The Children’s Health Insurance Program Explained

The Children’s Health Insurance Program (CHIP) is administered by the individual states within broad federal guidelines. Chip is jointly funded by the federal government and the individual state governments. The federal government’s contribution to each state’s traditional Medicaid program is determined by the Ffederal Medical Assistance Percentage (FMAP). Under the FMAP, the federal government pays a minimum of 50 percent of a state’s traditional Medicaid costs. The average FMAP payment is 57 percent. In 2017, FMAP contributions range from 50 percent to roughly 75 percent. The Enhanced FMAP, which applies to CHIP, Is about 15 percent higher than a state’s basic FMAP contribution; for example, where a state’s FMAP contribution is 50 percent its Enhanced FMAP rate is 65 percent. The Affordable Care Act added an additional 23 percent boost to the Enhanced FMAP through fiscal year 2019. If a state’s enhanced FMAP to provide children insurance through CHIP is 65 percent, the federal government’s actual contribution in 2017 is 88 percent. In 2017, the federal government is paying on average 93 percent of the cost associated with CHIP. In 2017, the federal government will pay 100 percent of the cost of CHIP in the following states.

  1. Alabama
  2. Arizona
  3. Arkansas
  4. District of Columbia
  5. Idaho
  6. Kentucky
  7. Mississippi
  8. New Mexico
  9. South Carolina
  10. Utah
  11. West Virginia

In Indiana, Maine, Michigan, Montana, Nevada, North Carolina, Oregon, and Tennessee, the federal government is paying at least 98 percent of the cost of CHIp. Currently, 8.9 million children are enrolled in CHIP.

As discussed above, states have wide latitude to determine what benefits they offer through CHIP; however, Medicaid expansion CHIP programs guarantee the standard Medicaid benefits package. This includes all medically necessary services including dental and mental health coverage.

States can charge families with children enrolled in CHIP up to five percent of their income for premiums, copays, coinsurance, diductibles, and enrollment fees. Cost sharing is prohibited for services like well-baby and well-child visits. Families with children enrolled in CHIP or Medicaid must pay something for their child’s health care in 30 states.

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