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Medicaid Policy Home > Children's Health Insurance (CHIP) > CHIP Development CHIP Development

The State Children's Health Insurance Program (CHIP) was established by the Balanced Budget Act of 1997 as Title XXI of the Social Security Act. It permits states to expand children's health coverage to children whose family incomes exceed the requirements for Medicaid, but are insufficient to afford private insurance coverage. The new program makes approximately $4 billion a year in federal grants available to states to provide health coverage to children less than 19 years of age with family incomes at or below 200 percent of the federal poverty level. Federal funds may be used to expand Medicaid, create a new, non-entitlement program, or implement a combination of these programs. As a result of the flexibility given to states under Title XXI, CHIP should be thought of primarily as a funding source, and not as a program per se.

Beginning July 1, 1998, Indiana implemented the first phase of CHIP as an expansion of Hoosier Healthwise, the Medicaid managed care program, to provide health coverage to children below the age of 19 with family incomes of no more than 150 percent of the federal poverty level. Since October 1, 1997, the State has also received federal CHIP reimbursement for children born before October 1, 1983 with family incomes of no more than 100 percent of the federal poverty level. The federal reimbursement rate for Indiana's CHIP in federal fiscal year 1999 (October 1, 1998, through September 30, 1999) was 72.71 percent, and the rate for federal fiscal year 2000 is 73.22 percent.

In September 1999, the Office submitted an amendment to Indiana's original CHIP State Plan to the Health Care Financing Administration (HCFA) requesting authorization to implement the second phase of CHIP as a non-Medicaid, state-designed program that provides coverage to uninsured children less than 19 years of age who are members of families with annual incomes greater than 150 percent of the federal poverty level and not more than 200 percent of the federal poverty level. On December 22, 1999, the Office received authorization of the amendment from HCFA and the program began January 1, 2000.

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