Reports results of a study on the viability in rural areas of premium assistance programs use Medicaid or State Children's Health Insurance (SCHIP) funding to subsidize the premium costs of employer-sponsored insurance or private non-group policies for eligible individuals. Because of the characteristics of rural residents and their employment markets, many stand to benefit from premium assistance programs, but there are also reasons to believe that these programs may be less successful in rural communities. Findings form the telephone survey of Medicaid or SCHIP officials in 14 of the 16 states with at least one premium assistance program indicate that premium assistance programs have not lived up to their potential. Enrollment in most of the states' programs has been small, and while positive in concept, these programs have inherent limitations that may preclude more widespread enrollment. Of particular concern is that rural residents are more likely to work for small employers who do not offer health insurance or have higher premiums or less comprehensive benefits. However, with creative program design, premium assistance programs may be a useful tool for states to expand health insurance coverage to the rural uninsured.