Who says chi-lax any more i mean come on..gesh?

Indeed, I agree with you.

Not to give an arrogant answer, but that word is called a "portmanteau". By its definition, a portmanteau is formed when you blend two or more words together to create a new word. Here, "chill" and "relax" make "chillax". Portmanteaus are usually slang, but there are a few that are legitimate everyday vocabulary words:

"smog" ("smoke" and "fog")

"brunch" ("breakfast" and "lunch")

And also some political terms, where we may have forgotten their original roots:

"gerrymander" ("Gerry" and "salamander"; named after 1812 Mississippi Governor Eldridge Gerry, in the way he made the electoral collectives look like "salamanders" to get the necessary election percentages)

"stagflation" ("stagnant" and "inflation"; used to describe the economy under president Carter, where the dollar inflated despite a stagnant economy)

Anyway, I tell you what. Just use your own portmanteaus back at them when they say "chillax". If your vocabulary is as colorful as you describe, then it will make those people feel like idiots when they hear yours. For instance:

"Yeah, just 'simmacline' ("simmer" and "recline") yourself to another 'serenitat' ("serene" and "habitat"). They just don't know how 'awetastic' ("awesome" and "fantastic") you are!"

Ugh, I'm making myself groan. Feel free to make better ones. Hope this helps ya. :)