DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop: S2-26-12 
Baltimore, Maryland 21244-1850 
 
 
 
 
 
 
 
SHO #23-004 
 
RE: Section 5112 Requirement for 
all States to Provide Continuous 
Eligibility to Children in Medicaid 
and CHIP under the Consolidated 
Appropriations Act, 2023  
 
 
 
September 29, 2023 
 
Dear State Health Official:  
 
Section 5112 of the Consolidated Appropriations Act, 2023 (CAA, 2023) amended titles XIX 
and XXI of the Social Security Act (the Act) to require that states1 provide 12 months of 
continuous eligibility (CE) for children under the age of 19 in Medicaid and the Childrens 
Health Insurance Program (CHIP) effective January 1, 2024.  The Centers for Medicare & 
Medicaid Services (CMS) is issuing this State Health Official (SHO) letter to provide states with 
guidance on implementing this requirement. 
 
This letter provides background on the importance of CE in preventing interruptions that impede 
access to health coverage to support better short- and long-term health outcomes,2 and describes 
policies related to implementing CE under the CAA, 2023 amendments.  We also discuss the 
differences between the CE requirements that exist today and those specified in the CAA.  This 
letter also clarifies which states will need to submit Medicaid and CHIP state plan amendments 
(SPA) and reminds states that section 1115 demonstration authority may also serve as a 
mechanism to extend the CE period for children beyond 12 months and/or to apply CE to adults.  
 
 
1 For the purposes of this letter, states refer to the 50 states, the District of Columbia, and the United States 
territories of American Samoa, Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. 
Virgin Islands. 
2 Brooks, T., & Gardner, A. (2021). Continuous Coverage in Medicaid and CHIP. Georgetown University Center for 
Children and Families. Retrieved from: https://ccf.georgetown.edu/wp-content/uploads/2012/03/CE-program-
snapshot.pdf  
 
 
  Page 2  State Health Official Letter 
 
 
I. Background 
 
A. Importance of CE for Medicaid and CHIP Children  
 
CE provides coverage to children in Medicaid and CHIP for a full 12-month period regardless of 
changes in circumstances with certain exceptions as described in more detail throughout this 
letter. 
 
Research has shown that children who are disenrolled for all or part of the year are more likely to 
have fair or poor health care status compared to children who have health coverage continuously 
throughout the year.3  Guaranteeing ongoing coverage ensures that children have continuous 
access to the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefit, which 
includes comprehensive and preventive health care services for children under age 21 who are 
enrolled in Medicaid.  Some states also offer EPSDT in their separate CHIP.  EPSDT is key to 
ensuring that children and adolescents receive appropriate preventive, dental, mental health, 
developmental, and specialty services.  Stable coverage enables health care professionals to 
provide EPSDT within a well-developed relationship with children and their parents, track their 
health and development, and avoid expensive emergency room visits.  
 
In addition to improving short- and long-term health status, CE has been shown to reduce 
financial barriers to care for low-income families, promote health equity, and provide states with 
better tools to hold health plans accountable for quality care and improved health outcomes.4 
Additionally, the literature shows that CE policies are cost-effective for both families and states 
by mitigating the impact of income volatility on enrollment, as children lose and then regain 
eligibility when their familys income fluctuates.  When families maintain coverage year-round, 
it reduces the administrative burden on state agencies due to repeated eligibility reviews and re-
enrollment after a gap in coverage.5  
 
CE has been shown to reduce rates of churn, or the percentage of children who disenroll in 
Medicaid and re-enroll within the year.  For example, one analysis found that the churn rate was 
lower in states with 12-month CE (2.9 percent) than in states without CE (5.3 percent).6 
 
3 Brantley, E., & Ku, L. (2022). Continuous eligibility for Medicaid associated with improved child health 
outcomes. Medical Care Research and Review, 79(3), 404-413. 
4 Park, E., Alker, J., & Corcoran, A. (2020). Jeopardizing a Sound Investment: Why Short-Term Cuts to Medicaid 
Coverage During Pregnancy and Childhood Could Result in Long-Term Harm. Retrieved from: 
https://www.commonwealthfund.org/publications/issue-briefs/2020/dec/short-term-cuts-medicaid-long-term-harm  
5 Georgetown University. (2021). Advancing Health Equity for Children and Adults with a Critical Tool: Medicaid 
and Childrens Health Insurance Program Continuous Coverage. Retrieved from https://ccf.georgetown.edu/wp-
content/uploads/2021/10/continuity-of-coverage-final.pdf 
6 Williams, E., Corallo, B., Tolbert, J., Burns, A., & Rudowitz, R. (2021). Implications of Continuous Eligibility 
Policies for Childrens Medicaid Enrollment Churn. Retrieved from https://www.kff.org/medicaid/issue-
brief/implications-of-continuous-eligibility-policies-for-childrens-medicaid-enrollment-churn/ 
  Page 3  State Health Official Letter 
 
Additionally, CE helps to address racial and ethnic disparities by reducing churn rates in groups 
disproportionately impacted by disenrollment.7  
 
Many states elected to provide CE in Medicaid and/or CHIP before enactment of the CAA in 
December 2022.  As of September 2023, 21 states had implemented CE for children in both 
Medicaid and CHIP.  An additional 11 states had implemented CE in at least one program. 
During the COVID-19 public health emergency (PHE),8 CE protected families and children from 
experiencing gaps in coverage, and also demonstrated that CE improves access to care,9  
continuity of coverage and lowers the uninsured rate for children.10  
 
II. CE Requirements  
 
A.  Overview and Exceptions to CE 
 
Current State Plan Option  
 
Under section 1902(e)(12) of the Act, implemented at 42 CFR 435.926, states have long had the 
option to provide 12 months of CE to children under age 19 in Medicaid.  A similar option exists 
in CHIP at 42 CFR  457.342.  States have had the flexibility to elect a younger age limit and/or 
a shorter CE period in both programs.  Currently, children under the state-specified age who are 
determined eligible for Medicaid or CHIP at initial application or a regularly-scheduled annual 
renewal remain eligible for Medicaid or CHIP for the duration of the CE period regardless of 
most changes in circumstances (CIC) that may affect eligibility, such as: 
 
  Changes in income or household composition,  
  Loss of Supplemental Security Income (SSI) for children eligible for Medicaid based on 
their eligibility for SSI, or  
  Obtaining other health insurance for children enrolled in CHIP.  
 
 
7 Georgetown University. (2021). Advancing Health Equity for Children and Adults with a Critical Tool: Medicaid 
and Childrens Health Insurance Program Continuous Coverage. Retrieved from https://ccf.georgetown.edu/wp-
content/uploads/2021/10/continuity-of-coverage-final.pdf 
8 See Section 6008 of the Families First Coronavirus Response Act (P.L. 116-127). 
9 Vasan, A., Kenyon, C., Fiks, A. G., & Venkataramani, A. S. (June 2023). Continuous Eligibility and Coverage 
Policies Expanded Childrens Medicaid Enrollment: Study examines state continuous eligibility and coverage 
policies and childrens Medicaid enrollment during COVID-19. Health Affairs, 42(6), 753-758. 
10 Alker, J., Osorio, A., Park, E., Guest, Brooks, T., &amp; Schneider, A. (December 2022). Number of uninsured 
children stabilized and improved slightly during the pandemic. Center for Children and Families. Retrieved from 
https://ccf.georgetown.edu/2022/12/07/number-of-uninsured-children-stabilized-and-improved-slightly-during-the-
pandemic-2/  
  Page 4  State Health Official Letter 
 
Medicaid and CHIP regulations11 establish limited exceptions to this general rule, and when a 
CIC can result in termination of eligibility during a CE period. A child's eligibility may not be 
terminated during a CE period unless one of the following exceptions applies:12  
 
(1) The child attains age 19 or a lower age specified by the state;  
(2) The child or childs representative requests a voluntary termination of eligibility;  
(3) The child ceases to be a resident of the state;  
(4) The agency determines that eligibility was erroneously granted at the most recent 
determination, redetermination, or renewal of eligibility because of agency error or fraud, 
abuse, or perjury attributed to the child or the child's representative; or  
(5) The child is deceased.  
 
The CHIP regulation also provides two additional CHIP-specific exceptions:  
 
(6) The child becomes eligible for Medicaid; and  
(7) At state option, the family fails to pay premiums or enrollment fees. 
 
Changes to CE under the CAA, 2023 
 
Section 5112 of the CAA, 2023 amended section 1902(e)(12) and added a new paragraph (K) to 
section 2107(e)(1) of the Act to require one year of CE under the state plan or a waiver of the 
state plan for children under age 19 enrolled in Medicaid and CHIP, effective January 1, 2024.  
The amendments to section 1902(e)(12) of the Act explicitly provide for an exception to CE for 
children who: 
 
  Reach age 19; or  
  Cease to be state residents.   
 
Section 2107(e)(1)(K) of the Act applies these exceptions through cross reference to section 
1902(e)(12) of the Act.  In the case of a child transferred from CHIP to Medicaid during a CE 
period, the state must maintain the childs enrollment in Medicaid for the remaining duration of 
their current CE period (unless the child experiences another exception to the provision of CE 
provided under the statute).  
The following current regulatory exceptions, discussed above, are not explicitly identified in the 
CAA, 2023.  However, states will be expected to take appropriate steps to terminate eligibility in 
the following situations, including providing required Medicaid and CHIP notice and appeals 
rights with sufficient advanced notice.13,14 
 
11  435.926(d) and 457.342(b) 
12 For Medicaid, termination of coverage during a CE period must comply with notice and explanation of fair 
hearings process requirements at part 431 Subpart E. For separate CHIP, termination of coverage during a CE period 
must comply with the requirements for notice and explanation of rights to a review process at  457.340(e) and 
457.1180.  
13 42 CFR part 431, subpart E and  457.340(e) and 457.1180  
14 CMS is still assessing how non-payment of premiums intersects with CE under the CAA.  We intend to issue 
separate guidance on this topic. 
 
  Page 5  State Health Official Letter 
 
 
  The child or childs representative requests a voluntary termination of eligibility (same as 
#2 above);  
  The agency determines that eligibility was erroneously granted at the most recent 
determination, redetermination or renewal of eligibility because of agency error or fraud, 
abuse, or perjury attributed to the child or the child's representative (same as #4 above); or 
  The child is deceased (same as #5 above). 
 
 
 
 
B.  Populations Covered under CE 
 
Section 1902(e)(12) of the Act, as amended by the CAA, 2023, applies to all children under age 
19 who are enrolled under the state plan in a mandatory or optional Medicaid eligibility group 
described in section 1902(a)(10)(A) of the Act and implementing regulations at 42 CFR part 435 
subparts B and C.15  Section 2107(e)(1)(K) of the Act, added by the CAA, 2023, applies to all 
targeted-low income children16 enrolled in a separate CHIP under the state plan.  This includes 
targeted low-income children covered from-conception-to-end-of-pregnancy (FCEP) option. 
States also are required to provide CE to children enrolled in Medicaid or CHIP under a section 
1115 demonstration.  
 
States are not required to provide 12 months of CE to children who have only established 
eligibility through medically needy Medicaid coverage under section 1902(a)(10)(C) of the Act, 
or children who have been determined presumptively eligible for Medicaid or CHIP consistent 
with section 1920A of the Act, but who have not yet received a determination of eligibility based 
on a regular application.  States also are not required to provide 12 months of CE to children 
who, upon a renewal, are determined to only be eligible for Medicaid based on transitional 
medical assistance (TMA) under section 1925 of the Act. (See discussion below on Duration of 
CE Period.) 
 
Effective January 1, 2024, states will no longer have the option to limit CE in both Medicaid and 
CHIP to children under an age (up to age 19) specified by the state, or apply CE to a subset of 
children in CHIP.  
 
C.  Duration of CE Period 
 
 
15 This includes children eligible under the mandatory group codified at  435.121 for individuals age 65 or over or 
who have disabilities or blindness in section 209(b) states as well as children who are eligible under section 
1902(e)(3) of the Act and  435.225 (relating to individuals under age 19 who would be eligible for Medicaid if they 
were in a medical institution, commonly referred to as the Katie Beckett group). Section 1902(f) generally 
requires that individuals eligible in a 209(b) states mandatory eligibility group for individuals 65 years old or who 
have blindness or disabilities be considered eligible under section 1902(a)(10)(A) of the Act. Similarly, section 
1902(e)(3) of the Act requires that Katie Beckett enrollees be treated as SSI beneficiaries.  
16 Targeted low-income child is defined in Section 2110(b) of the Act and  457.310. 
  Page 6  State Health Official Letter 
 
Effective January 1, 2024, states that have adopted a period of less than 12 months under existing 
policy will need to extend the CE period for children to 12 months as this policy is no longer 
permissible under the CAA.  
 
Beginning of CE Period for New Applicants  
 
Current Medicaid regulations17 specify that the CE period for new applicants determined eligible 
for coverage begins on the effective date of the individual's eligibility  either the date of 
application or the first day of the month when the application is submitted, depending on the 
states election.18  Current CHIP regulations19 specify that the CE period begins on the effective 
date of the childs eligibility.20  States have the flexibility to determine the effective date of 
eligibility based on the date of application or another reasonable methodology that ensures 
coordinated transition of children between CHIP and other insurance affordability programs as 
family circumstances change to avoid gaps or overlaps in coverage.  
 
Sections 1902(e)(12) and 2107(e)(1)(K) of the Act, as amended by the CAA, 2023, do not 
expressly address when a childs CE period begins.  Therefore, the current Medicaid and CHIP 
regulations governing the beginning of the CE period for new applicants will continue to apply 
to children enrolled in Medicaid or CHIP on or after January 1, 2024, when the requirement to 
provide CE to children under age 19 in Medicaid and CHIP goes into effect.  
 
Beginning of CE Period Following a Periodic Renewal of Eligibility 
 
States must renew eligibility for Medicaid and CHIP beneficiaries whose financial eligibility is 
determined using Modified Adjusted Gross Income (MAGI)-based methodologies every 12 
months and no more frequently than once every 12 months.21  States must renew eligibility for 
Medicaid beneficiaries excepted from MAGI-based financial methodologies at least once every 
12 months, but may conduct regular renewals more frequently but no more frequently than every 
six months.22  We refer to the period between regular renewals as the eligibility period.  
 
For children whose Medicaid or CHIP eligibility is being redetermined at a regular renewal, 
current regulations provide that the CE period begins on the effective date of the individual's 
renewal, which begins a new eligibility period.23  Because almost all children have 12-month 
eligibility periods and the 12-month CE period begins on the effective date of the childs most 
recent determination or redetermination of eligibility, a childs CE period generally will align 
with their renewal cycle.24  
 
17  435.926 
18  435.915 
19  457.342 
20 457.340(g) 
21  435.916(a) and 457.343 
22 435.916(b) 
23  435.926 and 457.342 
24 The only exception would involve children enrolled in Medicaid whose eligibility is not based on MAGI if the 
state has elected a shorter renewal period permitted under  435.916(b). For these individuals, states may only act on 
changes in circumstance that fall into one of the exceptions to the provision of CE discussed in section II.A of this 
SHO letter.     
  Page 7  State Health Official Letter 
 
 
Current Enrollees Whose Eligibility Period Ends After January 1, 2024 
 
Because the CE period is based on the effective date of the childs last eligibility determination 
(either at initial application or last renewal), for states newly implementing CE children under 
age 19 enrolled in Medicaid and CHIP will receive CE for the remainder of their eligibility 
period based on the date of their last determination.  For example, Elijah is enrolled in a state that 
implements CE for the first time on January 1, 2024.  Elijahs most recent determination of 
eligibility was completed in September 2023, and his current eligibility period began on October 
1, 2023.  Effective January 1, 2024, the state must provide Elijah with CE for the remainder of 
his 12-month eligibility period (through September 30, 2024), unless he experiences one of the 
exceptions to the provision of CE discussed in section II.A of this SHO letter.  States that already 
implement CE for a 12-month period will continue to provide CE through a childs existing CE 
period.  States that currently provide less than 12 months of CE will have to extend a childs CE 
period to 12 months. 
 
Interaction of CE and Continuous Enrollment during the COVID-19 PHE Unwinding Period  
 
Congress enacted the Families First Coronavirus Response Act (FFCRA) at the start of the 
COVID-19 Public Health Emergency (PHE) on March 18, 2020.  Section 6008 of the FFCRA 
allowed states to claim a temporary 6.2 percentage point increase in Federal Medical Assistance 
Percentage (FMAP) if they met certain conditions, including a continuous enrollment condition 
to keep nearly all individuals, including children, continuously enrolled in Medicaid for most of 
the period while the COVID-19 PHE was in effect.  The CAA, 2023 amended section 6008 of 
the FFCRA to end the continuous enrollment condition on March 31, 2023.  While the 
continuous enrollment provision was not applicable to separate CHIPs, some states obtained 
authority through a CHIP disaster relief SPA to delay processing renewals or through a section 
1115 demonstration to authorize continuous coverage in CHIP, which had the similar result of 
maintaining continuous enrollment of children in CHIP.  
 
CMS recognizes that states will be in the process of unwinding when mandatory CE for children 
becomes effective.  As a result, states likely will have some children whose eligibility was not 
renewed during the 12-month period preceding January 1, 2024.  
 
For children who have not had a determination or renewal of eligibility within the 12 months 
preceding January 1, 2024, and whose renewal during the unwinding period is conducted on or 
after that date, states will begin a new CE period when the renewal during the states unwinding 
occurs, provided that the child is determined to be eligible at that time.  For example, Mias last 
redetermination was August 1, 2021.  The state initiates a renewal for Mia during its unwinding 
period in December 2023.  The state typically takes three months to complete the renewal for a 
given cohort, such that Mias coverage is expected to end or be renewed effective March 1, 
2024.  The state determines that she is still eligible for Medicaid. Mias CE period will align with 
her new eligibility period, beginning March 1, 2024, and extending through February 28, 2025. 
 
Conversely, if the state had determined Mia was ineligible when the state completed her renewal, 
Mias coverage would end effective March 1, 2024.  Mia no longer gets the benefit of CE 
  Page 8  State Health Official Letter 
 
because her last redetermination was completed more than 12 months ago (August 1, 2021) and 
the state has determined that she no longer meets eligibility requirements. 
 
D.  Acting on Information from Electronic Data Sources During a CE Period  
 
Changes in Circumstances Experienced Between Renewal Periods  
 
As noted above, states must renew eligibility for CHIP and MAGI-based Medicaid beneficiaries 
once a year and may renew eligibility for MAGI-excepted Medicaid beneficiaries more 
frequently.25  States also are expected to have procedures in place designed to ensure that 
beneficiaries make timely and accurate reports of any CICs that may affect their eligibility, and 
to redetermine eligibility when such changes are reported.26  States also can elect to obtain 
information from reliable outside sources (e.g., through conducting periodic data matches (PDM) 
with electronic data sources) between regular renewals to detect CICs that may impact eligibility.  
 
For children entitled to a 12-month CE period, states may not terminate eligibility based on CICs 
either reported by the family or detected through a PDM prior to the childs regularly scheduled 
renewal (which is conducted at the end of the childs eligibility period), unless the change relates 
to one of the exceptions to CE listed in section II.A of this letter.   
 
Since children are protected from termination due to most CICs, but adults are not, states cannot 
delay acting on CICs that may impact eligibility for adults ages 19 or older that are also enrolled 
in Medicaid or CHIP.  When both children and adults in a given household are enrolled in 
Medicaid or CHIP, states must ensure that, when acting on a CIC that impacts the eligibility of a 
household member age 19 or older, the eligibility of a child in a CE period is not impacted unless 
the change relates to one of the exceptions to CE in section II.A of this letter. 
 
Post-Enrollment Verification 
 
In processing applications, states have the option to enroll individuals based on self-attested 
information and conduct required verifications post-enrollment, consistent with the states 
verification plan.27  This process is commonly referred to as "post-enrollment verification." 
Children who have been determined eligible for Medicaid or CHIP based on attested information 
are entitled to a 12-month CE period. States may not terminate coverage for such children during 
a CE period if, in conducting post-enrollment verification, the state obtains information that 
indicates that the child does not meet all of the eligibility requirements unless the information 
indicates that one of the limited exceptions to CE discussed in section II.A of this letter applies 
(e.g., the child turns age 19 or ceases to be a state resident).  Such information is considered a 
CIC, and the childs coverage may not be terminated.  Rather, the child must remain eligible for 
coverage through the end of the 12-month period following the effective date of eligibility based 
 
25 As mentioned earlier, if states conduct renewals for MAGI-excepted beneficiaries more than once a year, states 
may only act on changes in circumstance that fall into one of the exceptions to the provision of CE discussed in 
section II.A of this SHO letter.     
26  435.916(c) and (d), and  457.343 
27 Per  435.945(j) and 457.380(j), states are required develop, and update as needed, a verification plan that 
describes the verification policies and procedures. 
  Page 9  State Health Official Letter 
 
on the initial determination.  As long as the attested information indicates that the child is 
eligible, the state is not considered to have made an erroneous determination, even if there is an 
inconsistency between the attested information and information subsequently obtained from 
electronic data sources after enrollment.28  
 
III. Considerations for Specific Populations  
 
A.  Summary of Existing Medicaid Incarceration Policies  
 
 
Medicaid: Eligibility for Children who Become Incarcerated  
 
Federal law provides that incarceration status does not preclude eligibility for Medicaid. 
Individuals who are incarcerated are eligible for Medicaid if they otherwise meet all eligibility 
requirements under the state plan.  However, the provision of federal financial participation 
(FFP) for inmates of a public institution under Medicaid, including children, is limited to 
inpatient services that are furnished to the individual while admitted to a medical institution for 
at least a 24-hour inpatient stay.29  This policy does not apply to children who have attested to 
being a U.S. citizen or in a satisfactory immigration status,30 and who are receiving benefits 
during a reasonable opportunity period (ROP),31 if the state is unable to verify the childs status 
during the ROP. 
 
To comply with the FFP limitation, states historically have either terminated or suspended 
coverage for Medicaid beneficiaries who become incarcerated.  However, the Substance Use 
Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and 
Communities Act (SUPPORT Act) prohibits the termination of eligible juveniles who are 
incarcerated and instead requires states to suspend their Medicaid coverage for the duration of 
 
28 Children whose citizenship or satisfactory immigration status is not verified have not been determined eligible for 
Medicaid or CHIP. If a state is unable to verify a childs status prior to the end of the ROP, the state must take action 
within 30 days, to terminate benefits in accordance with  435.956(b)(3) and 457 380(b)(1)(ii).  
29 For additional information on when individuals are considered an inmate of a public institution see  435.1010 
and State Health Official Letter # 16-007 available at https://www.medicaid.gov/sites/default/files/Federal-Policy-
Guidance/Downloads/sho16007.pdf. Subdivision (A) of the matter following section 1905(a)(30) of the Act limits 
the provision of FFP to inpatient services provided to individuals who are incarcerated. For purposes of this payment 
exclusion, medical institutions include hospitals, nursing facilities, intermediate care facilities for individuals with 
intellectual disabilities, and to facilities pursuant to the inpatient psychiatric services available for individuals under 
age 21 through the EPSDT benefit, including psychiatric residential treatment facilities. To qualify for the medical 
institution exception, services must be covered under the states Medicaid plan, delivered in a prescribed setting in a 
way that is consistent with other terms of the states Medicaid plan, and provided by a certified or enrolled provider 
that maintains compliance with federal requirements. 
30 Applicable regulations are at  435.406(a) and 457.320(d), 
31 Applicable reasonable opportunity period regulations are at  435.956(b) and 457.380(b)(1)(ii). 
  Page 10  State Health Official Letter 
 
their incarceration.32,33  To comply with these requirements, states can elect to either suspend 
benefits or eligibility when a child in Medicaid is incarcerated:34  
 
  Under a benefits suspension, individuals who become incarcerated continue to be eligible 
for Medicaid, but coverage is limited only to inpatient services.  When benefits are 
suspended, the state must complete regular annual renewals and redetermine eligibility 
when the incarcerated individual experiences a CIC that may impact their eligibility for 
the duration of the individuals incarceration.  
 
  Under an eligibility suspension, the individuals Medicaid eligibility is not terminated, but is 
effectively paused.  Eligibility can be reinstated if the individual needs covered inpatient 
services.  Depending on when the individuals last full determination was conducted (i.e., at 
application or most recent regular renewal), the state may need to conduct a renewal prior to 
reinstating eligibility.  When eligibility is suspended, a state may, but is not required to, conduct 
regular annual renewals.  We also note that states electing to suspend eligibility will need to 
conduct a redetermination prior to release35 for individuals who were determined eligible more 
than 12 months prior to the date of release, if the state has not redetermined eligibility within the 
12-month period preceding release.   
 
Medicaid: CE for Children who Become Incarcerated 
 
Current Medicaid regulations36 do not include incarceration as a permissible reason to end a 
childs CE period in Medicaid if a state has elected to provide CE.  The CAA, 2023 does not 
change the current policy.  Therefore, if a child becomes incarcerated during their CE period, the 
child remains eligible for the remainder of the CE period while incarcerated.  
 
During a CE period, states that implement a benefits suspension for children in Medicaid who 
become incarcerated may not act on CICs that occur, unless the CIC triggers one of the 
exceptions to CE listed in section II.A of this SHO letter.  This means that the child would be 
eligible for any necessary inpatient services under Medicaid until the end of their CE period.  
The state would complete an annual renewal at the end of a childs CE period.  
 
During a CE period, states that implement an eligibility suspension would not take CICs into 
account if a child in Medicaid needed inpatient services while incarcerated prior to their annual 
renewal.  Under an eligibility suspension, if a child in a carceral setting needed inpatient services, 
the state only would consider whether the childs last eligibility determination was within the 
 
32 Section 1001 of the SUPPORT Act, Public Law 115-271, enacted October 24, 2018, added section 1902(a)(84) of 
the Act. 
33 An eligible juvenile is defined as an individual who is under 21 years of age or an individual eligible under the 
mandatory eligibility group for former foster care children who was determined eligible for Medicaid prior to 
becoming or while an inmate of a public institution.  
34 See SMDL #21-002 Implementation of At-Risk Youth Medicaid Protections for Inmates of a Public Institution 
(Section 1001 of the SUPPORT Act) (available at https://www.medicaid.gov/sites/default/files/2021-
12/smd21002.pdf) for additional information regarding suspension strategies available under Medicaid. 
35 States are required to redetermine eligibility for eligible juveniles prior to their release from a carceral facility 
consistent with section 1902(a)(84)(B) of the Act. See SMDL #21-002 for more information.  
36  435.926 
  Page 11  State Health Official Letter 
 
previous 12 months, such that the child is still in their CE period.  If it has been more than 12 
months since the childs last eligibility determination, the childs CE period would have expired, 
and the state would need to redetermine their eligibility prior to providing inpatient services. 
 
B.  Summary of CHIP Incarceration Policies 
  
CHIP: Eligibility for Children who Become Incarcerated 
Unlike in Medicaid, incarceration status is a factor of eligibility in CHIP.  A child who is an 
inmate of a public institution is excluded from the statutory definition of a targeted low-income 
child and therefore, without CE, a child who is in a carceral setting is ineligible for a separate 
CHIP.37 
 
CHIP: CE for Children who Become Incarcerated  
 
Under current CHIP regulations,38 incarceration is not an exception to CE.  Thus, in the case of a 
child currently enrolled in CHIP, incarceration is not a permissible reason to terminate coverage 
during a CE period.  This means that children determined eligible for CHIP at initial application 
or renewal who later become incarcerated during a CE period, remain eligible.  In addition, these 
children continue to receive services that are covered under the CHIP state plan through the end 
of their CE period, if the services are not otherwise provided by the carceral setting.  However, if 
a child remains incarcerated at the end of their CE period, the state must terminate the childs 
CHIP coverage because they no longer meet the definition of a targeted low-income child.  
 
CHIP: Modifications under the CAA, 2023 to CHIP Eligibility for Children who Become 
Incarcerated  
 
The CAA, 2023 amendments to sections 1902(e)(12) and 2107(e)(1)(K) of the Act do not 
explicitly change the incarceration policy for CHIP enrollees in a CE period. However, another 
provision in the CAA, 2023, has led us to reconsider the policy for operationalizing CE for 
children enrolled in a separate CHIP who become incarcerated.  Specifically, section 5121 of the 
CAA, 2023 added a new section 2102(d) of the Act to require, effective January 1, 2025, that 
[s]tate[s] shall not terminate eligibility for child health assistance under the State child health 
plan for a targeted low-income child because the child is an inmate of a public institution, but 
may suspend coverage during the period the child is such an inmate.  
 
The language added at section 2102(d) of the Act is virtually identical to the existing Medicaid 
requirements at section 1902(a)(84) of the Act, which require states to suspend coverage rather 
than terminate individuals because they are an inmate of a public institution.  Due to the 
similarity of the language, we look to the current interpretation of section 1902(a)(84) of the Act 
and its interaction with CE for children enrolled in Medicaid in considering the appropriate CE 
policy for children who become incarcerated while enrolled in CHIP. 
 
 
37 Section 2110(b)(2)(A) of the Act and regulations at  457.310 define targeted low-income child. 
38  457.342 
  Page 12  State Health Official Letter 
 
States may continue to utilize a suspension option for children who are incarcerated before or 
after the January 1, 2025 effective date of section 5121 of the CAA.  Prior to January 1, 2024, 
only states with CE may elect this suspension option, but after January 1, 2024, all states may 
elect suspension when CE becomes mandatory.  States may revise their state plans at any time to 
demonstrate that they suspend CHIP coverage.  States electing to suspend CHIP coverage may 
choose one of the suspension options discussed in detail under the subheading above entitled 
Medicaid: Eligibility for Children who Become Incarcerated.  States will also retain the option 
to continue to provide all CHIP-covered services to incarcerated youth not otherwise paid for by 
the carceral setting through the end of their CE period.   
 
Regardless of whether the state elects to suspend coverage or to provide benefits during a CE 
period, states must maintain children in CHIP who become incarcerated for the duration of their 
CE period, unless they experience an exception to CE.  If a targeted low-income child is released 
from the carceral setting before the CE period ends, the state would be required to reinstate 
coverage and benefits without conducting a redetermination of eligibility.  However, if a child 
remains incarcerated when their CE period ends, states must redetermine eligibility and 
terminate the childs CHIP eligibility.  This policy will change on January 1, 2025, the effective 
date of section 5121 of the CAA, 2023.  At that time, states will no longer be permitted to 
terminate eligibility of an incarcerated child at the end of the CE period, but they may suspend 
coverage.  
Additional guidance related to section 2102(d) of the Act and section 5121 of the CAA, 2023 
will be forthcoming. 
  
C.  From-Conception-to-End-of-Pregnancy Option  
 
Under  457.10, states have the option to provide coverage in order to provide prenatal care and 
other pregnancy-related benefits from conception to end of pregnancy to pregnant individuals, if 
they are not eligible for Medicaid or CHIP.39 
 
Under section 2107(e)(1)(K) of the Act, states must provide CE to those eligible under the FCEP 
option in the same manner as CE for targeted low-income children.  The duration of the CE 
period, however, will depend on how states pay for labor and delivery services.  
 
Currently, states generally must enroll the pregnant individual, if eligible, for coverage of 
services necessary to treat an emergency medical condition, which includes labor and delivery 
(Emergency Medicaid).  The only exception to this general rule is if the pregnant individual is 
ineligible for Emergency Medicaid or the state uses a bundled or global payment40 to cover 
prenatal, labor and delivery, and postpartum care in CHIP.  
 
The duration of CE depends on whether a state enrolls the pregnant individual into Medicaid for 
coverage of labor and delivery or pays for the delivery under CHIP, as follows: 
  
 
39 See the October 2, 2002 final rule at https://www.federalregister.gov/documents/2002/10/02/02-24856/state-
childrens-health-insurance-program-eligibility-for-prenatal-care-and-other-health-services-for  
40 See CMS SHO #02-004; available at https://healthlaw.org/wp- 
content/uploads/2018/09/cms_release_on_prenatal_care_for_fetuses.pdf  
  Page 13  State Health Official Letter 
 
  Emergency Medicaid pays for labor and delivery. Under the Medicaid deemed newborn 
requirement, the newborn will be deemed eligible for Medicaid at birth (regardless of 
family income), so the child is automatically eligible for continuous coverage in 
Medicaid until their first birthday.41  Because the newborn is eligible for Medicaid, the 
CHIP CE period that began on the effective date of coverage under the FCEP option ends 
at birth. 
 
  CHIP pays for labor and delivery. Many newborns will be eligible for Medicaid, if their 
familys income is at or below the Medicaid income standard for infants, even though 
labor and delivery was covered by CHIP.  Therefore, the state must screen the newborn 
for potential eligibility for Medicaid at birth.  Such screening must be based on 
information available to the state without contacting the individual, unless additional 
information is needed to verify the specific change in circumstances.42  Depending on the 
result of this screen, the state must take a different action: 
 
a.  The screening identifies potential eligibility for Medicaid. The state must 
transition the newborn to Medicaid for the remainder of their 12-month CE period 
(beginning on the effective date of coverage under the FCEP option) consistent 
with section 2107(e)(1)(K) of the Act.  Alternatively, the state may choose to 
provide a new 12-month CE period in Medicaid from the date of the 
determination if the state has enough information available to it to determine 
eligibility with respect to all eligibility criteria without requiring additional 
information or documentation from the family.43  
 
b.  The screening does not indicate potential eligibility for Medicaid. The state must 
maintain the newborns coverage in CHIP for the duration of the 12-month CE 
period (beginning on the effective date of coverage under the FCEP option). 44  If 
the screening indicates the child remains eligible for CHIP, the state may begin a 
new 12-month CE period if it has enough information available to redetermine 
CHIP eligibility with respect to all eligibility criteria without requiring additional 
information or documentation from the family.45  
  
We note that, while states may continue using bundled payments to provide postpartum care to 
those eligible under the FCEP option, states can also provide postpartum care through a health 
services initiative (HSI).46  Covering labor and delivery under Medicaid and postpartum care for 
 
41 Requirements for deemed newborns are at  435.117. When the deemed newborn reaches their first birthday, the 
state must conduct a renewal of eligibility in accordance with  435.916. 
42 See 457.350(b) for CHIP screening and enrolling procedures.   457.350(b) cites to  457.343, which 
incorporates Medicaid regulations about changes in circumstances by cross referencing  435.916(d)(1).  
43  435.916(d)(1)(ii) 
44 If the newborn continues to appear eligible for CHIP, states may move the child from the FCEP eligibility 
category to another CHIP eligibility category for the remainder of their 12-month CE period as long as the change 
does not result in a loss of benefits or an increase in cost sharing. States may not contact the childs family for 
additional information in order to move the newborn to a new CHIP eligibility category. 
45  457.343, which incorporates by cross reference  435.916(d)(1)(ii)) 
46 January 12, 2017 Health Services Initiatives FAQs (https://www.medicaid.gov/federal-policy-
guidance/downloads/faq11217.pdf) for more information. 
  Page 14  State Health Official Letter 
 
the parent through an HSI may be beneficial for both the parent and child.  Infants whose birth is 
not paid for as part of a bundled payment that are deemed eligible for Medicaid47 are entitled to 
Medicaid eligibility for one year and receive the mandatory EPSDT benefit in Medicaid, which 
is an optional benefit in CHIP.  States also generally impose lower premiums and cost sharing 
charges under Medicaid compared to CHIP.  Additionally, by using an HSI for postpartum care, 
states can provide the same comprehensive postpartum coverage to all pregnant individuals 
across Medicaid and CHIP for up to 12 months, not just the postpartum services covered through 
a bundled payment.  
 
IV. State Plan Amendments (SPAs) 
 
All states that must newly adopt CE for children in Medicaid and/or CHIP will need to submit a 
Medicaid and/or CHIP SPA.  
 
In addition, states that currently have CE will need to submit a Medicaid and/or CHIP SPA to 
come into compliance with new sections 1902(e)(12) and 2107(e)(1)(K) of the Act, if the state 
imposes CE restrictions that are no longer permissible effective January 1, 2024  that is, if, 
under the states current CE policy:  
 
  CE only applies to a subset of children under age 19, such as targeting a specific age 
range; or 
  The CE period is shorter than 12 months. 
    
States that currently provide CE in a manner that is consistent with sections 1902(e)(12) and 
2107(e)(1)(K) of the Act, as amended by the CAA, 2023, will not be required to submit a SPA. 
States whose Medicaid CE SPA was approved prior to MACPro (i.e., the state submitted a 
paper-based SPA), will need to attest to being in compliance in MACPro.  
 
States must submit CE-related SPAs for Medicaid through MACPro and CHIP SPAs through the 
Medicaid Model Data Lab (MMDL).  
 
For Medicaid, to have an effective date of January 1, 2024, states will need to submit their SPA 
no later than March 31, 2024, in accordance with Medicaid regulations.48  For CHIP, to have an 
effective date of January 1, 2024, states must submit their SPA no later than the end of the state 
fiscal year in which January 1, 2024 falls.49   
 
V. Section 1115 Demonstration Authority  
 
States may also request CE for children for more than a 12-month period, or multi-year CE, 
through section 1115 demonstration authority.  CMS has approved demonstration authority in a 
 
47  435.117 
48  430.12 and 430.20 
49
 457.60 and 457.65  
 
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few states to provide CE for longer than 12 months, including CE for children determined 
eligible until they reach age six, and a two-year CE period for children ages six and older.   
We recognize that CE for adults also supports consistent coverage and continuity of care by 
keeping adults and children enrolled for a longer period of time regardless of income fluctuations 
or most other changes that otherwise would affect eligibility.  These types of demonstrations are 
expected to minimize coverage gaps and to help maintain continuity of access to program 
benefits, and thereby help improve health outcomes of beneficiaries.  CE is also an important 
aspect of reducing the rate of uninsured and underinsured adults.  For more information about the 
section 1115 demonstration application process, states may contact their CMS Section 1115 
Project Officer or refer to the 1115 Application Process webpage on Medicaid.gov at 
https://www.medicaid.gov/medicaid/section-1115-demonstrations/1115-application-
process/index.html 
 
VI. Closing  
 
CMS looks forward to its continued work with states on the implementation of CE in all states 
and ensuring that all children enrolled in Medicaid and CHIP have continuous access to the 
coverage they need and to which they are entitled.  States should consult with CMS if they have 
questions related to the guidance in this letter.  We also encourage you to reach out to your 
Medicaid state lead or CHIP project officer with any questions related to SPA submission.  If 
you have additional questions about the policies described in this letter, you may contact Meg 
Barry, Director of the Division of State Coverage Programs at 410-786-1536 or 
meg.barry@cms.hhs.gov. 
 
Sincerely,  
 
/s/ 
 
Daniel Tsai 
Deputy Administrator and Director