Medicaid vs. CHIP: Differences in Children's Health Coverage

Key Takeaways

• Medicaid covers both adults and children, while CHIP focuses only on children.
• CHIP serves children from families with incomes too high for Medicaid.
• Medicaid offers more comprehensive coverage than CHIP.
• Medicaid is jointly funded by federal and state governments.
• States have flexibility in CHIP design and eligibility requirements.

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Comparing Medicaid and CHIP: An Overview

Medicaid and the Children’s Health Insurance Program (CHIP) both support low-income families, but Medicaid covers adults and children, while CHIP focuses on children who don’t qualify for Medicaid.

Each state runs these programs under federal rules, so eligibility and benefits differ by location. Knowing how they compare helps families choose the right coverage for their children.

Discover how Medicaid and CHIP differ in coverage, eligibility, and benefits for low-income children.

Sabrina Jiang / Investopedia

Understanding Medicaid: Coverage for Low-Income Families

Medicaid was enacted in 1965 as part of the Social Security Act to provide health coverage to families with dependent children living below the federal poverty line (FPL). Originally, Medicaid required states to provide coverage for children through age 5 up to 133% of FPL and 100% of FPL for school-age children. Medicaid coverage for children was expanded under the Affordable Care Act (ACA) to cover all children up to 138% of FPL.

Medicaid requires states to cover a broad range of services, including checkups, physician and hospital visits, and vision and dental care. It also requires coverage for early and periodic screening, diagnosis, and treatment (EPSDT), long-term care, and services provided at federally qualified health centers (FQHCs).

Unlike CHIP, Medicaid can provide free or low-cost medical coverage to adults as well.

Important

The FPL is not applied the same nationwide. Some states, such as Hawaii and California, are notably more expensive to live in and raise children in.

When Obamacare, or the Affordable Care Act, was passed in 2010, only certain children were eligible to be covered by Medicaid, even if they were raised in the same family. Before the ACA, only children ages 6 to 19 were affected by the eligibility threshold of only 100% of the FPL. However, since 2010, eligibility is now at least 138% of the FPL for all children, regardless of age.

Exploring CHIP: Expanding Health Coverage for Low-Income Children

CHIP was created as part of the Balanced Budget Act of 1997 to build on Medicaid coverage for low-income children. States are able to utilize federal funds for CHIP to expand their Medicaid program, or create a stand-alone program, or a combination of both. The primary goal of CHIP is to expand the reach of government-funded healthcare coverage to more low-income children.

As part of CHIP, states have simplified the enrollment process, making it easier for children to obtain coverage. Although CHIP covers more children, its coverage options are more limited than Medicaid. For example, CHIP doesn’t offer coverage for EPSDT services.

CHIP was designed to cover children who fall outside of Medicaid eligibility but otherwise were not able to be insured through a family plan. This program vastly increased the number of children eligible for health insurance. However, CHIP is not governed by the same legislation as Medicaid and offers drastically different levels of coverage.

Fast Fact

Certain states have different names for their Medicaid and CHIP programs. For example, in California, both programs are called Medi-Cal. In Georgia, Medicaid is called Georgia Medicaid, but their CHIP program is called PeachCare for Kids.

Key Differences Between Medicaid and CHIP

With almost 69 million enrollees in Medicaid and 7.2 million in CHIP, Medicaid is larger in size and scope than CHIP. Working together, the two programs are coordinated to provide coverage to all low-income children below 300% of the FPL threshold. Although the ACA has established minimum requirements across all healthcare programs, there are still some key differences in the way Medicaid for children and CHIP are administered on a state level.

Comparing Federal Matching Funds for Medicaid and CHIP

The federal government matches state spending for both Medicaid and CHIP. To encourage more participation by states, the CHIP match rate is higher than the Medicaid match rate. On average, states receive 56% in matching funds for Medicaid spending, but they receive 71% for CHIP spending. However, under Medicaid, there are no preset limits or caps for federal matching funds. Under CHIP, matching funds are capped, and states are limited to their specific allotment of funds.

Medicaid vs. CHIP: Coverage Requirements and Flexibility

Although states are allowed a certain amount of flexibility in the design of coverage under Medicaid and CHIP, there are far fewer restrictions in the operation of separate CHIP programs. Medicaid has higher minimum comprehensive coverage requirements that include EPSDT services. States can design CHIP coverage around their minimum coverage requirements and choose to include benefits covered under Medicaid.

Cost Sharing in Medicaid and CHIP: What You Need to Know

Under Medicaid, states are not allowed to impose premiums and cost sharing for mandatory coverage. States that have established a separate CHIP program may impose premiums and cost sharing.

Under the ACA, efforts are being made to better coordinate Medicaid and CHIP in both their coverage options and their administration by the states. The ACA seeks to create a continuum of coverage from the cradle to the grave with the goal of reducing the number of uninsured individuals. Efforts are underway to provide a more streamlined and coordinated enrollment process for states, using the two programs as a way to increase enrollment, especially among children.

How to Apply for Medicaid and CHIP

Determining qualification for Medicaid or CHIP is a rather straightforward process. There is an income calculator on the HealthCare.gov Medicaid page to determine qualification based on income. This is a useful tool, but it does not automatically determine eligibility.

One way to apply for Medicaid and CHIP is through the Health Insurance Marketplace. Once you submit an application, your state agency will contact you regarding enrollment. At the time of application, you will learn if you qualify for an individual plan as well, possibly with some savings based on income.

Important

Parents, grandparents, guardians or other legally authorized representative can apply for benefits on behalf of a child. Teenagers living on their own may also apply for themselves, or any adult may apply for them.

The second way to apply for Medicaid and CHIP is through your state’s Medicaid agency. Following this link will allow you to select your state. Once your state is selected, you will be able to follow a provided URL that directs you to the Medicaid homepage for your state’s Medicaid agency.

Are Teenagers Eligible for Medicaid or CHIP?

Teenagers are eligible in every state up to the age of 19. This does not automatically mean they are covered, and you would still need to apply regardless of the child’s age between 0 and 19.

If I Have a Job, Do My Children Still Qualify for Medicaid or CHIP?

You having a job in and of itself does not determine a child’s eligibility. In fact, many children receive coverage in families where one or both parents have jobs. Some parents are unable to afford their own insurance, or do not have health insurance plans through their employers.

What Do Medicaid and CHIP Cover?

Each state provides fairly comprehensive coverage for children. This can include items such as routine checkups, prescriptions, emergency room services, mental health services, and others. However, each state will vary in its coverage of specific benefits.

The Bottom Line

Medicaid and CHIP both provide healthcare coverage for low-income children, with Medicaid also covering eligible adults. Medicaid offers broader benefits and no cost sharing for required services, while CHIP gives states more flexibility on premiums and coverage.

Income limits differ by state, but together, they insure children up to about 300% of the federal poverty line. Families can apply through the Health Insurance Marketplace of their state Medicaid agency.