The TEFRA or Katie Beckett option began in 1982 and is named after Katie Beckett, a little girl who used a ventilator and lived her first three years in the hospital. Despite having two working parents and insurance, her insurance would not cover the home nursing services she required to live at home, even though they were cheaper than hospital care. And if she left the hospital, she would no longer be eligible for Medicaid. Then-president Ronald Reagan granted an exception that allowed Katie to move home and still receive Medicaid coverage, including private duty nursing. This exception was codified in the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982. It allows any state the option to extend Medicaid to a child with a significant disability.

All TEFRA programs have the same eligibility criteria. Children must have a disability under Social Service Administration rules that would require placement in a hospital, nursing facility, or intermediate care facility. Children are eligible from birth until age 18. In theory, the TEFRA option should be approved for children regardless of the type of disability, but historically it has been used primarily for children with physical disabilities, medical technology, or other complex medical needs.

The main advantage of the TEFRA option is that states who elect to offer this option must serve all eligible children who apply. There cannot be a waiting list. The TEFRA option is based only on the child's income and resources.

The primary disadvantage of the TEFRA option is that it just extends regular Medicaid state plan services to children. States cannot offer any additional services, such as respite or home/vehicle modifications. In addition, TEFRA/Katie Beckett programs are voluntary, meaning states can choose whether or not to offer them.

Most waivers currently in use are 1915(c) HCBS waivers. These are individual federal-state partnerships targeted to specific disability populations that provide both Medicaid coverage and additional services. All provide services beyond regular Medicaid to help people with disabilities live in the community. Since every program is different, it is difficult to generalize.

The typical populations targeted by 1915(c) waivers include the following: Aged, Physical Disabilities, Other (usually medical) Disabilities, Medically Fragile and/or Technology Dependent, Brain/Spinal Cord Injuries, HIV/AIDS, Autism, Developmental Disabilities, Intellectual Disabilities, and Serious Emotional Disturbance or Mental Illness. States often serve these populations in different ways. For example, a child with autism may be served by an autism waiver in one state, a developmental disabilities waiver in another, and an intellectual disabilities waiver in a third. Similarly, a child with cerebral palsy or epilepsy could be served by a physical disabilities waiver, a medically fragile waiver, or a developmental disabilities waiver.

Some of these waivers waive parental income when determining eligibility; others do not. Parental income may be waived in three typical ways: by using institutional deeming rules that typically only count the child's income; by using TEFRA rules for children up to age 19; or by creating a special designated population.

1915(c) waivers can have up to three levels of care: Hospital, Nursing Facility (NF), or Intermediate Care Facility (ICF). Typically, individuals can only receive the amount of services appropriate for their level of care. For example, a child on a ventilator or a child with severe mental illness would have to live in a hospital if he or she did not live at home, so these children are designated as requiring a hospital level of care. Children with physical disabilities typically receive a nursing facility level of care, while children with autism or developmental disabilities receive an intermediate care facility level of care. Typically, individuals cannot receive services that would cost more than their care would in the appropriate type of institution.

The main advantage of 1915(c) waivers is that they provide extra services to help people with disabilities live at home, such as respite, home or vehicle modifications, training, specialized medical equipment, personal support, and behavioral services.

The primary disadvantage of 1915(c) waivers is that they are not entitlements, which means they can have waiting lists. Many programs have waiting lists that are more than three years long before services are granted.

States have the option to create unique programs to meet the needs of people with disabilities, or replace their Medicaid program entirely, called 1115 demonstration waivers. In some states, people with disabilities are served through these programs instead of the more traditional types of waivers. Some of these programs are very small and work almost identically to a TEFRA or 1915(c) waiver (such as in Arkansas); others reform an entire state's Medicaid delivery system (such as in Arizona or New Jersey). Since each program is unique, it is difficult to generalize about them. This option is only used to provide home and community based services in a small number of states.

The main advantage of a well-designed 1115 waiver is that it can streamline the process of eligibility and services by combining programs together to serve multiple populations.

The primary disadvantage of an 1115 waiver is that it allows states to waive certain other Medicaid rules, meaning there are less protections for individuals in these programs. 1115 waivers may restrict services or eligibility.

Some states have created their own programs, typically to mimic the TEFRA option. Some of these programs expand eligibility further; others restrict it somewhat. Some provide full access to Medicaid, while others only provide certain services. This type of program is not used in most states, with Pennsylvania's PH-95 program the largest one, though several other states have TEFRA-like state-based program.

Some states use other waiver authorities to offer home and community based services through the regular state Medicaid plan for children already enrolled in Medicaid. These include the following:

• 1915(i): Allows for home and community based services of all kinds, including respite, home/vehicle modifications, and in-home supports, to anyone who qualifies and is already enrolled in Medicaid. While the state can restrict the program to individuals of certain ages or with particular diagnoses, there cannot be waiting lists. An example is the 1915(i) program in Idaho, which provides access to Medicaid for children through a Katie Beckett/TEFRA program and then offers them home and community based services through the state plan.
• 1915(j): Allows for those already enrolled in Medicaid to access personal care services that they self-direct. This authority also allows states to pay parents of minors for providing personal care services. An example is the IHSS program in California.
• 1915(k): Allows for states to provide personal assistance and other in-home support through the regular state plan for those already enrolled in Medicaid without waiting lists. Numerous states offer this option.