Losing Medicaid Part A coverage can feel like a dead end for families of children with disabilities. But it’s not the end of the road. Thanks to a federal program known as TEFRA (Tax Equity and Fiscal Responsibility Act of 1982), your child may still qualify for Medicaid — even if they’re no longer eligible under traditional income or disability pathways.
Here’s what you need to know.
Understanding TEFRA Medicaid
TEFRA is a Medicaid option that allows states to provide coverage to children with significant disabilities regardless of parental income, as long as the child meets certain criteria. This means that even if you make too much money to qualify for standard Medicaid, your child may still be eligible for coverage based solely on their medical needs.
TEFRA Eligibility Basics
Each state’s program varies slightly, but in general, a child may qualify for TEFRA if:
- They are under the age of 19.
- They have a physical or mental condition that significantly limits their ability to function.
- They would qualify for institutional care (like a hospital or nursing facility) without support services at home.
- They can be safely cared for at home at a lower cost than in an institution.
- They are not otherwise eligible for Medicaid — such as through SSI or Part A.
Losing Medicaid Part A Doesn’t Mean You’re Ineligible for TEFRA
Medicaid Part A (also known as categorically needy Medicaid) typically serves children receiving Supplemental Security Income (SSI). But SSI eligibility is based on strict income and resource limits — both for the child and their parents. If your income increases or your child no longer qualifies for SSI due to changes in medical or financial status, Medicaid Part A coverage may end.
Here’s the good news: TEFRA steps in exactly at this point.
If your child still has a qualifying disability but no longer receives SSI, you can apply for TEFRA to continue receiving Medicaid services — including:
- Day-Treatment and needed therapies
- Medical equipment and supplies
- Prescription medications
- Behavioral health services
- Personal care assistance
How to Apply for TEFRA Medicaid
- Get Medical Documentation
You’ll need recent evaluations and letters from healthcare providers showing that your child has a qualifying condition and would require institutional-level care without in-home support. - Contact Your State Medicaid Office
Ask specifically about the TEFRA/Katie Beckett option. Not all Medicaid staff are familiar with the program, so be persistent. - Undergo a Level of Care Assessment
A state agency will assess whether your child meets the institutional level of care requirement. - Demonstrate Cost-Effectiveness
The cost of caring for your child at home must be lower than placing them in a hospital or institution. States perform this calculation as part of the eligibility process. - Wait for Approval
The process may take several weeks. Once approved, your child can regain access to full Medicaid services.
Helpful Tips for Parents
- Keep documentation updated – Regular therapy notes, IEPs, and specialist assessments can help support eligibility.
- File appeals if needed – If your TEFRA application is denied, you have the right to appeal.
- Use care coordinators – If your child has a case manager or support coordinator, they can help guide you through the TEFRA process.
Final Thoughts
Medicaid Part A may close a door — but TEFRA can open a critical window. This program ensures children with disabilities don’t fall through the cracks just because their parents’ income changes or their SSI status shifts. If your child’s medical needs persist, TEFRA could be the key to continuing the support and services they rely on.
If you’d like help navigating the application process, contact your local Medicaid office or a disability advocacy organization in your state.
