Great news for children’s health insurance: A new federal regulation recently finalized by the Centers for Medicare & Medicaid Services (CMS) eliminates dangerous and outdated burdens that kept children from receiving care through the Children’s Health Insurance Program (CHIP). 

Called “Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes,” the rule eliminates CHIP waiting periods, lock-outs for nonpayment, as well as annual and lifetime dollar limits.

CHIP waiting periods

The final rule does away with outdated waiting periods that were imposed on children after they voluntarily disenrolled from  a group health insurance plan, such as a parent’s employer-sponsored plan. When CHIP was established in 1997, states were required to make sure that CHIP did not substitute for group health insurance. One method states used was to impose a period of time a child must remain uninsured before enrolling in CHIP. First Focus on Children has advocated for eliminating these CHIP waiting periods for many years. Many states ended waiting periods after the Affordable Care Act limited them to 90-days. However, as of February 2024, nine states still required children to remain uninsured for a period of time before they could sign on to CHIP.  The final rule ensures that no child eligible for CHIP will be forced to go without coverage, preventing critical gaps in their health care.

Lock-outs for nonpayment

The rule will prevent states from imposing mandatory “lock-out” periods on children whose families cannot keep up with their state’s CHIP premiums. Still used in a dozen states, “lock outs” keep children from re-enrolling in CHIP for a certain period of time after they lose coverage due to non-payment of premiums. The child is forced to go without coverage until the end of the lock-out period, even when the family can afford to pay the overdue premiums.

Annual and lifetime dollar limits

States can no longer set annual or lifetime dollar limits on specific benefits or services in separate CHIPs. States have several options for how they implement CHIP. States can choose 1) to expand Medicaid coverage for children (funded with CHIP dollars; a.k.a M-CHIP); 2) design a separate CHIP; or 3) use a combination approach. Most states use a combination approach. For those kids enrolled in M-CHIP, a state must follow Medicaid rules. For separate CHIPs, states have greater flexibility in designing benefits packages, a policy that has led some states to limit certain benefits and services, such as dental and mental health care, including imposing annual and lifetime caps. Medicaid does not allow annual or lifetime limits, and the Affordable Care Act extended these protections to other populations. The new rule means states can no longer impose these limits on specific benefits that children who are enrolled in separate CHIPs need.

More than 4.6 million children have lost their health care coverage to date as a result of the Medicaid unwinding. They now face gaps in essential care that could force them to miss preventative treatments, delay necessary care, and struggle to manage chronic conditions. Neglecting these conditions can lead to serious health problems, hinder development, and cause issues that impact a child’s health for years to come. The Biden Administration’s action to finalize this rule is a critical step toward improving the nation’s health care system to better serve children and ensure they can access the physical and mental health care they need.  

For questions, please contact Abuko D. Estrada, J.D., Vice President, Medicaid and Child Health Policy