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TEFRA and Home- and Community-Based Services (HCBS) Waivers
CYSHCN may enroll in Medicaid via several pathways. In addition to qualifying based on income; income and disability; and as a child in foster care, CYSHCN may be able to access Medicaid coverage through programs that create additional pathways for children who require an institutional level of care.
Options for Providing HCBS
States may implement such programs using either of the following authorities:
- 1915(c) Home- and Community-Based Services (HCBS) Waivers
- The TEFRA state plan option named for The Tax Equity and Fiscal Responsibility Act of 1982 that created this option (Also known as the Katie Beckett waiver)
These two options are similar in some ways, but also have substantial differences.
| HCBS Waiver | TEFRA State Plan Option | |
|---|---|---|
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Who Qualifies? |
Children (and others as defined by age, diagnosis, or other criteria established by the state) who:
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Children, birth to age 18 who:
|
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What Authority do States Use to Offer These Programs? |
Home- and community-based service waivers:
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State plan option (a.k.a. state plan amendment or SPA.):
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1915(c) HCBS WAIVERS
States may cover specific groups of individuals by requesting a waiver from the Centers for Medicare and Medicaid Services (CMS). The request to CMS asks for permission to “waive” certain requirements of the Social Security Act, such as statewide availability of services, freedom of choice of providers, and universal access to all benefits. Since 1983, 1915(c) waivers have allowed states to provide HCBS to children who otherwise would be eligible for Medicaid only if they resided in an institution. This worksheet will help you research 1915(c) waivers in your state.
Benefits and Eligibility
These waivers sometimes raise the income eligibility level for Medicaid coverage or disregard family income in determining the child’s eligibility. Unlike TEFRA, HCBS waivers may provide coverage for additional benefits such as: family support services, care coordination, specialized equipment, medical supplies, respite care, medical day care, and home or vehicle modifications.
Some states create HCBS waivers that include certain groups of CYSHCN, including children with autism, children who are medically fragile or technology dependent, and children with traumatic brain injuries.
States are allowed to restrict eligibility for HCBS waivers by age, geographic region, and/or diagnosis. In contrast with the TEFRA state plan option, states can limit the number of waiver slots available, which often results in waiting lists.
The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, Section 134
When a child receives extended care in an institutional setting, Medicaid disregards family income as an eligibility requirement and makes the determination based solely on the child’s income. The TEFRA state plan option makes it possible to do the same for a family whose child requires care at the level provided in an institution, but who can safely be cared for at home, if it is cost neutral to the state to do so.
TEFRA enables states to provide Medicaid coverage to children under 19 who require an institutional level of care, without considering household income for eligibility.
Benefits of TEFRA and HCBS Waivers
Adopting a TEFRA state plan option or HCBS waiver offers four main benefits for CYSHCN:
Provides More Children with Disabilities Access to Medicaid’s Comprehensive Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) Benefit.
Access to Medicaid is important for children with disabilities because of the EPSDT benefit that federal Medicaid regulations require states to provide. EPSDT requires that Medicaid cover all services that are medically necessary for enrollees under age 21, even if the service is not part of the state’s list of mandatory and optional services under the state plan. Additionally, because there are extremely limited copays, deductibles, or coinsurance associated with Medicaid, TEFRA provides children with disabilities access to more robust benefits at a much lower cost to families than private insurance.
Visit the Workbook section on EPSDT for more information.
Allows Families Greater Employment Flexibility.
Since family income is disregarded when considering eligibility for state TEFRA programs, families can continue working without risk of losing a child’s Medicaid benefits because they earn more than the income eligibility limit allows. According to the 2019–2020 National Survey of Children’s Health, nearly one-fifth of families raising CYSHCN reported that a family member left a job, took a leave of absence, or cut down on hours worked because of their child’s health or health conditions. For some families, these decisions may have been made to access Medicaid.
May Provide Wrap-Around Coverage to Supplement Private Health Insurance.
About half of CYSHCN have private insurance only; however, even among CYSHCN who are insured, inadequate benefits and high out-of-pocket cost sharing often create financial hardship for families. Many services that children with disabilities need may not be covered by private insurance or may require significant cost sharing (copays, coinsurance, deductibles, etc.) In these cases, the TEFRA option can allow families to use Medicaid as a secondary form of coverage for their child with a disability to help with the costs associated with covered services or to access services that their private insurance does not cover. As noted above, family members can continue to work and use their employer-sponsored insurance coverage for themselves, their children with disabilities, and other family members.
Learn More About Title V’s Role in TEFRA and HCBS
