The Katie Beckett provision is in a statute--the Tax Equity and Fiscal Responsibility Act 134--and was added to Medicaid in 1982. Katie Beckett is the name of the child whose parents petitioned the Federal Government for her to receive Medicaid services at home instead of in a hospital, and whose plight led the Reagan Administration to urge Congress to enact the provision. Prior to enactment, if a child with disabilities lived at home, the parents income and resources were automatically counted (deemed) as available for medical expenses. However, if the same child was institutionalized for 30 days or more, only the childs own income and resources were counted in the deeming calculation--substantially increasing the likelihood that a child could qualify for Medicaid. This sharp divergence in methods of counting income often forced families to institutionalize their children simply to obtain medical care for them.
TEFRA 134 amended the Medicaid statute to give states the option to waive the deeming (i.e., counting) of parental income and resources for children under 18 years old who were living at home but would otherwise be eligible for Medicaid-funded institutional care. Not counting parental income enables these children to receive Medicaid services at home or in other community settings. Many states use this option, which requires them to determine that (1) the child needs the level of care provided in an institution, (2) it is appropriate to provide care outside a facility, and (3) the cost of care at home is no more than the cost of institutional care. In states that use this option, parents may choose either institutional or community care for their Medicaid-eligible children.