How Medicaid Works for Children with Disabilities

For families raising a child with a disability, navigating healthcare can feel overwhelming. Doctor visits, therapies, specialized equipment, and home supports can quickly become costly—even with private insurance. That’s where Medicaid can make an enormous difference.

Medicaid provides essential health coverage for children with physical, developmental, and behavioral disabilities, often covering services that private insurance does not. But eligibility rules can be complex, especially when household income is above standard limits. Thankfully, there are special pathways and waivers—like the Katie Beckett program—that help families qualify based on a child’s needs rather than parental income.

Here’s how Medicaid works for children with disabilities, what benefits it provides, and how to access coverage through both traditional and specialized programs.

Medicaid and Children with Disabilities: The Basics

Medicaid is a joint federal and state program that provides health coverage to low-income individuals and families, but it also serves as a lifeline for children with disabilities—regardless of family income in many cases.

In 2025, Medicaid and related programs cover more than 40% of U.S. children with special healthcare needs. The coverage is often broader and more affordable than private insurance, offering access to services that are critical for development, independence, and daily living.

Each state runs its own Medicaid program under federal guidelines, which means eligibility and benefits vary. But every state must cover certain groups of children under federal law, including:

• Children who receive Supplemental Security Income (SSI) due to disability.

• Children from low-income families who meet the state’s Medicaid financial limits.

• Children who qualify through disability-based waivers or special programs like the Katie Beckett option.

What Medicaid Covers for Children with Disabilities

Medicaid coverage for children with disabilities is comprehensive. It includes standard medical care and specialized services often excluded from private plans.

Typical benefits include:

• Doctor visits and preventive care

• Therapies: Physical, occupational, and speech therapy

• Medical equipment and supplies: Wheelchairs, hearing aids, feeding tubes

• Personal care and home health services

• Mental and behavioral health treatment

• Specialized transportation to appointments

• Dental and vision care

• Prescription medications

• Hospital care and surgeries

For children under 21, Medicaid must also provide EPSDT services (Early and Periodic Screening, Diagnostic, and Treatment)—a federal requirement ensuring that children receive all medically necessary care to diagnose and treat conditions early.

Here’s a snapshot of the kinds of care EPSDT guarantees:

EPSDT is one of the strongest protections in U.S. healthcare policy for children—it guarantees that if a treatment is medically necessary, Medicaid must cover it.

The Income Challenge: Why Many Families Assume They Don’t Qualify

One of the biggest misconceptions about Medicaid is that only low-income families qualify. In reality, many children with disabilities can receive Medicaid even if their parents earn too much—thanks to special eligibility pathways that look at the child’s medical and financial situation separately from the household.

These programs ensure that access to vital care isn’t limited by parental income or job-based insurance.

Pathways to Medicaid for Children with Disabilities

Children can qualify for Medicaid through several routes. Here are the most common:

1. SSI-Linked Medicaid Eligibility

If a child receives Supplemental Security Income (SSI) due to disability, they are automatically eligible for Medicaid in most states. SSI eligibility requires that:

• The child meets the Social Security Administration’s definition of disability.

• The household meets SSI’s income and asset limits (which are stricter than Medicaid’s).

While this pathway helps the lowest-income families, many middle-income families don’t qualify financially. That’s where the next pathways come in.

2. The Katie Beckett (TEFRA) Option

The Katie Beckett program, also known as the TEFRA (Tax Equity and Fiscal Responsibility Act) option, allows states to provide Medicaid to children with significant disabilities regardless of family income.

Named after Katie Beckett, a child whose family fought to have her receive care at home instead of a hospital, this program ensures that a child’s eligibility is based solely on their medical needs and not on household earnings.

To qualify under Katie Beckett, a child must:

• Meet their state’s definition of disability (typically the same as SSI’s).

• Require a level of care comparable to what’s provided in a hospital or nursing facility.

• Be safely cared for at home with appropriate services.

• Not exceed a state-determined cost limit for in-home care versus institutional care.

This option allows children to receive the care they need at home—often at lower cost to Medicaid than institutional settings.

3. Medicaid Waivers (1915(c) or 1115 Programs)

Many states offer Home and Community-Based Services (HCBS) waivers for children with developmental, intellectual, or physical disabilities. These waivers allow families to access services like in-home aides, respite care, and therapies that aren’t covered by standard insurance.

Unlike the Katie Beckett option, waivers can have limited slots and waiting lists, sometimes several years long. Still, they provide critical support for families once approved.

4. Medically Needy or Spend-Down Programs

Some states have a “medically needy” pathway for families whose income is too high for regular Medicaid but whose medical expenses are large enough to “spend down” income to eligibility levels.

For example, if your child’s medical bills exceed a certain threshold each month, Medicaid can step in to cover the remainder after your family pays that share.

5. Medicaid Buy-In Programs

A growing number of states now offer Medicaid Buy-In for Children with Disabilities, allowing families above standard income limits to purchase Medicaid coverage by paying an affordable monthly premium. This gives middle-income families access to Medicaid’s comprehensive benefits while maintaining employer insurance if they choose.

How Medicaid Works with Private Insurance

If your child already has private or employer-sponsored insurance, Medicaid often acts as secondary coverage. That means:

• The private plan pays first.

• Medicaid covers remaining costs—like copays, deductibles, or services the private plan excludes (such as in-home therapy or medical equipment).

This coordination ensures families don’t face overwhelming out-of-pocket costs for medically necessary care.

Applying for Medicaid for a Child with Disabilities

Each state runs its own Medicaid application process, but the general steps are similar:

1. Gather required documentation: Proof of income, disability verification (doctor’s reports, therapy evaluations), and identity documents.

2. Contact your state Medicaid office: Apply online, by phone, or in person. Many states let you apply through the state’s healthcare marketplace.

3. Ask specifically about disability-related options: Mention the Katie Beckett program or Medicaid waivers to ensure the caseworker applies the correct criteria.

4. Expect an assessment: For disability-based eligibility, your child will undergo a functional needs evaluation to determine the level of care required.

5. Follow up regularly: If your child is placed on a waiting list for a waiver, check periodically for updates or interim support programs.

If you’re unsure where to start, most states have a Medicaid for Children with Special Health Care Needs office or local advocacy centers that help families through the process.

Real-World Example: How the Katie Beckett Option Helps Families

Consider a family earning $80,000 per year with a 7-year-old child who has cerebral palsy and needs daily physical therapy, specialized equipment, and home nursing support. Their income is too high for traditional Medicaid—but under the Katie Beckett option, the state evaluates the child’s needs and cost of care separately.

If the child meets the disability and medical criteria, Medicaid covers the child’s services and equipment, even though the family doesn’t meet regular income thresholds. This allows the child to receive consistent care at home, while the family avoids crushing medical bills.

Tips for Families Navigating Medicaid for Children with Disabilities

• Apply early and reapply if denied: Many families qualify under different pathways than the one initially considered.

• Keep detailed medical documentation: Doctor notes, therapy reports, and care plans strengthen your case for disability-based eligibility.

• Explore multiple programs at once: You can apply for SSI, Medicaid, and state disability services simultaneously.

• Track deadlines and recertifications: Most programs require yearly renewals. Missing paperwork can lead to coverage loss.

• Connect with advocacy groups: Organizations like Family Voices, Parent to Parent USA, and state protection agencies can help you appeal denials or navigate waiting lists.