CHIP financing

CHIP

Regardless of program design, states’ CHIP spending is reimbursed by the federal government at a matching rate higher than Medicaid’s. CHIP’s enhanced federal medical assistance percentage (E-FMAP) varies by state, historically ranging from 65 percent to 81 percent, compared to 50 percent to 73 percent for children in Medicaid. In fiscal years (FYs) 2016 through 2019, the CHIP matching rate is increased by 23 percentage points, ranging from 88 percent to 100 percent. In FY 2020, the matching rate will be increased by 11.5 percent, and in FY 2021 and subsequent years, the matching rate will return to the regular CHIP E-FMAP. (Click here to find state-specific matching rates.)

Unlike Medicaid, federal CHIP funding is capped. Federal CHIP allotments are provided to states annually, with amounts based on each state’s recent CHIP spending increased by a growth factor. (Click here to find state-specific allotments.) States have two years to spend each allotment, with unspent funds available for redistribution to other states.

In FY 2018, the Further Additional Continuing Appropriations Act (P.L. 115-96) provided semi-annual allotments for the first half of FY 2018, and then the HEALTHY KIDS Act provided a full year allotment for FY 2018 and provided funding for CHIP allotments through FY 2023 (P.L. 115-120). In February 2018, the Bipartisan Budget Act of 2018 funded CHIP for four more years, through FY 2027.

In addition to redistribution funds, federal CHIP contingency funds are available to qualifying states that exhaust their CHIP allotments and meet child enrollment targets. The most recent extension of CHIP funding reauthorized payments from this fund through FY 2027 (P.L. 115-120).