What Is the TEFRA D Medicaid Option for Children?

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) created a Medicaid option allowing states to cover children with significant disabilities by waiving parental income and resources. This provision, often called the “Katie Beckett Waiver,” targets children who require an institutional level of medical care but would not otherwise qualify for Medicaid. The program’s purpose is to prevent institutionalization by making it financially possible for families to care for them at home. This approach recognizes that the expenses for a child with profound disabilities can be catastrophic, even for families with moderate or high incomes.

Determining Child Eligibility

A child must be under the age of 19 to be considered for the TEFRA program. Eligibility must be established before the child’s 19th birthday, as other programs and eligibility rules will apply once the individual becomes an adult. Because the application and determination process can take time, it is advisable to begin the process well before the child approaches this age limit.

The child must also meet the definition of disability as established by the Social Security Administration (SSA). This definition requires a physical or mental condition that results in “marked and severe functional limitations.” The condition must have lasted or be expected to last for a continuous period of at least 12 months. If an official disability determination from the SSA is not already in place, the state Medicaid agency will conduct its own assessment.

A requirement is that the child needs a level of care provided in an institutional setting, such as a hospital or nursing facility. This means their medical needs are so significant that they would require such a facility if not for the care provided at home. Conditions like severe cerebral palsy, traumatic brain injuries, or dependence on medical technology like ventilators often meet this standard. The assessment focuses on the child’s functional deficits in daily living skills compared to age-appropriate norms.

Providing care at home must be cost-effective for Medicaid. The estimated cost of home-based care, including all necessary services and supports, cannot exceed what Medicaid would pay if the child were in an institution. The state agency will conduct an analysis comparing the projected expenses of the home care plan against the costs of institutional placement.

Parental Financial Obligations

While the TEFRA option disregards parental income and assets for determining a child’s eligibility, this does not always mean there is no cost to the family. State policies on this vary. Some states require parents to contribute to the cost of care through monthly premiums or fees.

In states that require a parental contribution, the amount is calculated on a sliding scale based on the parents’ adjusted gross income. This system is designed to make payments affordable relative to the family’s financial situation. Families should inquire directly with their state’s Medicaid agency to understand if any fees apply and how they are calculated.

Information and Documents for Application

A complete application package requires specific documentation to verify eligibility. You will need to provide proof of the child’s age and U.S. citizenship or legal residency status; a birth certificate or passport is used for this purpose. You must also provide:

• The child’s Social Security number.
• Substantial evidence of the child’s disability. If the child has a Supplemental Security Income (SSI) award letter, this serves as proof, otherwise you must submit comprehensive medical records.
• Information about the child’s own income and resources, which are subject to strict limits, including bank statements or trust fund details.
• A list of all medical providers involved in the child’s care, including their names, addresses, and phone numbers.
• State-specific forms completed by the child’s doctors that detail the specific medical and daily living supports required.

The State Application Procedure

The application process begins by locating the correct state agency, which is usually a division of the Department of Health and Human Services or the state’s Medicaid office. The application packet, which may include several distinct forms, must be completed thoroughly. Common submission methods include mailing the documents, uploading the package through an online state portal, or submitting it in person at a local county office.

After submission, you should receive a confirmation that your application has been received. The timeline for a decision varies; if the child’s disability status has already been established by the SSA, a determination may take around 45 days. If the state needs to conduct its own disability determination, the process can extend to 90 days or more.

During the review period, a case manager may contact the family to request additional information to clarify details about the child’s medical needs or living situation. It is important to respond to these requests promptly to avoid delays. Once the review is complete, the family will receive an official determination letter stating whether the child has been approved or denied for coverage.