Children's Health Insurance Program

The Children's Health Insurance Program (CHIP), initiated in 1997, is a federally funded program designed to take a bite out of a rather daunting statistic: the 8.1 million low-income American children who currently go without health insurance.

CHIP aims to provide for children whose parents make too much to qualify for Medicaid but too little to afford private health insurance.

If you think you might be one of those parents, you can get more information about CHIP in your state by calling the nationwide toll-free hotline: (877) KIDS-NOW.

You can also find out more on the Insure Kids Now Web site, which offers information about eligibility in your state and applying for coverage.

Additionally, if you live in New Jersey, Rhode Island, or Wisconsin, as a parent of a CHIP-eligible child, you may also qualify for health insurance under the program.

These three states won special permission to use money from CHIP to cover parents as well as children.

New Jersey and Rhode Island are also allowed to cover pregnant women under CHIP.

Because Medicaid programs are different in every state, CHIP's implementation also varies, but there are a few provisions that each state's plan has to meet.

States have to make sure that CHIP money goes toward covering children who are currently uninsured, rather than toward replacing existing coverage (in other words, shifting Medicaid costs onto CHIP.

They must also prevent private health insurance companies from "crowding out" children and forcing them into the CHIP program.

CHIP gives states three options for devising a plan to cover uninsured children: designing a new children's health insurance program; expanding current Medicaid programs; or a combination of both.

The Department of Health and Human Services must approve each state's plan before it provides CHIP funds.

Out-of-pocket expenses for families must remain minimal to ensure that low-income families can afford the coverage.

If a state decides to start a new program, it may offer one of three benchmark plans: the standard Blue Cross Blue Shield Preferred Provider Option offered to federal employees; a health plan offered to state employees; or the HMO plan with the most enrollees in the state.

It can also offer an "equivalent" of one of these plans, which must include:

  • Inpatient and outpatient hospital services.
  • Physicians' surgical and medical services.
  • Laboratory and X-ray services.
  • Well-baby and child-care services, including immunizations.

If a state's benchmark plan includes prescription drug coverage, mental health services, vision care, and hearing-related expenses, then the "equivalent" plan must also include these benefits.

CHIP plans use the federal poverty level as a basis for determining a family's eligibility.

The federal poverty level for a family of four is $18,100 for 2002. Depending on the state, families who make a certain amount above the federal poverty level can still be eligible for CHIP benefits.

Source: U.S. Department of Health and Human Services Last updated Aug. 1, 2002