If the parents qualify for FHP (aka medicaid) the children do NOT qualify for CHP, they also qualify for FHP. If the parents and children all qualify for FHP, might I ask if you pay them little more than minmum wage?
If none of your 30k annual outlay is deductible you are earning in excess of 400k. Unfortunately, the government doesnt care that you pay full tuition for 8 kids (or whatever that number might be) it is not one of the criteria on their eligibility chart for CHP. I admit, it is a bitter pill to swallow, but think what your employees might be saying about someone who pays them so little that they qualify for medicaid.