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 on the child's disability and care needs rather than the family's income or resources, subject to the state's other eligibility requirements. 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. Be a U.S. citizen or lawful permanent resident and a South Carolina resident
3. Live at home and meet SCDHHS's current child-income and resource limits; only the child's income and resources are counted
4. Have a disability — typically evidenced by SSI-level disability standards, meaning the disability must result in marked and severe functional limitations
5. Require a level of care equivalent to an intermediate care facility for individuals with intellectual disabilities (ICF/IID), nursing facility, or hospital care — and be able to be cared for safely at home; SCDHHS also compares the estimated home-care and institutional costs

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. Children with autism spectrum disorder, intellectual disabilities, medically complex conditions, or severe behavioral needs may qualify if they meet the applicable disability and level-of-care criteria.

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 Costs Under TEFRA

South Carolina's current TEFRA eligibility materials count only the child's income and resources for eligibility; they do not list a monthly family-income-based cost-of-participation amount. Ask SCDHHS about any premiums, copayments, or other costs that may apply to particular services.

Coverage can reduce out-of-pocket costs for medically necessary services, subject to eligibility, medical-necessity, authorization, and provider-availability requirements.

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)
• The child's income and resource documentation
• 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.

See more South Carolina guides →