7227 Determining Income Deductions - Deductible expenses include only certain costs of dependent care, medical, shelter costs, and child support and a determination shall take into account the following:
7227.1 Expenses Not Allowed -An expense covered by an excluded reimbursement, vendor payment, in kind benefit, or housing assistance per 6410 shall not be deductible, except for utility expenses as noted below.
Utility expenses, or portions thereof, reimbursed by LIEAP benefits still qualify the household for the SUA.
The portion of rent covered by an exempt vendor payment (for example, Emergency Assistance, or HUD negative rent or subsidy payments) shall not be calculated as part of the household's shelter costs. If a household member makes repairs or improvements in exchange for rent, no income is counted and no deduction for rent is allowed. This same principal applies if a household member works off part or all of the rent. If the person works off only part of the rent, any portion that is not worked off would be an allowable shelter expense.
In shared living arrangements, the portion of shelter expenses paid by one family to the other toward the total cost of shelter is not an allowable shelter expense for the family receiving the payment. (The payment is also not counted as income. See 6410).
For example, households A and B live together in a shared arrangement. Household A pays rent of $400 per month. Household B lives with A and pays household A $200 per month for rent which includes utilities. The $200 paid from B to A is not counted as income per 6410. Household A’s shelter costs are $200 rent plus the full SUA . Household B’s shelter costs are $200 because they do not pay utilities separate from their rent (not entitled to the SUA). If the households split the utility expenses, or household B contributed toward the actual cost of utilities or household B paid a flat amount for utilities separate from the rent, then each would have $200 rent and the full SUA.
In addition, the portion of dependent care expenses reimbursed by DCF Child Care payments shall not be allowed as part of the household's dependent care costs. Only amounts paid for dependent care that exceed the amount of the reimbursement can be allowed. (Also refer to 7224.)
Expenses shall only be deductible if the service is provided by someone outside of the household and the household makes a money payment for the service.
NOTE: Portions of property taxes paid with the Homestead Property Tax Relief refund program are allowable expenses for food assistance even though the refund is exempt income per 6410.
7227.2 Billed Expenses - Except as provided in 7227.3, 7227.5, and 7227.6, an expense shall be allowed only in the month the expense is billed or otherwise becomes due regardless of when the household intends to pay the expense. For example, rent which is due each month shall be included in the household's shelter costs for that month even if the household has not yet paid the expense. Amounts carried forward from past billing periods are not deductible even if included with the most recent billing and actually paid by the household. In any event, a particular expense may only be deducted once.
7227.3 Averaging Expenses - Households may elect to have fluctuating expenses averaged. Households may also elect to have expenses which are billed less often than monthly averaged forward over the interval between scheduled billings (e.g., taxes, insurance) or if there is no scheduled interval, averaged forward over the period the expense is intended to cover.
7227.4 Anticipating Expenses - A household's expenses shall be calculated on the expenses the household expects to be billed for during the review period. Anticipation of the expense shall be based on the most recent month's bills, unless the household is reasonably certain a change will occur. See the next section for anticipating medical expenses.
7227.5 Billed Medical Expenses - At certification and review the household shall report and verify all medical expenses, if not using the standard medical deduction. If using the standard medical deduction at initial certification, the household must verify one expense (or a combination of expenses) totaling greater than $35 per month. At review the household only needs to declare that the elderly or disabled member has ongoing anticipated allowable medical expenses in excess of $35 per month to continue the standard medical deduction in the new review period.
When determining allowable medical expenses, they shall be based on the information reported and verified by the household, and any anticipated changes in the household's medical expenses that can be reasonably expected to occur during the review period based on available information about the recipient's medical condition, private insurance coverage, spenddown status and current verified medical expenses. If the household reports an allowable medical expense at the time of certification but cannot provide verification at that time, and if the amount of the expense cannot be reasonably anticipated based upon available information about the recipients spenddown status or insurance coverage, the household shall have the nonreimbursable portion of the medical expense considered at the time the amount of the expense or reimbursement is reported and verified, if using actual medical expenses and not already using the standard medical deduction.
The household is not required to report changes in its medical expenses during the review period. Changes reported by the household must, however, be acted upon and expenses reported for the purpose of meeting a spenddown are considered reported for food assistance purposes. (Since the household is not required to report changes during the review period, the agency shall not issue supplements or establish claims against households that choose not to report and/or verify changes in medical expenses when they occur during the review period. Also, see 9121 or 9122.)
See the list of allowable medical expenses in the Appendix Item P1, Medical Necessity.
Medical expenses shall be determined and budgeted prospectively. The following additional provisions are applicable to determining allowable medical expenses, including whether the household is entitled the to the standard medical deduction.
Installments - If the household arranges with a provider to pay an expense in installments, the installments would be considered an allowable expense in the month that each installment is due. If the review period expires before the balance of the installment plan, the monthly payment may be allowed as a deduction into the new review period. To be allowable, the installment plan must be agreed upon prior to the due date of the original billing. In addition, the expense is allowable even if the household was initially billed and an installment plan established before the households was certified for food assistance.
In addition, payments on loans (established before the expense was past-due) for one-time medical expenses are allowable, but the portion that is interest cannot be allowed as part of the deduction. This includes medical expenses billed on revolving credit, but again the interest cannot be allowed as part of the deduction. If the household does not pay off the balance by the first month due, subsequent monthly billings are treated in the same manner as an installment plan. This does not include payments made on medical expenses that have been referred to a collection agency, as those bills are past due when referred to the collection agency.
Third-Party Reimbursements - Medical expenses subject to third-party reimbursement are allowable in the month in which the third-party reimbursement is received or can otherwise be verified rather than when the bill is first received. That portion of an allowable expense which is not reimbursable shall be included as part of the household's medical expenses. No matter how long it takes to obtain proof of the reimbursable portion of the medical expense, no deduction can be allowed until it is verified. This only applies to expenses subject to reimbursement. If the household has expenses that the agency is sure will not be reimbursed, the expense may be allowed prior to the third-party reimbursement/ verification as mentioned in (3) and (4) below.
NOTE: For purposes of the food assistance medical expense deduction, these expenses are not allowable as a food assistance expense, with the exception of amounts that the individual is actually billed for and expected to pay. For example, a Community Mental Health Center charges on a sliding scale. $90 is the charge per visit if the individual does not meet income guidelines, however, the individual meets income guidelines and is only charged $9. For spenddown purposes, the $90 is allowed and for food assistance purposes, the $9 charge is allowed as a medical expense.
Insurance Policies - If a household has an insurance policy that requires paying a deductible before the insurance will pay any expenses, medical expenses may be allowed until the deductible is met. Furthermore, if it is verified that the insurance company will only pay a certain percentage of further expenses, the worker may anticipate expenses and allow the percentage the household will be responsible for paying before the third-party reimbursement has been verified.
Households on Spenddowns - If a household is on a spenddown, reported medical expenses shall be allowable if the expense is otherwise allowable for food assistance purposes, will be used to meet the spenddown, or if the expense is a non-provider payment potential (N in the PPP field on MMIS) service. If there is any doubt whether an expense or portion of an expense will be paid by Medicaid, that expense cannot be allowed until the spenddown is met and it has been verified whether or not Medicaid will be paying for the expense. Under no circumstances shall the amount of the spenddown be averaged and allowed over the months of the review period.
Buy-In - Medicare premiums that will be reimbursed via the Buy-In process shall not be an allowable medical expense. This is also true when there is a problem with the Buy-In process and the individual remains responsible for the Medicare premium because he/she will be reimbursed when the problem is resolved and the individual is bought-in.
When an individual is no longer eligible for Buy-In, the Medicare premiums shall not be allowed until the individual reports the Medicare premium expense and it has been verified that the individual has been deleted from Buy-In and is now responsible for the premium expense.
Averaging Expenses - Households may also elect to have expenses which are billed less often than monthly averaged forward over the interval between billings. If there is no regularly scheduled billing, the expense may be averaged forward over the period the expense is intended to cover.
For households using the standard medical deduction, one-time expenses are treated as follows:
- If the one-time expense is going to be allowed for one month instead of averaged, the one-time expense shall be added to any other verified ongoing expense(s). (Whatever expense or expenses were verified to determine entitlement to the standard medical deduction.) If the resulting amount is $175 or less, the standard medical deduction is continued. If the one-time expense plus the verified ongoing expense(s) is greater than $175, the household is changed from the standard deduction to actual expenses for the one month and then changed back to the standard medical deduction.
- If the one-time expense is averaged over the remainder of the review period and the averaged amount plus the verified ongoing expense(s) used to determine entitlement to the standard is over $175, the household shall be switched from the standard medical deduction to actual expenses until the time of the next review.
The following special procedures also apply to these type of expenses:
Households With 12-Month Review Period - If a one-time expense is reported in the second to last month, or last month of the review period (or at the time of review) and there is no time to allow the expense in the current review period, the expense can be averaged over the months of the new review period.
If a one-time expense is reported in the second to last month, or last month of either of the 12-month periods mentioned above, and there is no time to allow the expense in that 12-month period, the expense can be averaged over the months of the next 12-month period.
Medicare Prescription Drug Discount Card - Special provisions apply when determining the amount of allowable medical expenses for clients reporting receipt of the Medicare Prescription Drug Discount Card. Clients must be allowed the pre-discount price of the prescription drug when determining allowable food assistance medical expenses. Clients are only required to provide an adequate description of the prescription and the pharmacy where the prescription was filled. The agency is responsible for obtaining the pre-discount price of the drug to allow as a medical expense. Under no circumstances are clients to be required to provide the pre-discount prices of the prescription drug.
7227.6 Dependent Care Expenses - A dependent care expense shall only be allowed in the month the expense is incurred or otherwise becomes due.
Dependent care expenses shall only be deductible if the service is provided by someone outside of the food assistance household and the household incurs an expense for the service. For example, a dependent care deduction shall not be allowed if another food assistance household member provides the care, or compensation for the care is provided in the form of an in-kind benefit such as food. Also refer to 7224.