Federal Financing for the State Children’s Health Insurance Program (CHIP)

Summary. The State Children’s Health Insurance Program (CHIP) is a means-tested program that provides health coverage to targeted low-income children and pregnant women in families that have annual income above Medicaid eligibility levels but have no health insurance. CHIP is jointly financed by the federal government and the states, and the states are responsible for administering CHIP. The federal government’s share of CHIP expenditures (including both services and administration) is determined by the enhanced federal medical assistance percentage (E-FMAP) rate. Statutorily, the E-FMAP can range from 65% to 85%. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) included a provision to increase the E-FMAP rate by 23 percentage points for most CHIP expenditures from FY2016 through FY2019. With this increase, the E-FMAP ranges from 88% to 100%. The federal appropriation for CHIP is provided in statute. From this federal appropriation, states recei