South Carolina Medicaid TEFRA for Children with Disabilities: What Parents Need to Know

One of the most significant financial resources available to South Carolina families with children who have disabilities — and one of the most widely unknown — is the Medicaid TEFRA option. For families who do not qualify for regular Medicaid based on household income, TEFRA opens access to full Medicaid benefits for the child individually, regardless of what the parents earn. The implications for accessing services that connect to school-based IEPs are substantial.

What TEFRA Is

TEFRA stands for the Tax Equity and Fiscal Responsibility Act of 1982. Under this federal law, states have the option to offer Medicaid coverage to children with disabilities based solely on the child's disability and care needs — not on the family's income or resources. South Carolina has elected this option.

In practical terms: a child with a significant disability can be enrolled in South Carolina Medicaid as an individual even if the family's household income would otherwise make them ineligible for Medicaid. The parents' income is disregarded in the eligibility determination. Only the child's own income and resources (which for most children is essentially zero) are counted.

This is meaningful because full Medicaid coverage provides access to medically necessary services that overlap significantly with services children with disabilities need — including speech-language therapy, occupational therapy, physical therapy, behavioral health services including ABA therapy for autism, and durable medical equipment.

How TEFRA Eligibility Works in South Carolina

To qualify for TEFRA in South Carolina, the child must:

1. Be under age 19 (and meet continued eligibility requirements)
2. Have a disability — typically evidenced by SSI-level disability standards, meaning the disability must result in marked and severe functional limitations
3. Require a level of care equivalent to an intermediate care facility for individuals with intellectual disabilities (ICF/IID), nursing facility level of care, or similar institutional level — but be able to be cared for safely in the community with appropriate supports

Note: "Level of care" in TEFRA is a clinical determination made by the state agency — it does not mean the child actually needs institutional care. It means the child's care needs are complex enough that, without appropriate community supports, institutional placement would be considered. Many children with autism spectrum disorder, intellectual disabilities, medically complex conditions, and severe behavioral needs qualify.

The South Carolina Department of Health and Human Services (SCDHHS) processes TEFRA applications. Family Connection of South Carolina can help families navigate the application and understand the level-of-care determination process.

What TEFRA Covers

Once enrolled in Medicaid through TEFRA, the child receives the full South Carolina Medicaid benefit package, which includes:

• Medical services: Physician visits, specialist care, prescriptions, hospitalizations
• Behavioral health services: Mental health therapy, psychiatric services, behavioral assessment
• Applied Behavior Analysis (ABA): South Carolina Medicaid covers ABA therapy for children with autism who qualify — this is a significant benefit, as private ABA can cost $5,000-$10,000+ per month
• Speech-language therapy
• Occupational and physical therapy
• Durable medical equipment and assistive technology

A critical point for IEP families: when a child has Medicaid, the school district may bill Medicaid for certain services provided through the IEP — including speech therapy, OT, PT, and health-related services. This is a cost offset for districts, but it does not change what the district owes the child. The district cannot reduce IEP services simply because Medicaid covers some of the cost, and consent requirements govern what Medicaid information the district can access.

The Connection Between TEFRA and IEP Services

Children covered by TEFRA Medicaid can access therapeutic services through two tracks simultaneously: their IEP (which provides educationally necessary services funded by the school district) and their Medicaid coverage (which provides medically necessary services funded through SCDHHS). These are distinct coverage streams.

For example, a child with autism might receive:

• 60 minutes per week of speech-language therapy through their IEP (educationally necessary)
• Additional ABA therapy hours funded by Medicaid (medically necessary)
• OT through their IEP plus additional OT hours privately funded by Medicaid for non-educational goals

The IEP team cannot decline to include educationally necessary therapy in the IEP on the grounds that Medicaid "already covers" that service. The IEP obligation is independent of what Medicaid covers. Similarly, the existence of an IEP does not satisfy the medical necessity determination for Medicaid services.

Family Cost Sharing Under TEFRA

TEFRA in South Carolina does involve a monthly cost-sharing obligation for families — called a "cost of participation." This amount is based on family income and is calculated by the state agency. Families with higher incomes pay more; the obligation phases in as income increases above the income floor.

This cost-sharing is typically significantly less than what the same services would cost privately. For families accessing ABA therapy, early intervention services, or intensive behavioral health care, the TEFRA benefit can represent tens of thousands of dollars per year in covered services that would otherwise be out of pocket.

How to Apply

Contact the South Carolina Department of Health and Human Services (SCDHHS) to begin a TEFRA application. You can also contact Family Connection of South Carolina, which provides guidance on navigating Medicaid waivers and can connect families to parent volunteers who have gone through the process.

Documentation typically needed includes:

• The child's disability documentation (diagnostic records, evaluations)
• Level of care determination (conducted through the SCDHHS process)
• Family income documentation (for cost-sharing calculation, not eligibility)
• The child's current IEP if one exists

DDSN Waivers and Long-Term Services

For children with intellectual disabilities or autism who may need long-term community supports beyond what TEFRA covers, South Carolina's Department of Disabilities and Special Needs (DDSN) administers Medicaid waiver programs that fund residential supports, day programs, and other community-based services. DDSN waivers have significant waitlists in South Carolina — families should register as early as possible even if the child's current needs are fully met through the IEP and TEFRA.

The South Carolina IEP & 504 Advocacy Playbook includes a South Carolina resource directory covering Medicaid TEFRA, DDSN, Family Connection SC, and other state agencies — a practical reference for navigating the full ecosystem of supports available alongside IEP services.

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