*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***

Chapter 03 - Eligibility Groups and Bases of Eligibility

Effective:  October 1, 2011

03.30.25 - TEFRA Option

Archived:  June 1, 2016 (Previous Versions)

TEFRA Option

The TEFRA option provides Medical Assistance (MA) eligibility to some children with disabilities who live with at least one biological or adoptive parent. It is commonly known as ”TEFRA” because it was part of the Tax Equity and Fiscal Responsibility Act of 1982. The TEFRA option allows for the waiver of parental deeming requirements.

Children who are eligible for MA when counting parental income do not need to use the TEFRA option.  

Children who require services in addition to those provided in the standard MA benefit set may be eligible under a home and community-based disability waiver. Children who are approved under a home and community-based disability waiver do not need to be certified under the TEFRA option rules below.

The TEFRA option provides for the waiver of parental deeming requirements for children who meet all of the following:

l  Are under age 19.

Note:  Although federal guidelines allow TEFRA eligibility up to age 19, since parental income is not deemed to disabled 18-year-olds, they will generally not need the TEFRA option.

l  Live with at least one biological or adoptive parent.

l  Require a level of care:

n  Comparable to that provided in a hospital, nursing home or an intermediate care facility for persons with mental retardation and related conditions (ICF/DD), and

n  for which the cost for home care would not be more than MA would pay for the child's care in a medical institution.

There are no additional services provided under the TEFRA option. Its sole benefit is providing MA eligibility for otherwise-ineligible children through the waiver of parental deeming requirements.

Eligibility factors and links to standard program guidelines are provided below.

Application Process.

Eligibility Begin Date.



Social Security Number.

Citizenship/Immigration Status.


Insurance and Benefit Recovery.

Household Composition.

Eligibility Method.

Asset Guidelines.

Income Guidelines.



Covered Services.

Service Delivery.

Other Requirements.

End of Eligibility Basis.

Relationship to Other Groups/Bases.

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Application Process  (standard guidelines)

Follow the guidelines for MA for People With a Disability.

Eligibility Begin Date  (standard guidelines)

Follow standard MA guidelines.

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Renewals  (standard guidelines)

Do not require the parents of TEFRA enrollees to re-verify their income at renewal unless the parents report an income decrease that would make the child eligible for MA without a spenddown under another basis with parental income deemed.


Emily, age six, is disabled and requires TEFRA-level home and community-based services. Her parents’ income exceeds MA limits.


Approve Emily for MA under the TEFRA option, which allows a waiver of parental income.

On the annual renewal form, Emily’s parents report decreased income. It appears Emily may now qualify for MA without a spenddown under a disabled basis of eligibility.


Request income verification. If Emily no longer requires a TEFRA certification to qualify for MA, do not require a SMRT determination for continued TEFRA eligibility. Approve ongoing MA under a disabled basis.

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Verifications  (standard guidelines)

TEFRA enrollees must have a disability determination from the State Medical Review Team (SMRT).

Social Security Number  (standard guidelines)

Follow MA guidelines for Children Under 21.

Citizenship/Immigration Status  (standard guidelines)

Follow standard MA guidelines.

The TEFRA option is available to children who are eligible for EMA.

Residency  (standard guidelines)

Follow standard MA guidelines.

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Insurance and Benefit Recovery  (standard guidelines)

Policies that cover TEFRA enrollees are considered cost effective by the Benefit Recovery Section (BRS) and do not require further review if the child's portion of the premium is $50 or less per month.

Household Composition  (standard guidelines)

Use a household size of one. See income guidelines below for information about deeming.

Use the standard guidelines for MA household size and income to determine eligibility for the Medicare Savings Programs for TEFRA enrollees.

Eligibility Method  (standard guidelines)

Use Method B for income.

Asset Guidelines  (standard guidelines)

There is no asset limit for children under 21, regardless of their basis of eligibility.

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Income Guidelines  (standard guidelines)

The income limit is 100% FPG.

Count only the child's income; do not deem parental income.

Note:  Parents of children who are eligible under the TEFRA option may have to pay a parental fee. See parental fees for information about when to refer the case to DHS for a parental fee determination.

Exclude child support and RSDI payments received by or on behalf of children under age 18.

Deductions/Disregards  (standard guidelines)

Use the following Method B deductions in the order given:

1. Income used to fulfill an approved Plan to Achieve Self Support (PASS) for disabled or blind people.

2. Earned income disregard for blind or disabled student children.

3. The first $65 of earned income disregard.

4. Work expense deduction for disabled clients.

5. One-half the remaining earned income.

6. Work expense deduction for blind clients.

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Spenddowns  (standard guidelines)

Children with incomes over 100% of FPG may be eligible by spending down to 75% FPG.

Covered Services  (Prepaid MHCP Manual)

Follow MA guidelines for Children Under 21.

Service Delivery  (Prepaid MHCP Manual)

People who are not enrolled in a managed care plan receive services through fee-for-service (FFS).

People under age 65 who are eligible for MA due to blindness or disability are excluded from managed care enrollment.

Note:  People under age 65 who are certified as disabled but who choose a non-disabled basis of eligibility may voluntarily enroll in a managed care plan.

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Other Requirements

The following children do not need to have their eligibility determined under the TEFRA option:

l  Children who are eligible for MA through Transitional/Transition Year MA (TMA/TYMA).

l  Children who are eligible as auto newborns.

l  Children who are eligible for MA without a spenddown under any other basis when parental income is deemed.

Note:  In some cases it may be advantageous for some families to not use the TEFRA option when the child has a spenddown that is less than the parental fee.

l  Children who receive Supplemental Security Income (SSI).

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End of Eligibility Basis

Refer TEFRA enrollees who turn age 18 to SSI if their disability continues.

l  Leave MA open as a disabled child ages 18-21 while the SSI determination is pending.

l  If SSI determines that the child is not disabled and the child continues to live with the parents, redetermine the child’s eligibility under the children under 21 basis and deem parental income.

Eligibility under TEFRA ends when a child is no longer a member of his or her parent’s household. Redetermine the child’s eligibility based on the change in living arrangement and basis.


Abby is active on MA under TEFRA. On March 29 she is placed in foster care and is anticipated to stay there for several months. Since Abby was placed outside of her parents’ home, she is no longer eligible as a TEFRA child. However, she is eligible as a disabled child because she has been certified as disabled for TEFRA by SMRT. Her eligibility begin date is the first of the month of placement.  


Change Abby’s eligibility basis to a child with a disability effective March 1.

On July 11, Abby returns to her parents’ home.


Change Abby’s eligibility basis to TEFRA for the first full month that she is back in her parents’ home. Abby is eligible for TEFRA effective August 1.


John is active on MA under TEFRA. On May 3, he moves into an ICF/DD and is expected to reside there for more than 30 days.  


Change John’s eligibility basis to disabled effective June 1. Use John’s income only to determine his eligibility while he is in the ICF/DD. Parental income does not deem to John while he is in the facility.

Relationship to Other Groups/Bases  (standard guidelines)

If a child loses MA eligibility under another basis, but appears to meet all of the conditions for TEFRA, request a TEFRA certification. Leave MA open while the SMRT determination is in process.

l  If SMRT approves TEFRA, continue eligibility as a TEFRA case.

l  If SMRT determines the child is ineligible for TEFRA and there is no eligibility when parental income is deemed, close MA for the first month for which you can give 10-day notice.

Note:  If the family appeals the SMRT decision, follow continuing benefits.


Mona is a disabled child who lives with her mother and brother. They are MA-eligible as a parent/caretaker and a child under 21. Mona’s mother begins employment. The family is no longer eligible for MA without a spenddown, but they qualify for Transition Year Medical Assistance (TYMA). When TYMA ends, Mona, her mother and her brother do not qualify for MA without a spenddown; however, Mona continues to require a level of home care comparable to what would be provided in a hospital, nursing home, or ICF/DD.


Request a TEFRA certification from SMRT. When TYMA ends, open Mona as a disabled child pending the SMRT decision.

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