SCHIP is a block grant program in which the federal government makes a capped amount of new funding available for each fiscal year. This capped funding is divided annually among the states into state-specific allotments, determined by a formula set out in the law.

SCHIP funds generally must be used to provide coverage to uninsured, low-income children who do not qualify for regular Medicaid. States also can use a limited amount of funds for administrative costs and other non-coverage initiatives, such as outreach. Under waivers, some states use SCHIP funds for other purposes, including coverage for parents.

The federal government pays for 65 percent to 83 percent of each state’s SCHIP initiatives (depending on the state). The match rate is based on the regular Medicaid match rate, but is significantly higher. Unlike Medicaid, however, the amount that a state can draw down for SCHIP is capped. See federal matching rates.

See the SCHIP Financing page for more information.