribution funds from other states was enough
to make up the difference, but for FY2006 through FY2008, additional CHIP appropriations were provided to cover the
cost of the federal share of CHIP expenditures.
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State Allotments
State allotments are the federal funds allocated to each state for the federal share of their CHIP
expenditures. CHIPRA established a new allocation of federal CHIP funds among the states based
largely on states’ actual use of and projected need for CHIP funds.68 There are two formulas for
determining state allotments: an even-year formula and an odd-year formula.69
In even years, such as FY2014, state CHIP allotments are each state’s previous year allotment
plus any Child Enrollment Contingency Fund (described below) payments from the previous year
adjusted for health care inflation and child population growth in the state. For even years, the
formula for CHIP allotments can be adjusted to reflect CHIP eligibility or benefit expansions and
increase the allotment amount.
In odd years, state CHIP allotments are each state’s previous year spending (including federal
CHIP payments from the state CHIP allotment, Child Enrollment Contingency Fund payments,
and redistribution funds) adjusted using the same growth factor as the even year formula (i.e.,
health care inflation and child population growth in the state). Since the odd-year formula is
based on states’ actual use of CHIP funds, it is called the “re-basing year” because a state’s CHIP
allotment can either increase or decrease depending on each state’s CHIP expenditures in the
previous year.
State CHIP allotment funds are available to states for two years. As noted above, this explains
why federal expenditures are higher than the state allotments in Figure 2 because the FY2013
federal CHIP expenditures include federal funding from states’ FY2012 and FY2013 allotments.
In addition, the aggregate state CHIP allotment amounts have been lower than the annual federal
appropriation amount because the allotment formulas do not factor in the annual federal
appropriation amount, which means the aggregate state allotment amounts could add up to an
amount greater than or less than the federal appropriation amount. Since FY2009, the aggregate
state CHIP allotment amounts have been significantly lower than the federal appropriation
amount.
The allotment is available to states to cover the federal share of both CHIP benefit and
administrative expenditures.70 However, no more than 10% of the federal CHIP funds that a state
draws down from its CHIP allotment can be spent on non-benefit expenditures including
expenditures for administration, translation services, and outreach efforts.
Shortfall Funding
If a state’s CHIP allotment for the current year, in addition to any allotment funds carried over
from the prior year, is insufficient to cover the projected CHIP expenditures for the current year, a
few different shortfall funding sources are available. These include Child Enrollment
Contingency Fund payments, redistribution funds, and Medicaid funds. Since FY2009, only one
state and one territory have received shortfall funding.
68 Prior to CHIPRA, funds were allocated to states using a statutory formula based on each state’s share of the nation’s
uninsured children and uninsured low-income children.
69 §2104(m) of the Social Security Act.
70 CHIP Medicaid expansion states may use federal Medicaid funds to pay for CHIP administrative expenditures.
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Child Enrollment Contingency Fund Payments
Child Enrollment Contingency Fund payments are available to states with both a funding
shortfall71 and CHIP enrollment (for children) that exceeds a target level.72 As a result, not all
states with funding shortfalls are eligible for Child Enrollment Contingency Fund payments.
The contingency fund formula is based on a state’s growth in CHIP enrollment and per capita
spending. This means that a state may receive a payment from the fund that does not equal its
actual shortfall.
Iowa is the only state that has received Child Enrollment Contingency Fund payments since
FY2009 when the funds were first available.73
Redistribution Funds
After two years, any unused state CHIP allotment funds are redistributed to shortfall states.74 For
redistribution funds, a shortfall state is defined as a state that will not have enough money to meet
projected costs in the current year after counting (1) the current year’s state allotment, (2) unspent
funds from the prior year’s state allotment, and (3) available Child Enrollment Contingency Fund
payments.
If redistributed funds are insufficient to meet the needs of all shortfall states, each shortfall state
receives a proportionate share of the available funds based on the shortfall in each state.
Since FY2009, only Puerto Rico has received redistribution funds.75
Medicaid Funds
For states that designed their CHIP program as a CHIP Medicaid expansion or a combination
program, if the state is still facing a shortfall after receiving Child Enrollment Contingency Fund
payments and redistribution funds, they may receive federal Medicaid matching funds to fund the
shortfall in the Medicaid expansion portion of its CHIP program. When Medicaid funds are used
to fund CHIP, the state receives the lower regular FMAP rate (i.e., federal Medicaid matching
rate) rather than the higher E-FMAP rate provided for other CHIP expenditures. However, while
federal CHIP funding is capped, federal Medicaid funding is open-ended, which means there is
no upper limit or cap on the amount of federal Medicaid funds a state may receive.
71 For Child Enrollment Contingency Fund payments, a state has a funding shortfall if a state’s current year CHIP
allotment plus any unused CHIP allotment funds from the previous year are insufficient to cover the federal share of
the state’s CHIP program. The definition of shortfall funding for Child Enrollment Contingency Fund payments does
not factor in redistribution funds.
72 §2104(n) of the Social Security Act.
73 In FY2011, Iowa had a projected shortfall in federal CHIP funding of $3.8 million. Since Iowa’s CHIP enrollment
exceeded the target level, Iowa was eligible for a Child Enrollment Contingency Fund payment and received $28.9
million. (Medicaid and CHIP Payment and Access Commission, MAC Basics: Federal CHIP Financing, September
2011; Communication with the Centers for Medicare & Medicaid Services in May 2014.)
74 §2104(f) of the Social Security Act.
75 In FY2012 and FY2013, Puerto Rico received $23.7 million and $0.8 million, respectively, in CHIP redistribution
funds. (Communication with the Centers for Medicare & Medicaid Services in May 2014.)
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Federal CHIP Funds Finance Some Medicaid Expenditures
In a few situations, federal CHIP funding is used to finance Medicaid expenditures. For instance,
certain states significantly expanded Medicaid eligibility for children prior to the enactment of
CHIP in 1997.76 These states are allowed to use their CHIP allotment funds to fund the difference
between the Medicaid and CHIP matching rates (i.e., FMAP and E-FMAP rates respectively) to
finance the cost for children in Medicaid above 133% FPL.77
In addition, states may use CHIP allotment funds and receive the more generous E-FMAP rates
for (1) expenditures for children aged six to 18 in families with annual income up to 133% FPL
that had been enrolled in separate CHIP programs who were transitioned to Medicaid on January
1, 2014 as part of the ACA78 and (2) children that moved from CHIP to Medicaid due to the
application of the 5% income disregard.79
CHIP Expenditures
Figure 3 shows actual CHIP expenditures (including both the federal and state share) for FY1998
through FY2013 and projected CHIP expenditures for FY2014 and FY2015. See Table A-2 for
CHIP expenditures by state for FY2013.
Figure 3. CHIP Expenditures, Actual and Projected
($ in billions)
Source: Centers for Medicare & Medicaid Services’ Office of the Actuary.
76 The following 11 states meet the definition: Connecticut, Hawaii, Maryland, Minnesota, New Hampshire, New
Mexico, Rhode Island, Tennessee, Vermont, Washington, and Wisconsin.
77 §2015(g)(4) of the Social Security Act.
78 The E-FMAP rate is not available for children aged 6 to 18 who have access to private health insurance.
79 Centers for Medicare & Medicaid Services, Medicaid and CHIP FAQs: Funding for New Adult Group, Coverage of
Former Foster Care Children and CHIP Financing, December 2013.
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While FY2015 is the last year states are to receive CHIP allotments, there are expected to be
federal CHIP outlays in FY2016 because states will have access to unspent funds from their
FY2015 allotments and unspent FY2014 allotments redistributed to shortfall states (if any).
However, federal CHIP funding is not expected to be sufficient to cover the federal share of
states’ CHIP programs for the entire year, especially with the 23 percentage point increase in the
E-FMAP that is set to begin in FY2016. With this increase to the E-FMAP rate, states are
expected to spend through their CHIP allotments more quickly.
The Future of CHIP
With federal funding for CHIP set to end after FY2015, Congress is actively discussing whether
to continue the program as a part of potential legislation to permanently replace the Medicare
Sustainable Growth Rate (SGR) system.80 In considering the future of CHIP, it is helpful to recall
why the program was created in 1997: to provide affordable health coverage at a time when there
were few other insurance coverage options for low-income children outside of Medicaid. The
health insurance market is far different today, with the enactment of the ACA. Now, if CHIP
funding is exhausted, current CHIP-eligible children could be eligible for Medicaid or potentially
for subsidized coverage in the health insurance exchanges, but not all CHIP-eligible children
would be eligible for these programs and could end up being uninsured without the availability of
CHIP.
Some argue that it is important to continue providing CHIP children with child-specific safety net
coverage because each of the low-income subsidy programs (e.g., CHIP, Medicaid, and
subsidized exchange coverage) plays a unique role in the health care delivery system.81 For
instance, greater cost sharing protections exist for the programs that target families at the lower
ends of the income eligibility spectrum.82 Also, others are wary of providing coverage for
children in the health insurance exchanges because the exchanges are new and there is little
evidence about how coverage in the exchanges compares to CHIP coverage.83
With the current fiscal year being the final year federal CHIP funding is provided in statute,
Congress’s action or inaction will determine the future of CHIP and health coverage for CHIP
children. In considering the future of CHIP, Congress has a number of policy options, which
80 A bipartisan joint committee statement from the House for the Sustainable Growth Rate (SGR) bill released on
March 19, 2015, mentions that an extension of CHIP is to be included in the bill (See http://waysandmeans.house.gov/
news/documentsingle.aspx?DocumentID=398209). Some in the Senate also are interested moving legislation that
would address SGR and the future of the CHIP program. (See http://www.finance.senate.gov/newsroom/ranking/
release/?id=3a1481a0-a650-4af1-ae1e-abd0915158e7).
81 See Tricia Brooks, Martha Heberlein, and Joseph Fu, Georgetown University Health Policy Institute, Center for
Children and Families, Dismantling CHIP in Arizona: How Losing KidsCare Impacts a Child’s Health Care Costs,
May 2014; Anita Cardwell, et al., National Academy for State Health Policy and Georgetown University Health Policy
Institute, Center for Children and Families; Benefits and Cost Sharing in Separate CHIP Programs, May 2014; and
Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP, March 2015.
82 Under CHIP and Medicaid, out-of-pocket spending (including both premiums and cost sharing) is exempt for many
children and pregnant women, and when premiums and cost sharing apply, they cannot exceed 5% of the family’s
income. For the health insurance exchanges, in 2014, the out-of-pocket spending cannot exceed $6,350 for self-only
coverage and $12,700 for coverage other than self-only.
83 Medicaid and CHIP Payment and Access Commission, Report to Congress on Medicaid and CHIP, June 2014;
Tricia Brooks, MACPAC Considers Future of CHIP, Georgetown University Health Policy Institute’s Center for
Children and Families, Say Ahhh! Blog, November 22, 2013.
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include extending federal CHIP funding and continuing the program or letting CHIP funding
expire.84
Extending Federal CHIP Funding
If Congress decides to extend federal CHIP funding, there are a number of policy options to
consider, including the length of the funding extension and whether to make programmatic
changes. Funding could be extended for just a few years (e.g., two or four years) or indefinitely,
and the extension could maintain, phase down, or eliminate the 23 percentage point increase to
the E-FMAP rate. In addition, the extension could make programmatic changes to eligibility,
benefit coverage, or other aspects of the program.
There are a few legislative proposals to extend federal CHIP funding. Senator Sherrod Brown
introduced the Protecting and Retaining Our Children’s Health Insurance Program Act of 2015 (S.
522) on February 12, 2015, and by Representative Gene Green introduced the CHIP Extension
and Improvement Act of 2015 (H.R. 919) on February 12, 2015. In addition, Senator Orrin Hatch,
Representative Fred Upton, and Representative Joe Pitts released a discussion draft of legislation
to extend CHIP funding on February 24, 2015.85
The two introduced bills would extend federal CHIP funding for four years through FY2019 and
maintain the current allotment formula with the 23 percentage point increase to the E-FMAP rate.
The discussion draft also proposes to extend CHIP funding and maintain the current allotment
formula but does not specify the length of the extension of CHIP funding. In addition, the
discussion draft would strike the 23 percentage point increase to the E-FMAP rate and end the
ACA MOE requirement after FY2015.
The two introduced bills would extend the Child Enrollment Contingency Fund, the “qualifying
state” option, the performance bonus payments, the Outreach and Enrollment Grants,86 “Express
Lane” eligibility,87 the Pediatric Quality Measures Program,88 the Quality of Care for Children
Demonstration Project,89 and the Childhood Obesity Demonstration Project,90 but the legislative
84 The policy options discussed herein reflect current law. They do not take into consideration the potential implications
on the ACA coverage provisions from the forthcoming U.S. Supreme Court ruling in King v. Burwell or new
legislation. For more information on the potential implications of the Court’s decision in King v. Burwell, see CRS
Report R43833, Premium Tax Credits and Federal Health Insurance Exchanges: Questions and Answers, by Jennifer
A. Staman, Erika K. Lunder, and Daniel T. Shedd.
85 The discussion draft can be found at http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/
files/114/Analysis/SCHIPDiscussionDraft.pdf.
86 CHIPRA provides grant opportunities to states, local governments, community-based, nonprofit, and other
organizations to support children’s health insurance enrollment and outreach. For more information, see
http://www.medicaid.gov/chip/chipra-grants/chipra-grants.html.
87 CHIPRA created a state plan option for “Express Lane” eligibility whereby states are permitted to rely on a finding
from specified “Express Lane” agencies (e.g., those that administer programs such as Temporary Assistance for Needy
Families, Medicaid, CHIP, and food stamps) for (1) determinations of whether a child has met one or more of the
eligibility requirements necessary to determine his or her initial eligibility, (2) eligibility redeterminations, or (3)
renewal of eligibility for medical assistance under Medicaid or CHIP.
88 CHIPRA established a Pediatric Quality Measures Program (PQMP) to identify pediatric measure gaps and
development priorities, award grants and contracts to develop measures, and revise and strengthen the core measure set,
among other things.
89 Under CHIPRA, the HHS Secretary was required, between FY2009 and FY2013, to award no more than 10 grants to
states for demonstration projects to evaluate ideas to improve the quality of children’s health care.
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details of these extensions vary. H.R. 919 includes additional provisions related to coverage,
outreach and enrollment facilitation, cost sharing, benefit coverage, pediatric quality measures,
and several miscellaneous provisions.
Other changes in the discussion draft include extending the qualifying state option, reducing the
federal matching rate for children above 250% of the federal poverty level, changing the source
of funding for stairstep children, permitting wait-lists of no more than 12 months,91 exempting
state-funded CHIP-equivalent coverage from the individual mandate,92 and reducing Medicaid
and CHIP fraud in the territories.
Letting Federal CHIP Funding Expire
Although FY2015 is the last year for which federal CHIP funding is provided under current law,
states are expected to have federal CHIP spending in FY2016 because states will have access to
unspent funding from prior years. However, unspent federal CHIP funding is not expected to be
sufficient to cover the federal share of most states’ CHIP programs for the entire year, especially
with the 23 percentage point increase in the E-FMAP that is set to begin in FY2016.
According to the Medicaid and CHIP Payment and Access Commission (MACPAC), without
additional federal CHIP funding, one state is expected to have sufficient federal CHIP funding to
cover its CHIP program throughout FY2016. However, MACPAC estimates 11 states would run
out of federal CHIP funding in the first fiscal quarter in FY2016, 9 states would run out in the
second fiscal quarter, 19 states would run out in the third fiscal quarter, and 11 states would run
out in the fourth fiscal quarter.93
There are number of policy options available to Congress if it lets the federal CHIP funding
expire. Congress could let federal CHIP funding expire and take no action. Under this option,
some CHIP enrollees might be eligible to receive Medicaid coverage and some might be eligible
to receive subsidized exchange coverage. Alternatively, Congress could let federal CHIP funding
expire and increase the income eligibility thresholds for Medicaid to cover all CHIP-eligible
children. Another option instead of covering CHIP-eligible children under Medicaid would be to
change the law to ensure all CHIP-eligible children would be eligible for subsidized coverage in
(...continued)
90 CHIPRA required the HHS Secretary to conduct a childhood obesity demonstration project by awarding grants to
eligible entities (e.g., community-based organizations, Federally-qualified health centers, universities or colleges) to
carry out individual programs.
91 CHIP allows states to require periods of uninsurance between disenrollment from private group health coverage and
the beginning of enrollment in CHIP (often referred to as waiting periods) as a method to ensure that coverage
provided under CHIP does not substitute for (or crowd out) coverage under group health plans. The Obama
Administration promulgated regulations that retain the ability of states to impose a waiting period under CHIP but limit
any waiting period to a maximum of 90 days. See 42 C.F.R. §457.805.
92 Beginning in 2014, the ACA requires most individuals to maintain health insurance coverage or otherwise pay a
penalty. Specifically, most individuals are required to maintain minimum essential coverage, which is a term defined in
the ACA and its implementing regulations and includes most private and public coverage (e.g., employer-sponsored
coverage, individual coverage, Medicare, and Medicaid, among others). For more information on the individual
mandate, See CRS Report R41331, Individual Mandate Under ACA, by Annie L. Mach.
93 Chris Peterson and Ben Finder, Extending CHIP: Short-Term Issues, Medicaid and CHIP Payment and Access
Commission, February 26, 2015.
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the health insurance exchanges. Under current law, not all CHIP children would be eligible for
subsidized exchange coverage due to the “family glitch,”94 among other reasons.
These policy options would impact states differently depending on whether a state’s CHIP
program is a CHIP Medicaid expansion or a separate CHIP program. Letting CHIP expire and
moving CHIP enrollees into the Medicaid program would maintain the status quo for the 30% of
the enrollees currently in the CHIP Medicaid expansions, but change coverage for the other 70%
of enrollees currently in separate CHIP programs. Letting CHIP expire and allowing CHIP
enrollees to receive subsidized coverage in the health insurance exchanges would mean all CHIP
enrollees would have to change coverage.
If Congress Takes No Action
If Congress takes no action and CHIP funding runs out, states need to adhere to the MOE
requirements that are in effect through FY2019.95 The MOE requires states to maintain income
eligibility levels for CHIP children through September 30, 2019 as a condition for receiving
Medicaid payments (notwithstanding the lack of corresponding federal CHIP appropriations for
FY2016 through FY2019).96 The MOE requirements impact CHIP Medicaid expansion programs
and separate CHIP programs differently.97
• For CHIP Medicaid expansion programs, when federal CHIP funding is
exhausted, the CHIP-eligible children in these programs continue to be enrolled
in Medicaid but financing switches from CHIP to Medicaid.98 This switch
would cause the federal share of expenditures to decrease from the E-FMAP
rate to the regular FMAP rate, which means the cost of covering these children
would increase for states.
• For separate CHIP programs, states are provided a couple of exceptions to the
MOE: (1) after September 1, 2015, states may enroll CHIP-eligible children
into qualified health plans in the health insurance exchanges99 or (2) states may
impose waiting lists or enrollment caps in order to limit CHIP expenditures. In
addition, in the event that a state’s CHIP allotment is insufficient to fund CHIP
94 Subsidized coverage in the health insurance exchanges is not available to individuals with access to affordable health
insurance. The “family glitch” results from the definition of affordable coverage. Under the ACA, employer-sponsored
insurance is considered affordable if employees’ premiums contributions for self-only coverage (not family coverage)
comprise less than 9.5% of family income. However, there is no limit on the employees’ share of premiums for family
coverage. Due to the “family glitch,” some of the current CHIP enrollees would not be eligible for subsidized coverage
in the health insurance exchanges based on their parent’s access to “affordable” employer-sponsored insurance. For
more information about subsidized coverage in the health insurance exchanges, see CRS Report R41137, Health
Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA) in 2014, by Bernadette
Fernandezhttp://www.crs.gov/pages/Reports.aspx?PRODCODE=R41137.
95 For more information about the ACA MOE requirement and CHIP, see CRS Report R43909, CHIP and the ACA
Maintenance of Effort (MOE) Requirement: In Brief, by Alison Mitchell and Evelyne P. Baumrucker.
96 §2105(d)(3) of the Social Security Act.
97 The HHS Secretary has not issued guidance regarding the impact of the MOE requirements if federal CHIP funding
were to expire.
98 Both the CHIP MOE under §2105(d)(3) of the Social Security Act and the Medicaid MOE under §1902(gg)(2) of the
Social Security Act concurrently apply to the CHIP Medicaid expansion programs.
99 This option is only available to states if the HHS Secretary certifies that the coverage in the health insurance
exchanges is “at least comparable” to CHIP in terms of benefits and cost sharing. However, some children will not be
eligible for subsidized exchange coverage due to the “family glitch.”
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coverage for all eligible children, a state must establish procedures to screen
children for Medicaid eligibility, and enroll those who are Medicaid-eligible.
For children not eligible for Medicaid, the state must establish procedures to
enroll CHIP children in qualified health plans in the health insurance
exchanges that have been certified by the HHS Secretary.
If no additional federal CHIP appropriations are provided, CHIP children in CHIP Medicaid
expansion programs would continue to receive coverage through the Medicaid program through
FY2019,100 but coverage of CHIP children in separate CHIP programs who are not eligible for
Medicaid is reliant on whether the children have access to qualified health plans that are certified
by the HHS Secretary. Under the MOE, if states do not receive a CHIP allotment, after
establishing procedures to enroll all Medicaid eligible children in Medicaid, states are only
required to establish procedures to enroll children in qualified health plans certified by the HHS
Secretary. If there are no certified plans, the MOE does not obligate states to provide coverage to
these children. If there are certified plans, not all CHIP children will be eligible for subsidized
exchange coverage due to the “family glitch” (see footnote 94) among other reasons.
Comparing the Coverage Options
Under each of the policy options outlined above, at least some CHIP enrollees would continue to
have coverage through CHIP, Medicaid, or the health insurance exchanges, but not all CHIP
children would continue to have coverage under each of the policy options. For the children that
would receive coverage under the coverage options, there would be variation among the programs
in terms of benefits, cost sharing, and financing. For example, the exchange coverage and
Medicaid alternative benefit plans (ABP) coverage are required to cover the essential health
benefits (EHBs) while traditional Medicaid coverage and CHIP benefit coverage are not required
to cover EHBs. Also, the cost sharing requirements would likely be higher under subsidized
exchange coverage than under CHIP or Medicaid coverage.101
With respect to financing, under CHIP and Medicaid the coverage for the CHIP enrollees would
continue to be jointly financed by the federal government and states, but moving CHIP children
into Medicaid would increase the state share of expenditures for these children. Under the option
to move CHIP children into the health insurance exchanges, the federal government alone would
fund the subsidized coverage without any contribution from states.
100 CHIP children covered under CHIP Medicaid expansion programs are an optional eligibility group under Medicaid.
However, because the Medicaid MOE for children extends through FY2019, states are not permitted to roll back
Medicaid eligibility for these children without the loss of all Medicaid federal matching funds.
101 According to a GAO comparison of separate CHIP programs to the benchmark plans selected by states in 2012 as
models for the benefits that will be offered through qualified health plans (QHP) in 2014, the benefit coverage is
similar but cost sharing requirements (both premiums and point of service cost sharing) were considerably lower under
the separate CHIP programs. (U.S. Government Accountability Office, Children’s Health Insurance: Information on
Coverage of Services, Costs to Consumers, and Access to Care in CHIP and Other Sources of Insurance, GAO-14-40,
November 2013.)
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Appendix A. CHIP Data by State
Table A-1 provides FY2013 data by state regarding CHIP program type, income eligibility levels,
and enrollment. Table A-2 shows FY2015 CHIP E-FMAP rates and FY2013 CHIP expenditures
(including both federal and state expenditures).
Table A-1. CHIP Program Type, Income Eligibility and Enrollment Information,
by State
FY2013 Program Enrollmenta
Reported
Upper Income
Level for
CHIP
Separate
Total
State and Program Type
Children (%
Medicaid
CHIP
children
Pregnant
as of July 1, 2014
FPL)
expansion
program
enrolled
women
Alabama (S*)
317
–
113,490
113,490
–
Alaska (M)
208
16,566
–
16,566
–
Arizona (S*)
205
–
80,238
80,238
–
Arkansas (C)
216
106,413
2,888
109,301
–
California (C)
416
510,424
1,092,859
1,603,283
–
Colorado (C)
265
–
126,169
126,169
4,873
Connecticut (S)
323
–
18,999
18,999
–
Delaware (C)
217
79
13,101
13,180
–
District of Columbia (M)
324
9,057
–
9,057
–
Florida (C)
215
1,072
472,343
473,415
–
Georgia (S*)
252
–
269,906
269,906
–
Hawai (M)
313
30,979
–
30,979
–
Idaho (C)
190
19,881
25,518
45,399
–
Illinois (C)
318
162,134 174,963
337,097
–
Indiana (C)
255
105,655
46,760
152,415
–
Iowa (C)
380
22,159
61,511
83,670
–
Kansas (S*)
250
–
76,164
76,164
–
Kentucky (C)
218
51,391
32,678
84,069
–
Louisiana (C)
255
140,876
9,092
149,968
–
Maine (C)
213
19,071
10,641
29,712
–
Maryland (M)
322
135,454
–
135,454
–
Massachusetts (C)
305
69,113
79,606
148,719
–
Michigan (C)
217
19,229
70,441
89,670
–
Minnesota (C)
288
91
3,744
3,835
–
Mississippi (S*)
214
–
93,120
93,120
–
Missouri (C)
305
55,017
37,901
92,918
–
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FY2013 Program Enrollmenta
Reported
Upper Income
Level for
CHIP
Separate
Total
State and Program Type
Children (%
Medicaid
CHIP
children
Pregnant
as of July 1, 2014
FPL)
expansion
program
enrolled
women
Montana (C)
266
–
31,496
31,496
–
Nebraska (C)
218
53,790
1,993
55,783
–
Nevada (C)
205
–
20,277
20,277
–
New Hampshire (M)
323
19,450
–
19,450
–
New Jersey (C)
355
90,512
116,249
206,761
291
New Mexico (M)
305
9,368
–
9,368
–
New York (C)
405
–
490,114
490,114
–
North Carolina (C)
216
81,656
201,916
283,572
–
North Dakota (C)
175
2,331
8,950
11,281
–
Ohio (M)
211
286,817
–
286,817
–
Oklahoma (C)
210
140,373
7,538
147,911
–
Oregon (S*)
305
–
128,061
128,061
–
Pennsylvania (S*)
319
–
267,073
267,073
–
Rhode Island (C)
266
24,508
2,069
26,577
349
South Carolina (M)
213
76,191
–
76,191
–
South Dakota (C)
209
13,357
4,275
17,632
–
Tennessee (C)
255
22,906
83,567
106,473
–
Texas (S*)
206
–
1,034,613
1,034,613
–
Utah (S*)
205
–
63,001
63,001
–
Vermont (M)
318
–
7,393
7,393
–
Virginia (C)
205
92,690
104,221
196,911
4,636
Washington (S)
305
–
44,073
44,073
–
West Virginia (S*)
305
–
37,065
37,065
–
Wisconsin (C)
306
92,723
74,569
167,292
–
Wyoming (S*)
205
–
8,815
8,815
–
Total
2,481,333
5,649,460 8,130,793
10,149
Source: MACPAC, Report to Congress on Medicaid and CHIP, March 2014, MACSTATS, Tables 3 and 9, and
Centers for Medicare & Medicaid Services (CMS), Children’s Health Insurance Program Plan Activity, as of July 1,
2014, for information regarding program type.
Notes: State CHIP program type are identified next to the state name with (M) for CHIP Medicaid expansion,
(S) for Separate CHIP program, and (C) for a combination of the two approaches. States with (S*) are
considered a separate CHIP program by the state, but the CHIP program is technically a combination due to the
transition of those aged 6 to 18 up to 133% FPL to Medicaid as required by the ACA.
Enrol ment estimates based on ever enrol ed data. Enrol ment counts reported in the pregnant woman column
reflect enrol ment estimates associated with states that extend coverage to such individuals through the CHIPRA
pregnancy coverage state plan option or through the Section 1115 waiver authority.
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State Children’s Health Insurance Program: An Overview
State reported Upper Income Level for Children (% FPL) represents the highest income eligibility threshold
available in the state either through a CHIP Medicaid expansion, a separate state CHIP, or in combination
states—the highest threshold between the two programs. These thresholds have been certified by the Secretary
of Health and Human Services (HHS) as representing the conversion from the state’s old income counting rules
to the new income counting rules based on MAGI and include the 5% disregard (which the law provides as a
standard disregard).
FPL: Federal poverty level.
a. In FY2013, there were 219,473 adults enrol ed in the CHIP program. CHIPRA terminated CHIP coverage of
nonpregnant childless adults by the end of calendar year 2009, prohibited new states from obtaining waivers
to extend CHIP coverage to uninsured parents, and phased out coverage of parents altogether by FY2014.
Source: MACPAC, Report to Congress on Medicaid and CHIP, March 2014, MACSTATS, Table 3.
Table A-2. E-FMAP Rates and CHIP Expenditures by State
FY2013 CHIP Expenditures
($ in millions)
FY2015 E-
State
FMAP
Total Federal State
Alabama 78.29%
$193.4
$150.8
$42.6
Alaska 65.00
32.8
21.3
11.5
Arizona 77.92
73.9
56.1
17.7
Arkansas 79.62
122.8
95.4
27.4
California 65.00
2,126.8
1,382.4
744.4
Colorado 65.71
227.3
147.7
79.5
Connecticut 65.00
28.0
18.2
9.8
Delaware 67.54
24.6
17.0
7.6
District of Columbia
79.00
18.4
14.5
3.9
Florida 71.80
520.7
367.5
153.2
Georgia 76.86
413.3
313.6
99.7
Hawai
66.56
40.3
26.6
13.7
Idaho 80.23
60.7
48.3
12.4
Illinois 65.53
517.7 336.4 181.3
Indiana
76.56
157.4
121.2
36.2
Iowa 68.88
134.2
96.2
38.0
Kansas 69.64
75.5
52.5
23.0
Kentucky 78.96
184.8
146.7
38.1
Louisiana 73.44
203.3
148.1
55.2
Maine 73.32
37.2
27.5
9.7
Maryland 65.00
258.4
168.0
90.4
Massachusetts 65.00
573.7
372.9
200.8
Michigan 75.88
147.1
112.5
34.7
Minnesota 65.00
19.5
12.8
6.7
Mississippi 81.51
207.5
168.9
38.6
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State Children’s Health Insurance Program: An Overview
FY2013 CHIP Expenditures
($ in millions)
FY2015 E-
State
FMAP
Total Federal State
Missouri 74.42
170.0
124.1
45.8
Montana 76.13
91.5
69.7
21.8
Nebraska 67.29
70.1
48.2
21.9
Nevada 75.05
37.2
26.8
10.5
New Hampshire
65.00
16.7
10.9
5.9
New Jersey
65.00
958.0
586.6
371.5
New Mexico
78.76
144.9
110.0
35.0
New York
65.00
959.9
624.0
335.9
North Carolina
76.12
398.0
302.0
96.1
North Dakota
65.00
26.6
17.7
8.9
Ohio 73.85
381.3
284.1
97.2
Oklahoma 73.61
172.6
129.1
43.5
Oregon 74.84
209.4
154.3
55.0
Pennsylvania 66.27
428.0
291.1
136.9
Rhode Island
65.00
81.1
53.7
27.4
South Carolina
79.45
132.5
105.1
27.4
South Dakota
66.15
24.6
17.0
7.6
Tennessee 75.49
259.6
198.0
61.6
Texas 70.64
1,285.0
918.8
366.2
Utah 79.39
68.6
54.0
14.6
Vermont 67.81
9.0
6.2
2.8
Virginia 65.00
301.0
195.7
105.4
Washington 65.02
122.9
79.9
42.9
West Virginia
79.95
57.9
46.5
11.3
Wisconsin 70.79
140.3
100.7
39.6
Wyoming 65.00
16.4
10.7
5.7
Total
$12,962.4 $8,987.9
$3,974.5
Source: Department of Health and Human Services, “Federal Financial Participation in State Assistance
Expenditures; Federal Matching Shares for Medicaid, the Children’s Health Insurance Program, and Aid to Needy
Aged, Blind, or Disabled Persons for October 1, 2014 Through September 30, 2015,” 79 Federal Register 3385,
January 21, 2014; U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services,
Form CMS-64 data.
Notes: This table does not include CHIP expenditures in the territories or CHIP expenditures under §2105(g)
of the Social Security Act, which permits 11 qualifying states to use CHIP funds to pay the difference between
the FMAP rate (i.e., the federal Medicaid matching rate) and the E-FMAP rate for Medicaid-enrolled, Medicaid-
financed children whose family annual income exceed 133% FPL. These are CHIP funds used to finance children
in Medicaid, and states are not required to match the federal funds provided in §2105(g) of the Social Security
Act.
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State Children’s Health Insurance Program: An Overview
Appendix B. Upper Income Eligibility Levels in
Medicaid, CHIP, and Subsidized Exchange Coverage
State-by-state income eligibility level for Medicaid, CHIP, and subsidized exchange coverage for
infants, children aged 1 to 5, children aged 6 to 18, and pregnant women and unborn children are
provided in Figure B-1, Figure B-2, Figure B-3, and Figure B-4 (respectively).
Most children and pregnant women in families with income under 400% of the federal poverty
level (FPL) are eligible for Medicaid, CHIP, or subsidized exchange coverage. The income
eligibility levels for Medicaid and CHIP vary by state and population (i.e., age of child or
pregnant women), and subsidized exchange coverage102 is available for most children and
pregnant women with incomes between 100% FPL and 400% FPL that do not have access to
other minimum essential coverage,103 such as Medicaid or CHIP.
102 Premium tax credits are provided to certain individuals with household income between 100% and 400% FPL who
do not have access to minimum essential coverage, and these individuals with income between 100% and 250% FPL
could be eligible for cost-sharing subsidies.
103 The definition of minimum essential coverage is broad. It includes Medicare Part A, Medicaid, the State Children’s
Health Insurance Program (CHIP), Tricare, the TRICARE for Life program, the veteran’s health care program, the
Peace Corps program, a government plan (local, state, federal) including the Federal Employees Health Benefits
Program (FEHBP) and any plan established by an Indian tribal government, any plan offered in the individual, small
group, or large group markets, a grandfathered health plan, and any other health benefits coverage, such as a state
health benefits risk pool, as recognized by the HHS Secretary in coordination with the Treasury Secretary.
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State Children’s Health Insurance Program: An Overview
Figure B-1. Upper Income Eligibility Levels for Infants, as a Percentage of the FPL in
Medicaid, CHIP, and Subsidized Exchange Coverage by State
(as of January 1, 2014)
Source: MACPAC, Report to Congress on Medicaid and CHIP, March 2014, MACStats, Table 9.
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State Children’s Health Insurance Program: An Overview
Notes: Upper income levels (% FPL) represent the highest income eligibility threshold available in the state, and
include the 5% disregard (which the law provides as a standard disregard),
It is important to note that CHIP coverage is limited to uninsured children, so children who have health
insurance coverage and fall in the income eligibility range shown for CHIP are nonetheless not CHIP eligible
because of their insurance status.
In one county in California and New York, CHIP coverage for CHIP children extends to a higher income
eligibility threshold than subsidized exchange coverage (i.e., 416% FPL and 405% FPL, respectively).
FPL: Federal poverty level.
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State Children’s Health Insurance Program: An Overview
Figure B-2. Upper Income Eligibility Levels for Children Aged 1 Through 5, as a
Percentage of the FPL in Medicaid, CHIP, and Subsidized Exchange
Coverage by State
(as of January 1, 2014)
Source: MACPAC, Report to Congress on Medicaid and CHIP, March 2014, MACStats, Table 9.
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State Children’s Health Insurance Program: An Overview
Notes: Upper income levels (% FPL) represent the highest income eligibility threshold available in the state, and
include the 5% disregard (which the law provides as a standard disregard),
It is important to note that CHIP coverage is limited to uninsured children, so children who have health
insurance coverage and fall in the income eligibility range shown for CHIP are nonetheless not CHIP eligible
because of their insurance status.
In one county in California and New York, CHIP coverage for CHIP children extends to a higher income
eligibility threshold than subsidized exchange coverage (i.e., 416% FPL and 405% FPL, respectively).
FPL: Federal poverty level.
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State Children’s Health Insurance Program: An Overview
Figure B-3. Upper Income Eligibility Levels for Children Aged 6 Through 18, as a
Percentage of the FPL in Medicaid, CHIP, and Subsidized Exchange
Coverage by State
(as of January 1, 2014)
Source: MACPAC, Report to Congress on Medicaid and CHIP, March 2014, MACStats, Table 9.
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State Children’s Health Insurance Program: An Overview
Notes: Upper income levels (% FPL) represent the highest income eligibility threshold available in the state, and
include the 5% disregard (which the law provides as a standard disregard),
It is important to note that CHIP coverage is limited to uninsured children, so children who have health
insurance coverage and fall in the income eligibility range shown for CHIP are nonetheless not CHIP eligible
because of their insurance status.
In one county in California and New York, CHIP coverage for CHIP children extends to a higher income
eligibility threshold than subsidized exchange coverage (i.e., 416% FPL and 405% FPL, respectively).
FPL: Federal poverty level.
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State Children’s Health Insurance Program: An Overview
Figure B-4. Upper Income Eligibility Levels for Pregnant Women and Unborn
Children, as a Percentage of the FPL in Medicaid, CHIP, and Subsidized Exchange
Coverage by State
(as of January 1, 2014)
Source: MACPAC, Report to Congress on Medicaid and CHIP, March 2014, MACStats, Table 9.
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State Children’s Health Insurance Program: An Overview
Notes: Upper income levels (% FPL) represent the highest income eligibility threshold available in the state, and
include the 5% disregard (which the law provides as a standard disregard),
As of January 2014, 15 states extended CHIP coverage to unborn children in Arkansas, California, Illinois,
Louisiana, Massachusetts, Michigan, Minnesota, Nebraska, Oklahoma, Oregon, Rhode Island, Tennessee, Texas,
Washington and Wisconsin. State income eligibility boundaries associated with the unborn child pathway are not
shown here.
FPL: Federal poverty level.
Author Contact Information
Evelyne P. Baumrucker
Alison Mitchell
Analyst in Health Care Financing
Analyst in Health Care Financing
ebaumrucker@crs.loc.gov, 7-8913
amitchell@crs.loc.gov, 7-0152
Acknowledgments
Nicholas Elan contributed to the preparation of some of the tables and figures included in this report.
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