Medicaid was designed for people at very low incomes. CHIP was designed for the other kind of family: the one where both parents work, earn too much for Medicaid, and either don’t get offered family coverage at work or can’t afford the $600-a-month paycheck hit when they add the kids to the plan. A lot of hourly workers land in that middle zone, and CHIP is what covers the children.
CHIP (the Children’s Health Insurance Program) is federal-state health coverage for kids under 19. Every state runs one, though some call it something else. Florida KidCare. New York’s Child Health Plus. Texas CHIP. Dental, vision, prescriptions, mental health, hospital care are all included. Monthly premiums, if any, are low, and they’re capped at 5% of family income for the year.
CHIP vs the other options you’re probably comparing
| CHIP | Medicaid (kids) | Employer family plan | ACA Marketplace | |
| Who it covers | Kids under 19 | Kids, pregnant women, some adults | Whole family | Whole family |
| Income limit | Usually 200-400% FPL (varies) | Usually 138-150% FPL for kids | None | Subsidies up to 400% FPL |
| Monthly cost | $0 to ~$50 per family | Free | $400-$900+ for family add-on | Varies; subsidies available |
| Deductibles | None or very low | None | $1,000-$6,000 typical | Varies |
| Copays | $0 to $5 per visit | $0-$4 | $20-$50 per visit | Varies |
| Dental/vision | Always included | Yes | Usually separate plan, extra cost | Varies |
| Prescriptions | Yes | Yes | Yes, with copay | Yes |
The employer column is where CHIP really makes sense. Retail and food service workers routinely pay $500 to $900 a month just to add their kids to a company plan with a $3,000 deductible. CHIP runs free or close to it and has no deductible.
Who qualifies
CHIP income limits vary more than any other federal benefit, because each state sets its own cap. Most states land between 200% and 300% of the Federal Poverty Level. New York, Iowa, and a handful of others go up to 400%. Practically speaking, a family of four earning under about $64,300 in 2026 qualifies in most states, and a family of four earning up to about $128,600 qualifies in the highest-limit states.
Beyond income, the rules are simpler than Medicaid. The child needs to be under 19, a U.S. citizen, national, or qualified immigrant, and not currently covered by other health insurance when you apply. Most states have a 90-day waiting period if you just voluntarily dropped private coverage, though that’s waived if you lost it involuntarily (job loss, employer dropping the plan). The child can’t be incarcerated or in an institution.
One thing not on that list: the parents’ immigration status. In every state, a child who is a U.S. citizen or qualified immigrant can get CHIP regardless of their parents’ status.
What CHIP covers
Every state’s CHIP is required to cover the same core benefits. Doctor visits and well-child checkups. Immunizations, free. Prescriptions. Dental, including cleanings, fillings, and often braces when medically necessary. Vision, including eye exams and glasses. Hospital stays and ER visits. Mental health and substance use treatment. Labs, X-rays, and imaging. Physical, occupational, and speech therapy.
Some states add more. Texas CHIP has a short list of enhanced services. Florida KidCare has a separate track for kids with special health needs. Your state’s CHIP website lists what’s included. Copays run $0 to $5 for most services, and there’s an annual family out-of-pocket cap so surprise bills don’t add up.
How CHIP and Medicaid work together
In most states, CHIP and Medicaid are integrated. You apply once, the state decides which program fits based on income, and you get enrolled in whichever applies. In other states, CHIP has a separate application, but the documents are the same either way. Go to healthcare.gov and start an ACA application; at the income step the system screens your kids for Medicaid and CHIP automatically. Or apply directly at your state’s CHIP website, which tends to be faster.
If your family’s income drops (lost a shift, cut hours, separation), your kids may shift from CHIP to Medicaid without a new application in most states. If income rises, they might shift to CHIP or, if over the limit, to the Marketplace with subsidies. Nothing lapses during the transition as long as you respond to state renewal notices on time.
Employer family coverage you can’t afford
This one affects almost every retail and food service parent. Under a rule that used to be called the “family glitch,” kids could be forced off CHIP because a parent had “affordable” employer self-only coverage, even if family coverage cost hundreds more a month. The IRS fixed this in 2022. The test now looks at family coverage affordability separately.
In plain terms: if your employer’s family plan costs more than about 9.1% of household income (for the lowest-cost plan), your kids can still qualify for CHIP or Marketplace subsidies. You don’t have to pay for the employer plan first. COBRA and benefits after termination cover related situations.
Applying
Three routes, all of them work.
Start an ACA application at healthcare.gov or your state exchange. Answer the income questions, and the system routes your kids to Medicaid or CHIP as appropriate. This is the most flexible path because it screens all three programs at once.
Go direct to your state CHIP website. Search “[your state] CHIP” or the state-specific name (KidCare, Child Health Plus). Faster if you already know your family is in the CHIP income range and not in Medicaid territory.
Call 1-800-318-2596 for the federal Marketplace or your state’s CHIP enrollment line. Useful for non-English speakers or for anyone who wants to walk through the questions with a person.
You’ll need each child’s Social Security number (or immigration document number), proof of income (usually last four pay stubs or last year’s tax return), proof of address, and any existing insurance information. Processing takes 10 to 45 days depending on state. Coverage usually starts the first of the month after approval.
Renewals are the thing people miss
CHIP enrollment is annual. The state sends a renewal notice 30-60 days before your child’s coverage lapses. Miss it and coverage ends, which is how most disenrollments happen. Paperwork, not eligibility.
If your phone number or address changes, update it with the state the same day. That’s the channel the notice comes through. If you’ve already lost CHIP in the last 90 days and think it was a paperwork issue, call the state enrollment office and ask about reinstatement. Most will restore coverage without a new application.
CHIP and your taxes
CHIP doesn’t count as income for tax purposes. It doesn’t reduce your Earned Income Tax Credit. It doesn’t interfere with your Child Tax Credit. It’s public health insurance, not welfare, and using it has no effect on your tax return beyond checking a box on Form 1095-B.
For hourly workers in retail, food service, healthcare, or any other sector where employer family coverage is unaffordable, CHIP is usually the best coverage available for the kids, and in most cases it’s free. That’s who it was designed for.