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Children’s Health Insurance Program (CHIP) – Coverage & How It Works


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In 1996, 10.6 million American children — roughly one out of every seven kids in the country — had no health insurance, according to a report from the Census Bureau. For kids from low-income families, the numbers were even worse; nearly one out of four poor children were uninsured. By 2015, according to a report from the Georgetown University Health Policy Institute, the number of uninsured children had fallen to 3.5 million. More than 95% of all U.S. kids were now insured, more than at any point in the country’s history.

There were two big factors behind this change. One was the 2010 Affordable Care Act (ACA), commonly known as Obamacare. The other was a government program that’s not as well-known but is just as crucial for our country’s children: the Children’s Health Insurance Program, or CHIP. This program provides low-cost health coverage to kids whose families can’t easily afford health care but aren’t poor enough to qualify for Medicaid.

According to the Medicaid website, CHIP provided coverage for 9.6 million kids nationwide in 2018. That same year, the U.S. Census Bureau reports, Medicaid and CHIP together provided coverage for over 35% of all children in the country.

How CHIP Works

In 1993, after President Bill Clinton’s attempt to provide universal health coverage for Americans failed, the administration and its allies in Congress set its sights on a narrower goal. They aimed to expand coverage for children.

After several years of wrangling, Congress finally passed a bill in 1997 that established the State Children’s Health Insurance Program, or SCHIP (later shortened to CHIP). It set up this new program as a partnership between federal and state governments. Each state runs its own program but receives part of its funding from the federal government.

Each year, the Centers for Medicare & Medicaid Services (CMS) allots funds for CHIP to each state. To do this, it adjusts the amount the state got the year before to account for changes in the child population and the cost of health care.

However, before the states can get their share of the federal funds, they must provide matching funds out of their own budgets. According to the Medicaid and CHIP Payment and Access Commission (MACPAC), the federal government pays for about 93% of the total cost of the program, and the states cover the other 7%.

Once states get their CHIP funds, they decide how to distribute them to children in need. Each state has its own CHIP program, which works closely with the state’s Medicaid program. Some states simply call the program CHIP; others use unique names such as Healthy and Well Kids in Iowa (Hawki) and Dr. Dynasaur in Vermont.

The states can make their own decisions about who qualifies for CHIP, what benefits to provide, and how closely the program is tied to the state Medicaid program. A 2018 MACPAC fact sheet shows that eight states, five territories, and the District of Columbia run CHIP solely as an expansion of Medicaid. Two states treat it as a completely separate program, and 40 treat it as a combination program.


Who Uses CHIP?

All state CHIP programs cover children from birth through age 18 who have no other health coverage and are not eligible for Medicaid. Some states have expanded coverage to include pregnant women as well. Groups particularly likely to rely on CHIP include:

1. Low-Income Working Families

All states limit eligibility for CHIP to families with income below a certain level. This cutoff varies from 170% to 400% of the federal poverty level (FPL). According to the 2018 MACPAC fact sheet, nearly 9 out of 10 children covered by CHIP are from families making less than twice the FPL.

However, that doesn’t mean these children are from “welfare families.” According to a 2019 study in Health Affairs, more than half of low-income working parents rely on Medicaid and CHIP to cover their children. For those who are eligible, it’s usually cheaper than private insurance from their workplace, and it often provides better coverage.

2. Ethnic Minorities

According to a 2020 fact sheet on children’s coverage from the Georgetown University Health Policy Institute, children from certain ethnic minority groups are particularly likely to receive coverage under CHIP or Medicaid. In 2018, 57% of all Black children, 56% of Native American children, and 55% of Latino children had Medicaid or CHIP coverage. By contrast, the percentage for white and Asian children was less than 33%.

3. Those in Rural Communities

According to a 2014 report by First Focus, children in rural areas are also especially likely to rely on CHIP and Medicaid. The report found that in 2012, 47% of rural children got health coverage from these programs, compared to 38% of urban children.

4. Special-Needs Children

According to the Kaiser Family Foundation, nearly half of all children with special health needs received coverage from CHIP or Medicaid in 2017. That includes children with a variety of chronic physical, emotional, and developmental conditions, including autism, cerebral palsy, and Down syndrome.

5. Working Parents Without Affordable Family Coverage

CHIP helps many families caught in the ACA family glitch, which prevents some workers from getting affordable health insurance for their families. Because of this problem, workers who have access to affordable health insurance coverage at work for themselves, but not for their families, aren’t allowed to receive subsidies for family coverage.


What CHIP Covers

Because each state has its own CHIP program, the exact benefits provided vary from state to state. However, all states cover the basics, including:

  • Routine care, such as checkups, other doctor visits, and immunizations
  • Hospital care, including inpatient and outpatient care as well as emergency services
  • Prescription medicines
  • Medical tests, including lab work and X-rays
  • Additional services that many employer-sponsored health plans don’t include, such as dental and vision care

Individual states can choose to cover additional benefits besides those listed here, such as speech and language therapy or hearing aids. To learn about what benefits your state covers, check the website of your state’s CHIP program, which you can find through InsureKidsNow.gov.

Not all doctors and pharmacies accept CHIP. If a family signs up for CHIP and their current health provider doesn’t accept it, they can sometimes keep seeing that provider for a little while, but only until they’re able to find another one. However, it’s up to the state program to decide whether this is allowed.

In most states, you can find out which providers accept CHIP by visiting the state’s Medicaid or CHIP website. If the website doesn’t have this information, call the number for your state Medicaid or CHIP agency. The phone number should appear on the website and in the documents you receive when you sign up for the program.


Costs for Patients

Regular medical and dental checkups, or “well child” visits, are always free under CHIP. However, individual states can choose to require copayments for other services. The 2018 MACPAC fact sheet shows that 24 states require cost sharing for at least some services.

In addition, some states charge CHIP families a monthly premium for their coverage. According to the fact sheet, 17 states charge premiums averaging $25 per child per month for families with incomes higher than twice the FPL. Seven states charge premiums averaging $18 per child per month for families with incomes about 150% of the FPL. However, a family’s total costs for CHIP, including premiums and copayments, can’t add up to more than 5% of its income.

This rule makes CHIP much more affordable than most other health insurance plans for children. A 2017 study by the Bipartisan Policy Center found that the average family using CHIP spent just $158 per year on health care premiums and cost sharing. By contrast, if those same families had to buy silver-level plans through the ACA health insurance marketplace, even if they received subsidies for this coverage, they would have paid an average of $1,073 per year out of pocket.

That $900 difference looks like a lot, but it’s just the average amount. For children with serious medical conditions, the cost difference would be even higher. The report indicates that if children with special health care needs had to move from CHIP to private coverage through the health insurance marketplace, their families could end up paying more than $10,000 per year for health care.


How to Apply for CHIP

To qualify for CHIP, you must have a household income below the cutoff set by your state. This limit varies from state to state, falling somewhere between 130% and 320% of the federal poverty level. This chart from Medicaid.gov shows the 2020 income limits for both Medicaid and CHIP in all 50 states.

If you’re not sure about your eligibility for CHIP or Medicaid in your state, you can find out by applying. Unlike most health insurance plans available through the federal health insurance marketplace, CHIP and Medicaid don’t have a specific open enrollment period, so you can apply for them at any time.

There are three ways to apply for CHIP or Medicaid:

  • By Phone. Call 1-800-318-2596 (TTY: 1-855-889-4325) to reach customer service for the federal health insurance marketplace.
  • Online. Fill out an application through the online health insurance marketplace at HealthCare.gov. If your application shows that you or anyone in your household qualifies for Medicaid or CHIP, the system will automatically send your information on to your state Medicaid agency. The state agency will then contact you to help you enroll.
  • Through Your State Agency. You can also go directly to your state CHIP program to apply. To find the program for your state, visit InsureKidsNow.gov and click on the link for your state — the site will show you information about the CHIP and Medicaid programs in your state, along with a link to apply for benefits.

Final Word

Although CHIP can be a literal lifesaver for children in need of health care, it can’t do anything to help their parents. If you’re a parent or parent-to-be in need of affordable health care, your best bets are Medicaid coverage and the Obamacare subsidies. If you fill out an application through the health insurance marketplace at HealthCare.gov, you can find out whether you qualify for Medicaid or a subsidized health care plan.

Unfortunately, some low-income people can’t qualify for coverage under either program. If you fall into this category, you may be able to find emergency financial assistance to help with health care in the form of free clinics, drug discount programs, and other sources of affordable medical care. These resources can help you keep yourself healthy while CHIP looks after your kids.

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