Medical Assistance under the TEFRA Option

2.3.6.1.2 Parental Fees (Archive)

Medical Assistance (MA) under the TEFRA option is for children with a disability who are otherwise ineligible for MA because household income is above the MA for Families with Children and Adults (MA-FCA) income limit. The TEFRA option for children with a disability is named after the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 that created the option.

Because MA under the TEFRA option only considers the child’s income in deciding eligibility, parents must share the cost of care by paying a parental fee.

The Minnesota Department of Human Services (DHS) collects parental fees. The child’s, county, tribal or state servicing agency must make a referral to the DHS parental fee unit. The county, tribal or state servicing agency sends the Important Notice and Parental Fee Worksheet (DHS-2977) to parents.

Parental Fee Amount

DHS uses the birth and adoptive parent's adjusted gross income (AGI) as reported on the previous year's federal tax return to compute parental fees.

Parents can estimate the amount of the parental fee using the worksheet and information on DHS-2977.

Parents receive a determination order that indicates what the parental fee is for the fiscal year and the amount of monthly payments.

Parental fee amounts can change each fiscal year due to annual changes in the FPG or changes in AGI or family size. Parents have the obligation to tell DHS when there is a change in household size, the child leaves the home, other health insurance coverage starts or stops, or there is change in monthly income in excess of 10%. The parents can send a letter to:

Department of Human Services

Financial Operations Division

PO Box 64171

St. Paul, MN  55164-0171

Undue Hardship

Parents may request a change to the parental fee when they incur any of the following expenses, not reimbursed by any public or private sector by sending a letter to DHS:

• Payments for medical expenses not covered by MA or health insurance, but that would be allowable as a federal tax deduction under the Internal Revenue Code.

• Expenditures for adaptations to the parents’ vehicle that are necessary to accommodate the child’s medical needs and are a type that would be allowable as a federal tax deduction under the Internal Revenue Code.

• Expenditures for physical adaptations to the child’s home that are necessary to accommodate the child’s physical, behavioral, or sensory needs and are a type that would be allowable as a federal tax deduction under the Internal Revenue Code.

• Unexpected, sudden or unusual expenditures by the parents since the last renewal or within the past 12 months that are not reimbursed by any type of insurance or civil action and which are a type allowable as a casualty loss deduction under the Internal Revenue Code.

• When a peculiar tax status creates a gross disparity between the amount of income allocated to them and the amount of the cash distributions made to them.

Non-Cooperation with Parental Fee Requirements

A child’s MA coverage is not closed when a parent does not cooperate with parental fee requirements. Action may be taken against the parent in either of the following circumstances:

• Refusal to submit the necessary information to DHS in determining a fee can result in a bill for the full reimbursement cost of MA services.

• Failure to pay the parental fee can result in the account being turned over to a collection agency, garnishment of wages, or taking the parent’s state tax refund.

Legal Citations

Code of Federal Regulations, title 42, section 1396A, subdivision e

Code of Federal Regulations, title 42, section 435.225

Code of Federal Regulations, title 42, section 412.424

Minnesota Rules, part 9550, subpart 6200-6240

Minnesota Statutes, section 252.27

Minnesota Statutes, section 256B.14

The Tax Equity and Fiscal Responsibility Act (TEFRA), Public Law 97-248, section 134

Published:  June 1, 2016

Archived:  November 1, 2019