No, Texas does not have TEFRA. The state has not adopted the Tax Equity and Fiscal Responsibility Act option (sometimes called the Katie Beckett option), the federal Medicaid pathway that lets children with significant disabilities qualify based on their own income rather than their parents’. Eighteen states and the District of Columbia have adopted it. Texas instead covers children with disabilities through a set of Medicaid waiver programs that cap enrollment and maintain interest lists, some running longer than 15 years.1Navigate Life Texas. Texas Medicaid Waiver Programs for Children With Disabilities
What You’re Missing Without TEFRA
TEFRA is a Medicaid state plan option. When a state adopts it, family income is disregarded entirely in deciding whether a child qualifies for Medicaid. Only the child’s own income and assets count. To be eligible, a child generally must be under 19, meet the Social Security Administration’s definition of disability, and need a level of care that would otherwise be provided in a hospital, nursing facility, or intermediate care facility for individuals with intellectual disabilities. Home-based care must be safe and must cost the state no more than institutional placement.2Boston University Center for Innovation in Social Work & Health. TEFRA Policy Brief
The feature that matters most is enrollment: TEFRA is an entitlement. Every child who meets the criteria must be enrolled, and waiting lists are not permitted.3Boston University Center for Innovation in Social Work & Health. TEFRA and HCBS Waivers Workbook Enrolled children receive the full Medicaid benefit package, including Early and Periodic Screening, Diagnostic, and Treatment, which covers all medically necessary services for anyone under 21.4Disability Rights South Carolina. Medicaid Guide, Part 1
That is the entitlement Texas families do not have.
How Texas Covers Children With Disabilities Instead
Texas uses Home and Community-Based Services (HCBS) waivers to serve children with disabilities at home. Each program targets a different population, and each has its own interest list:
- Medically Dependent Children Program (MDCP): medically fragile individuals ages 0 through 20 who meet a hospital or nursing facility level of care. Services include respite, flexible family support, and minor home modifications.5Medicaid.gov. Texas Waiver Description Factsheet
- Community Living Assistance and Support Services (CLASS): individuals with developmental disabilities who meet an ICF/IID level of care. Services include case management, residential habilitation, respite, and therapies.
- Home and Community-based Services (HCS): individuals with intellectual or developmental disabilities, including residential and therapeutic services.
- Texas Home Living (TxHmL): day habilitation, respite, and nursing for individuals with intellectual or developmental disabilities.
- Youth Empowerment Services (YES): children ages 3 through 18 with serious emotional disturbance who meet a hospital level of care.
Children in these waivers and in standard SSI-linked Medicaid receive services through STAR Kids, the state’s managed care program for people 20 and younger with disabilities. Each STAR Kids member gets a service coordinator who develops an individualized service plan.6Texas Health and Human Services. STAR Kids
Texas also runs a Medicaid Buy-In for Children program, which lets families above the standard Medicaid income limits purchase coverage. A family of four can qualify with monthly gross income up to $8,250. Premiums of up to $230 per month may apply, depending on income and whether the family has employer-based insurance.7Texas Health and Human Services. Medicaid Buy-In for Children For many middle-income families whose children would qualify under TEFRA elsewhere, the Buy-In is currently the closest alternative.
The Interest List Problem
Because waivers can cap enrollment, Texas serves families first-come, first-served from the interest lists. Wait times on some lists exceed 15 years.1Navigate Life Texas. Texas Medicaid Waiver Programs for Children With Disabilities One parent reported waiting nine years to move from position 50,000 to position 8,000 on the CLASS interest list. Eligibility is only formally determined when a child reaches the top, so families are advised to register for every relevant list as soon as a child is diagnosed.
The Legislature has added slots periodically. During the 2021 session, Senate Bill 1 authorized $76.9 million for interest list reduction, funding 1,549 new waiver slots across six programs, including 542 for HCS, 471 for TxHmL, 381 for CLASS, and 42 for MDCP.8Texas Health and Human Services. Interest List Reduction The size of the lists far exceeds those additions. “Diversion slots” exist for families facing immediate risk of institutional placement, but they are reserved for the most urgent cases.
The Catalyst Center has documented that the absence of a TEFRA-style pathway pushes some families into extreme choices: cutting work hours or quitting jobs to keep income low enough for standard Medicaid, or in the hardest cases, relinquishing custody so a child can qualify independently.9Health and Disability Working Group. TEFRA Policy Brief
Why Texas Still Doesn’t Have TEFRA
Advocates have pressed the state for years. In May 2022, The Arc of Texas presented TEFRA adoption as one of five key recommendations to the Texas House Human Services Committee. Public policy director Ashley Ford testified that private insurance covers only a fraction of what children with disabilities need and that families face “impossible decisions” about employment and care. The Arc argued a TEFRA option would ease pressure on oversubscribed waivers by creating a parallel, uncapped pathway.10The Arc of Texas. Recommendations on Reducing Interest Lists and Staffing Shortages for Waiver Services
In November 2024, the Policy Council for Children and Families, a state advisory body, formally recommended in its biennial report that the Legislature establish a TEFRA option “for children who meet an institutional level of care to access Medicaid,” pointing to Louisiana as a model. The recommendation was adopted unanimously.11Texas Health and Human Services. Policy Council for Children and Families Biennial Report
The 2025 Legislative Session
During the 89th Legislature, Senator Tan Parker filed SB 2062 with Senators Pete Flores and Brent Hagenbuch, and Representative Manuel authored companion bill HB 5220. The legislation stopped short of creating a full TEFRA state plan option but moved in that direction. It would have raised the income ceiling for the Medicaid Buy-In for Children to the maximum allowable amount, prioritized MDCP enrollment for SSI-eligible children meeting medical necessity, reserved MDCP diversion slots for children at high risk of institutionalization, and removed IQ requirements for TxHmL eligibility for individuals with related-condition diagnoses.12BillTrack50. SB 2062, 89th Texas Legislature The Buy-In provisions explicitly cited 42 U.S.C. Section 1396a(cc)(1), the federal statutory basis for TEFRA.13Texas Legislature Online. HB 5220, 89th Regular Session
SB 2062 died before reaching a floor vote. The 89th session also did not extend Medicaid coverage for intensive children’s mental health services, and the YES waiver received no additional funding.14Texans Care for Children. Preliminary Recap of the 2025 Texas Legislative Session
What Other States Do
Eighteen states and the District of Columbia have adopted the TEFRA state plan option, including Alaska, Georgia, Idaho, Massachusetts, Minnesota, Mississippi, Nevada, Oklahoma, South Carolina, South Dakota, Vermont, and West Virginia.15Health and Disability Working Group. TEFRA State Plan Option A few others run TEFRA look-alike programs. Pennsylvania’s PH-95 has served over 32,000 children by disregarding family income for children who meet SSI disability criteria.16Boston University Center for Innovation in Social Work & Health. The Tax Equity and Fiscal Responsibility Act
Louisiana is the most direct example cited to Texas lawmakers. The Louisiana Legislature passed Act 421 in 2019, and the resulting Act 421 Children’s Medicaid Option took effect January 1, 2022.17Louisiana Department of Health. Act 421 FAQs Louisiana structured it as a Section 1115 demonstration rather than a traditional state plan amendment, letting it cap enrollment at legislatively funded levels, with projected capacity of 2,540 children on roughly $27.2 million per year.18Louisiana Department of Health. Act 421 Implementation Plan Participating families must maintain private or employer-sponsored insurance, with Medicaid acting as secondary payer; families who drop private coverage face a lock-out of up to 180 days.19Medicaid.gov. Louisiana Act 421 Demonstration Approval
What This Means for Your Family Right Now
If you are raising a child with significant disabilities in Texas, there is no income-disregard pathway to Medicaid available today based on institutional level of care alone. Your practical options are to apply for SSI-linked Medicaid if your household income qualifies, to apply for the Medicaid Buy-In for Children if you are above those limits but within Buy-In thresholds, and to sign up for every HCBS waiver interest list your child could potentially qualify for, as early as possible. If a TEFRA option is ever adopted in Texas, it would not replace the waivers, which provide specialized services like respite, home modifications, and habilitation that go beyond the standard Medicaid benefit; it would add a non-capped route to the baseline coverage underneath them.