I. HOUSEHOLDS ELIGIBLE FOR THE MEDICAL DEDUCTION
The first factor the worker must deal with is determining if any household members are entitled to the medical deduction. Households are entitled to a medical deduction only if one or more members are elderly or disabled. Elderly or disabled means a member of a household who:
- is 60 years of age or older;
- receives Supplemental Security Income benefits under Title XVI of the Social Security Act or disability or blindness payments under Titles I, II, X, XIV or XVI of the Social Security Act (see glossary for definition Receiving Social Security Benefits);
- receives federally or State-administered supplemental benefits under Section 1616(a) of the Social Security Act provided that the eligibility to receive the benefits is based upon the disability or blindness criteria used under Title XVI of the Social Security Act;
- receives federally or State-administered supplemental benefits under Section 212(a) of Public Law 93-66;
- receives disability retirement benefits from a government agency because of a disability considered permanent under Section 221(i) of the Social Security Act;
- is a veteran with a service-connected or non-service connected disability rated by the Veteran’s Administration (VA) as total or paid as total by the VA under Title 38 of the United States Code;
- is a veteran considered by the VA to be in need of regular aid and attendance or permanently housebound under Title 38 of the United States Code;
- a surviving spouse of a veteran and considered by the VA to be in need of regular aid and attendance or permanently housebound or a surviving child of a veteran and considered by the VA to be permanently incapable of self-support under Title 38 of the United States Code; or
- a surviving spouse or surviving child of a veteran and considered by the VA to be titled to compensation for a service-connected death or pension benefits for a nonservice-connected death under Title 38 of the United States Code and has a disability considered permanent under Section 221(i) of the Social Security Act. Entitled as used in this definition refers to those veterans’ surviving spouses and surviving children who are receiving the compensation or pension benefits stated or have been approved for such payments, but are not yet receiving them;
- receives an annuity payment under: Section 2(a)(1)(iv) of the Railroad Retirement Act of 1974 and is determined to be eligible to receive Medicare by the Railroad Retirement Board; or Section 2 (a) (i) (v) of the Railroad Retirement Act of 1974 and is determined to be disabled based upon the criteria used under Title XVI of the Social Security Act;
- is a recipient of interim assistance benefits pending the receipt of Supplemental Security Income, disability related medical assistance under Title XIX of the Social Security Act, or disability-based State general assistance benefits provided that the eligibility to receive those benefits is based upon disability or blindness criteria which are at least as stringent as those used under Title XVI of the Social Security Act.
Only those households that contain individuals who meet the above definitions are entitled to the medical deduction. A spouse or other person receiving benefits as a dependent of the SSI or disability recipient are not entitled to the deduction. An SSI essential person does not entitle the household to the deduction.
Persons receiving emergency SSI benefits based on presumptive eligibility are eligible for the medical deduction. These benefits include regular benefits for a 3-month period which are paid to persons who will most likely meet SSI disability criteria. The single $100 payment made to applicants who appear to meet the SSI eligibility criteria and who are considered in need of immediate assistance are also eligible for the excess medical deduction. If a person is approved for presumptive SSI and then denied, the medical deduction must be removed according to regular processing standards.
A person is considered disabled if he has been certified for the benefits listed above. This includes persons who have been certified but have not received their first payments and those whose benefits are being recouped to repay a prior overpayment.
For households which contain a disabled SSI recipient in accordance with items 2, 3, 4, or 5 above: If the household is determined to be categorically eligible within the 30-day processing standard or determined to be eligible as a noncategorical eligible household but later becomes categorically eligible, the household will be entitled to the medical deduction for the period that the SSI recipient is authorized to receive SSI benefits or the date of the food stamp application, whichever is later. A household that is determined to be ineligible and later becomes categorically eligible and entitled to restored benefits would be entitled to the medical deduction from the beginning of the period for which SSI benefits were paid or the original food stamp application date, whichever is later.
The medical expenses of a deceased household member (who met the definition of elderly or disabled while a member of the household) are allowable if the remaining household members are legally responsible for the bills.
A household that is responsible for paying medical expenses of a nonhousehold member is not entitled to the medical deduction because of that person.
If an individual was a member of the household and subsequently became hospitalized or placed in a nursing home, the household would be entitled to the medical deduction for those expenses incurred by the former household member if the household continues to be legally responsible for paying those expenses. This policy also applies if a member is placed in a boarding home or retirement home. If the previous member is placed in any type of institution and cannot establish food stamp eligibility for himself/herself, the household may continue to claim the deduction for the institutionalized member.
Additionally, expenses are allowable if the elderly/disabled person who is in a home or hospital would have been in the food stamp household prior to incurring the expense. The household does not have to be participating prior to incurring the expense to be eligible for the deduction, but the worker would have to determine if the expenses were allowable or past due.
Example: A husband and wife were not participating. The husband goes to the hospital in September. The wife applies for food stamps in October. The husband’s expenses can be allowed because he would have been required to be a part of his wife’s household.
Example: An elderly mother was living with a daughter. They had separate food stamp households. The mother goes into the hospital, so her case is closed. The daughter is making sporadic payments for hospital costs. She is not allowed to claim a medical deduction for her mother’s costs because they were separate households before the costs were incurred.
If a household member will turn 60 years of age during the first month of the certification period, the medical deduction should be allowed beginning that month. If the person will turn 60 years old later in the certification period, any reported medical expenses should be allowed beginning in the month the member turns 60.
Example: A household applies in January and is certified through December. One of the members will turn 60 in March. No expenses would be allowed in January and February. The worker would determine medical expenses anticipated for March and subsequent months and compute benefits for March through the rest of the certification period based on those expenses.
For retrospectively budgeted monthly reporting households, eligibility for the medical deduction is determined by the person’s age during the budget month, not the issuance month.
II. ALLOWABLE MEDICAL COSTS
Once the worker has determined the household contains elderly or disabled members, he/she must determine what, if any, medical expenses the household incurs. Some costs are allowable as a deduction, while others are not allowed. The following are allowable medical expenses as outlined in Section 273.9(d)(3) of the Regulations:
- Medical and dental care including psychotherapy and rehabilitation services provided by a licensed practitioner authorized by State law or other qualifying health professional;
- Hospitalization or outpatient treatment, nursing care, and nursing home care including payments by the household for an individual who was a household member immediately prior to entering a hospital or nursing home provided by a facility recognized by the State;
- Prescription drugs when prescribed by a licensed practitioner authorized under State law and other over-the-counter medication (including insulin) when approved by a licensed practitioner or other qualified health professional. In addition, costs of medical supplies, sick-room equipment (including rental) or other prescribed equipment are deductible;
- Health and hospitalization insurance policy premiums. The costs of health and accident policies such as those payable in lump sum settlements for death or dismemberment or income maintenance polices such as those that continue mortgage or loan payments while the beneficiary is disabled are not deductible;
- Medicare premiums related to coverage under Title XVIII of the Social Security Act, any cost-sharing or spend down expenses incurred by Medicaid recipients;
- Dentures, hearing aids, and prosthetics;
- Securing and maintaining a seeing eye or hearing dog including the cost of dog food and veterinarian bills;
- Eye glasses prescribed by a physician skilled in eye disease or by an optometrist;
- Reasonable cost of transportation and lodging to obtain medical treatment or services; and
- Maintaining an attendant, homemaker, home health aide, child care services, or housekeeper necessary due to age, infirmity, or illness. In addition, an amount equal to the one-person coupon allotment shall be deducted if the household furnishes the majority of the attendant’s meals. The allotment for this meal related deduction shall be that in effect at the time of initial certification. The worker is only required to update the allotment amount at the next scheduled recertification. However, at the worker’s option, the allotment amount may be updated earlier. If a household incurs attendant care costs that would qualify under both the dependent care deduction and the medical deduction, the worker shall treat the cost as a medical deduction.
Further clarification of allowable medical costs are:
• Only the portion of a medical insurance premium assigned to the elderly or disabled household member may be considered when computing the deductible amount. If the policy does not spell out how much of the premium is for each household member, the worker may prorate the premium amount among all household members. Only the prorated amount for the eligible member would be considered a deduction. If the policy holder is not elderly or disabled, but the family policy includes a person who is eligible for the medical deduction, that part of the premium for the eligible member may be used in computing the deduction.
• Some insurance policies pay a household a specific amount of money for each day the person is in the hospital. These premiums are deductible only if the policy itself states that the monies are intended to be used to cover medical expenses. This is also true of insurance policies intended to cover cancer treatment or nursing home care. Ambulance insurance premiums are allowable medical costs.
• In some areas of the country, Medic-Alert systems are available to households who are disabled or aged and live alone. These systems involve a mechanism that is worn around the neck. If the person should become ill or injured, emergency help can be summoned by activating the mechanism. The costs incurred for these devices are considered allowable medical costs. The basic fee for the telephone which the system uses should be handled as a utility expense.
• Transportation costs include trips to a pharmacy or other location to fill prescriptions, fittings for dentures, hearing aids, or glasses, as well as trips to the doctor, dentist, etc.
• Each State may set amounts to be considered reasonable costs of transportation and lodging. Use of State or IRS rates is permissible for mileage in a privately-owned vehicle. As for lodging costs, the State should provide guidelines to judge reasonableness of such costs. The guidelines could be a flat, State-wide amount, could include variations for rural and urban areas, and could provide the basis for making exceptions to such rates.
• A relative, who is not a household member, may be an attendant.
• The term eye glasses as an allowable expense includes costs for contact lens.
• Child care expenses for a child receiving SSI which are necessary and identifiable are allowable medical costs.
• Payments on loans for one-time medical expenses are deductible, but the interest on the loan must not be allowed as part of the deduction.
• Medical expenses billed on a charge card are allowable. The interest can not be included as a deduction.
• Monthly telephone fees for amplifiers and warning signals for handicapped persons and the costs of typewriter equipment that is connected to the telephone for deaf persons may be allowable medical deductions. A deduction may be allowed for equipment added to a vehicle or home for a handicapped person if a physician prescribes the equipment. Again, loan payments for the purchase of such equipment are also allowed, but not the interest on the loan. Additionally, the cost of building a ramp for a wheelchair is an allowable expense. However, a computer purchased by a blind person for learning purposes cannot be allowed as a medical expense.
• Costs of securing and maintaining service animals specially trained to assist handicapped individuals are allowable medical expenses. Such animals include seeing guide dogs, hearing guide dogs, and housekeeper monkeys. Food and veterinarian bills are also allowable costs associated with the service animal. Animals, such as cats, that are recommended as a companion are not allowable as a medical deduction.
• Special diets are not an allowable medical deduction.
• Costs for “alternative therapy” treatment, such as Chi Therapy is not an allowable medical deduction. The treatment must be provided by a licensed practitioner recognized and authorized by State law. Message therapy is not allowable, unless the treatment is performed by a licensed therapist. Consultation fees and purchase of oils used for aroma therapy are not an allowable expense. A DOCTOR’S RECOMMENDATION FOR THESE ALTERNATIVE THERAPIES DOES NOT OVERRIDE ANY UNALLOWABLE DEDUCTION.
• In some States, herbalists are licensed practitioners recognized by the State Medical Board. If they prescribe vitamins/herbs the cost for the herbalist and vitamins/herbs may be allowed as a medical expense.
THE INTENT TO PAY IS NOT A CONSIDERATION IN ALLOWING AN EXPENSE.
III. DETERMINING THE AMOUNT OF THE DEDUCTION
After the worker has identified all the medical expenses the household incurs and which of those expenses are allowable, several other factors must be considered in determining the total amount of the deduction the household will be entitled to receive. The worker will need to anticipate when the household will receive bills for their expenses, and when those expenses may be averaged. Consideration must be given to those expenses which will be paid by a third party. In addition, the worker must determine if the expenses are current or past due. This section addresses these factors.
A. EXCESS MEDICAL DEDUCTION
Only those medical expenses incurred by an elderly or disabled household member in excess of $35 per month can be used as a deduction.
Example: If a household incurs expenses of $100 a month, the worker would subtract $35 from the $100 and allow $65 as the medical deduction.
If the medical expenses have been averaged over the certification period, the $35 is deducted from the monthly average each month.
Example: A household elects to average a one time medical expense of $300 over the next three months, which is the remainder of the certification period. The worker would allow $100 minus $35 each month for the next three months.
B. BILLED EXPENSES
Except as provided for elsewhere in this section, a medical expense shall only be allowed in the month the expense is billed or otherwise becomes due, regardless of when the household intends to pay the expense.
Example: A household member had a check-up in August. The household received the bill on August 15 and reported the expense on the same day. The worker would allow a deduction for the expense in September since it is too late to allow the deduction for August and September will be the month the bill becomes due. If this same household does not report the expense until October, no deduction will be allowed because it is past due.
The Regulations provide that a deduction shall be allowed in the month the expense is billed or otherwise becomes due. Or otherwise becomes due may be interpreted to apply to situations in which a bill is received in one month, but the due date on the bill is in the following month. In these cases, the State may chose to allow the expense in either the month the bill is received or the month the expense is due. The option chosen by the State should be stated in the policy manual and applied in all cases.
Agreed upon monthly installments on one-time medical expenses are allowable in the month that each installment is due. The expense is allowable even if the household was initially billed and an agreement plan set up before the certification period began.
Medical expenses billed on a charge account are considered billed when the statement is received. If the household does not pay off the balance by the first month due, subsequent monthly billings will be treated in the same manner as an installment plan. In no event can amounts that are considered past due be allowed. The worker shall calculate a household’s expenses based on the expenses the household expects to be billed for during the certification period.
C. ANTICIPATING EXPENSES
Anticipation of the expenses shall be based on the most recent month’s bills, unless the household is reasonably certain a change will occur. The worker shall not automatically average past month’s bills as a method of anticipating. In other words, the worker may consider past month’s bills, and through discussions with the household, determine if those same expenses will most likely be the same as they were in the past. The worker should thoroughly explore with the household any changes from past expenses and any new expenses expected to occur. Once the worker has anticipated all expenses, those expenses may be allowed in the month they are expected to be billed or they can be averaged over the certification period if the they fluctuate. Allowing anticipated expenses in the month they are expected to be billed will more than likely result in varying allotment levels during the certification period.
If new expenses occur in the middle of the certification period, the worker should anticipate the amounts the household expects to be billed for. These expenses would then be allowed in the months they are expected to be billed or averaged if the expenses fluctuate.
D. AVERAGING EXPENSES
Households may elect to have fluctuating expenses averaged. If a recurring monthly expense does not fluctuate, it would not be averaged. It will be allowed each month as billed.
Example: A household incurs a $50 a month expense for rental of medical equipment. The worker would simply allow the actual expense each month. There would be no need to average.
Households may also elect to have expenses which are billed less often than monthly averaged forward over the interval between scheduled billings. If a bill is averaged over the interval between billings, the expense can be allowed even if the bill was not received in the certification period.
Example: A household is billed quarterly on January 1, April 1, etc. The household applies in February. The worker would average the billing over January, February, and March, but only allow the averaged amounts for February and March. The averaged amount could not be allowed for January as the household was not participating at that time.
If there is no regularly scheduled billing, the expense may be averaged forward over the period the expense is intended to cover.
Example: A household receives a bill in July which covers a 3-month supply of a prescription drug. The bill may be averaged over July, August, and September.
At initial certification, households may also elect to have one time only expenses averaged over the entire certification period in which they are billed.
Households reporting one time only medical expenses during the certification period may elect to have a one time deduction or to have the expense averaged over the remainder of the certification period.
Example: A household was certified from January through December. The elderly person was in the hospital in June. The household receives the bill and reports the expense in July. The worker would average the entire expense over the months of August through December, not over the months of January through December.
For those households reporting a one time medical expense during the certification period, averaging begins the month the reported change becomes effective as reflected in the example immediately above. However, if verification is not received by the second normal allotment after the change has been made, benefits revert to the amount in effect prior to the change. (This applies to all reported changes which are effected prior to verification, except when dealing with expenses that will be reimbursed.)
Example: A household’s one time expense was effected as in the last example above. The household does not provide verification by the September allotment. The worker would remove the amount of the deduction being allowed for the one time expense for the October issuance, unless verification of reimbursement is not yet available.
If a one time expense is billed in the last month (or the second to the last month) of the certification period and there is no time to allow the expense in the current certification period, the expense can be averaged over the months of the new certification period provided there is not a break between the certification periods.
Example: A household is billed for a one time expense on November 27. December is the last month of the certification period. Since the worker does not have time to effect the change for December, he/she would average it over the months of the new certification period, provided the household is recertified for the next month.
The only other time a one time medical expense may be allowed outside of the certification period is if the household has made an agreement with the provider to pay the bill in installments.
If a household reports an allowable medical cost at the time of certification but cannot provide verification at that time, and if the amount of the cost cannot be reasonably anticipated based upon available information about the recipient’s medical condition and public or private insurance coverage, the household shall have the nonreimbursable portion considered at the time the reimbursement is reported and verified. Therefore, if the household has met its deductible and the worker has verified the policy only pays 80 percent of all further expenses, the worker may anticipate that the insurance will pay 80 percent of the future expenses and allow 20 percent of those anticipated expenses as a deduction. However, the State will be liable for any Quality Control errors that result from anticipating incorrectly. If the anticipated expenses will fluctuate, they may be averaged over the certification period if anticipation was done at initial certification or over the remainder of the certification period if anticipation is done as a result of changes being reported during the certification period.
Any medical expense that will be covered by a third-party reimbursement or an excluded vendor payment shall not be allowed as a deduction. In addition, an expense which will be covered by an excluded vendor payment that has been converted to a direct cash payment under the approval of a federally authorized demonstration project shall not be deductible.
That portion of an allowable medical expense which is not reimbursable can be included as part of the household’s medical expenses. Households entitled to the medical deduction will have the nonreimbursable portion of the expense considered at the time the amount of the reimbursement is received or can otherwise be verified.
Example: A household has total medical expenses of $635 and has third-party liability. The household receives the bill for $635 in February. In June the insurance company pays $400 of the bill. The household is then responsible for paying the remaining $235. After verification of the reimbursed amount, the worker can allow a medical deduction of $200. This amount can be allowed in one lump sum in the month it is verified, averaged over the remainder of the certification period, or the monthly installment can be allowed for the period of time it has been agreed upon for the household to pay the balance.
No matter how long it takes to obtain proof of the reimbursable portion of the medical expenses, no deduction can be allowed until it is verified if the worker and household were unable to anticipate expenses based on the recipient’s medical condition and type of insurance coverage. Keep in mind this only applies to expenses subject to reimbursement. If the household has expenses that the worker is sure will not be reimbursed, the expenses may be allowed prior to verification.
If the reimbursement is verified after the end of the certification period in which the expense was billed or otherwise became due, the nonreimbursable portion may be allowed during the certification period in which the reimbursement was verified.
Example: A household was certified from January through June. In January the household received a bill for $555. The expenses are subject to reimbursement. In June the household is recertified for July through December. In August the household verifies the insurance paid $335. The worker would then average the remaining $220 expense over the months of September through December.
A household’s statement that no reimbursement will be received should be accepted unless it is questionable.
There are some exceptions to not allowing an expense until the reimbursement is verified. If a household has an insurance policy that requires paying a deductible before the insurance will pay any expenses, the worker may allow expenses until the deductible is met. In addition, 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.
F. PAST DUE EXPENSES
Medical expenses carried forward from past billing periods are not deductible, even if they are included with the most recent billing and actually paid by the household. In any event, a particular expense may only be deducted once. Once a bill becomes past due, it remains past due for food stamp purposes.
Example: A household is billed for a medical expense in May and reports the expense but does not pay. Because deductions are allowable when they are billed, the worker would allow the expense for June. At a later date the household arranges a repayment agreement. The household is not entitled to the deduction again, even if they are now paying, as this would result in the same expense being allowed twice.
A bill is considered past due 30 days after the billing date. Past due means the payment is overdue to the provider, not overdue at the time of certification or recertification.
Example: A household received a bill on May 25. They apply for food stamps on June 1. At this point the bill is not considered past due at certification, and the worker would allow the expense in computing June’s allotment.
Therefore, the household does not have to be participating prior to incurring the expense to be eligible for the deduction, but the worker has to determine if the expense is allowable or past due.
If a household arranges with the provider to pay the expense in installments, the installments would be considered the household’s expense in the month each payment becomes due. The installment plan must be agreed upon prior to the due date of the original billing.
Example: A household incurs an expense of $1000. The original bill is received on May 1. By May 30, the household has made arrangements with the hospital to pay $100 each month from June through March. The worker would allow $100 minus $35 each month as a deduction for the next ten months. The original bill would not be considered past due.
If a household makes an agreement to pay in installments, but defaults, the provider may turn the bill over to a collection agency. A subsequent arrangement may be made with the collection agency. If the household made the original agreement with the provider prior to the due date of the initial billing, and the worker allowed the agreed upon amount each month, even if the household did not make the payments, the subsequent agreement with the collection agency would not be allowed as a deduction, because the expense has already been allowed as a deduction.
Example: Using the example above, assume the household made the arrangement with the provider by May 30 and reported the expense, but never made any payments. In August the provider turns the bill over for collection. The household agrees to begin making monthly payments beginning in September. The household again reports the expense. The worker would not allow the deduction as the expense has already been allowed.
If a household made an agreement with the provider, but defaulted, the provider will turn the bill over to a collection agency. A household may receive a deduction based on the arrangement with the collection agency as long as the worker can ensure that no amount of the expense is allowed twice. Allowing a renegotiated amount is an option to the State. If chosen, it must be applied consistently and the policy should be clearly stated in the manual. It must be pointed out the extra effort required of the worker could be time-consuming and prone to error. However, if the worker can ensure no amount of any medical expense is allowed twice, it may choose to use renegotiated amounts to calculate the medical expense deduction.
Example: A household made an initial agreement with the provider on May 15. It was agreed that the household would make $100 a month payments over the next 10 months beginning in June. The household does not report the expense because payments were not made. In August the provider turns the bill over to a collection agency and the household agrees to another payment agreement. Because the household intends to make these payments, the expense is reported. The worker may allow the expense based on the agreement with the collection agency.
Example: A household made an agreement in January to pay $100 a month for 10 months. The household made payments for January and February. The household was unable to make payments in March and April. In May, the household renegotiated the payments with the provider to pay the balance of $800 in equal amounts of $80 over the next 10 months. The worker had continued to allow a $100 deduction during March and April. In May, the household reports the renegotiated amount. In acting on this report, the worker would consider a remaining balance of $600 rather than $800, and allow an $80 deduction until the $600 is paid off.
The payment arrangement does not have to be a formal contract. A mutually recognized agreement is sufficient.
Medical expenses that are pending verification of third-party reimbursement are not considered past due until 30 days after the receipt of verification of the reimbursement.
Example: A household is billed in May for $1000. The bill is submitted to the insurance company. In July the household is notified that the insurance company paid $800. The household is responsible for paying $200 of the expense. If timely reported, the worker would allow the expense in August or average the deduction over the remainder of the certification period.
If the certification period expires before the balance of the installments has been paid, the monthly payment may be allowed as a deduction into the new certification period.
Example: A household makes an agreement with the provider to pay the medical expense in 36 monthly payments. The expense was billed in June 1999. The household’s certification period expires in December 1999. The monthly payment would be allowed for 36 months, resulting in the expense being budgeted into subsequent certification periods, beginning with a new certification period in January 2000.
The balance due may be renegotiated between the household and the provider even if payments have been made timely. If a new agreement is negotiated, the expense may be allowed in accordance with the new agreement. (The household can not simply elect to have the remaining balance deducted in one month or over the remaining months of a certification period in order to receive a larger deduction.)
Example: A household initially agreed to make $100 a month payments for 36 months to pay off a $3600 one time expense. The worker allowed a deduction of $65 from January through December. In mid-December, the household was recertified for another year. At the interview, the household informed the worker that a new agreement had been negotiated with the doctor to pay the remaining balance of the expense. Beginning in January the household would be paying $200 a month for the next 12 months. The household provided a copy of the agreement to verify the renegotiation. The worker could allow $165 as a medical deduction for each month of the new 12 month certification period.
If a household is receiving a monthly deduction based on an agreement, the worker must discontinue the deduction if the household pays the remaining balance off early. The balance could be allowed as a deduction in the month it is paid or averaged over the remaining months of the certification period.
Example: A household (certified from January – December) makes an agreement in January to pay $100 a month for 10 months. The household makes regular payments until June. In June, the household receives extra money and pays the remaining balance of $500. This is reported to the worker on June 5. The worker would allow a $500 deduction in July or, if the household chooses, the $500 would be averaged over the months of July through December.
G. GROUP HOMES
Residents of group homes are entitled to the medical deduction for costs they incur. In some cases, it may be challenging to determine a medical deduction. The worker should first attempt to have the group home separately identify allowable medical expenses. If the group home can provide this information, this will be the amount to calculate the deduction.
Some group homes charge a basic rate for room and board and then have a higher rate depending on the amount of medical care a resident may need. In such instances, if a person is charged a higher rate, the basic rate minus the food stamp maximum allotment for a one-person household may be used to determine the shelter costs for that person, and the difference between the basic rate and the higher rate may be used to determine the medical deduction.
Examples: A group home charges $2000 a month basic rate. If an individual has substantial medical care needs, the rate is $3000. The medical deduction for this individual would be $1000 a month minus $35.
These procedures apply to residents making their own payments and to those instances where a protective payee is handling the payments but is using the resident’s own funds.
H. EXPEDITED SERVICE
When a household is entitled to expedited service and claims medical expenses, a deduction will be allowed as follows:
· If the household claims medical expenses and no insurance, a deduction may be allowed even though verification is not required at the point of certification because the household is entitled to expedited service.
· If the household claims medical expenses and insurance, and it is stated that the insurance company pays 80 percent of expenses, a deduction may be allowed for 20 percent of the expenses without requiring the household to provide verification.
· If the household claims medical expenses and insurance, but the amount of reimbursement is unknown, no deduction is allowed. The nonreimbursable portion of an expense cannot be allowed as a deduction if the amount of the reimbursement is not known. The deduction will be allowed at the time reimbursement is received or can otherwise be verified.
Medical expenses allowed under expedited service at initial certification must be verified prior to the second month’s issuance.
I. MEDICAID SPEND-DOWN
Each State has its own method of determining eligibility and calculating the amount of the Medicaid spend-down and the period it is intended to cover. Because of this, it is not possible to address this issue specifically. The general rule is, however, that expenses less than the spend-down amount should be viewed as an out-of-pocket medical expense, like any other.
Example: A household is approved for Medicaid and must meet a $200 spend-down before Medicaid will begin to pick up medical costs. If a household incurs $175 in medical expenses (expenses less than the spend-down of $200), this amount would be viewed as an out-of-pocket expense and allowed for food stamp deduction purposes.
The Regulations at 273.10(d)(4) allow the State to anticipate and calculate a household’s expense based on expenses the household expects to be billed for during the certification 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. Reviewing the household’s history of meeting the spend-down will also assist in anticipating expenses and the period over which to allow expenses.
The household’s statement that no reimbursement of the anticipated expenses will be received should be accepted unless the worker has reason to question the statement.
The household may elect to average these anticipated expenses forward over the period they are expected to cover or have them deducted in the month in which they are expected to be billed or otherwise become due. In either case, the $35 limit must be exceeded monthly before a deduction can be allowed.
IV. REPORTING AND ACTING ON CHANGES
Procedures for reporting and acting on changes in medical expenses is the same for change reporting households and monthly reporting households. For monthly reporting/retrospectively budgeted (MRRB) households, medical expenses shall be budgeted prospectively. MRRB households cannot be required to monthly report medical expenses.
NOTE: The monthly report form may ask the household if there have been any changes in medical expenses, but the form must clearly state that such information is NOT required to be reported.
At certification and recertification, the household shall report and verify all medical expenses. The household’s monthly medical deduction for the certification period 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 certification period based on available information about the recipient’s medical condition, public or private insurance coverage, and current verified medical expenses. The household shall not be required to file reports or be required to report changes about its medical expenses during the certification period.
Example: A household is initially certified in January and is assigned a 12 month certification period. The household reports a member will have surgery in March. It is anticipated the household will incur $1000 in expenses. Based on verification received by the doctor and the household, and based on insurance coverage, the worker determines the household is entitled to a deduction of $65 for the months of March through December. ($1000 divided by 10 months = $100 a month – $35 = $65.) Due to unforeseen events, the household’s medical expenses become $1500 in March rather than $1000. The household does not report this change, nor is it required to.
A household may voluntarily report changes in medical expenses during the certification period. If it does so, the worker must act on all reported changes. The worker shall verify the change if it will increase the allotment. The State has the option of either requiring verification prior to acting on the change, or requiring the verification prior to the second normal monthly allotment after the change is reported. The State should specify in the Food Stamp Program manual the option selected and apply the option consistently to all households.
Example: Using the same example on page 22, let us suppose the household reports the increased medical expenses of $1500 on June 5. The State has taken the option to verify prior to acting on the change. The household provides verification of the extra $500 in expenses by June 16. The worker would recalculate the expense and allow the new amount beginning in July.
If the household’s allotment decreases or the household becomes ineligible as a result of a decrease in the medical expenses, the worker shall issue a Notice of Adverse Action within 10 days of the date the change was reported. The decrease in the benefit level shall be made effective no later than the allotment for the month following the month in which the Notice of Adverse Action has expired, provided a fair hearing and continuation of benefits have not been requested.
Example: A household reports a decrease of $150 in medical expenses on May 5. The worker must issue a Notice of Adverse Action by May 15. Provided a fair hearing is not requested, the worker would effect the change for the June allotment.
During the certification period, the worker shall NOT act on changes in the medical expenses of households eligible for the medical expense deduction which it learns of from a source other than the household and which, in order to take action, requires the worker to contact the household for verification. The worker shall only act on those changes in medical expenses it learns of from a source other than the household if those changes are verified upon receipt and do not necessitate contact with the household.
V. VERIFICATION AND DOCUMENTATION
Prior to allowing the household excess medical deductions or allowing the specific expenses, verification of the disability and the medical expenses must be accomplished. This section addresses verification of the disabilities and verification of the expenses separately. Documentation is covered at the end of this section.
A. VERIFYING ELIGIBILITY FOR THE MEDICAL DEDUCTION
The worker shall verify disabilities as defined on pages 1 and 2 as follows:
- For persons to be considered disabled under items 2, 3, and 4 on page 1, the household must provide proof that the person is receiving benefits under Titles I, II, X, XIV, or XVI of the Social Security Act;
- For persons to be considered disabled under item 6 on page 1, the household must present a statement from the Veteran’s Administration (VA) which clearly indicates that the disabled person is receiving VA disability benefits for a service-connected or nonservice-connected disability and that the disability is rated as total or paid at the total rate by VA;
- For persons to be considered disabled under items 7 and 8 on page 1, proof by the household that the disabled person is receiving VA disability benefits is sufficient verification of the disability;
- For persons to be considered disabled under items 5 and 9 on page 1, the worker shall use the Social Security Administration’s (SSA) most current list of disabilities considered permanent under the Social Security Act for verifying disability. If it is obvious to the worker that the person has one of the listed disabilities, the household shall be considered to have verified the disability. If the disability is not obvious to the worker, the household shall provide a statement from a physician or licensed or certified psychologist certifying that the person has one of the non-obvious disabilities.
- For persons to be considered disabled under item 10 on page 2, the household shall provide proof that the person receives a Railroad Retirement disability annuity from the Railroad Retirement Board and has been determined to qualify for Medicare.
- For persons to be considered disabled under item 11 on page 2, the household shall provide proof the person receives interim assistance benefits pending the receipt of SSI; or disability-related medical assistance under Title XIX of the SSA; or disability-based State general assistance benefits. The worker shall verify the eligibility to receive these benefits is based on disability or blindness criteria which are at least as stringent as those used under Title XVI of the Social Security Act.
B. VERIFYING THE MEDICAL EXPENSES
The worker shall use documentary evidence as the primary source of verification.
Documentary evidence consists of a written confirmation of the household’s medical
expenses. The following are examples of documentary evidence the worker may use:
- Bills from the providers of health insurance, services, and products;
- Statements from these providers; or
- Health insurance policies that clearly describe the areas of coverage.
Although documentary evidence shall be the primary source of verification, acceptable verification shall not be limited to any single type of document and may be obtained through the household or other sources. Whenever documentary evidence cannot be obtained or is insufficient to make a firm determination of eligibility for the deduction or the amount of the deduction, the worker may require a collateral contact. Documentary evidence may be considered insufficient when the household presents bills that do not represent an accurate picture of the household’s medical expenses (such as old bills).
A collateral contact is an oral confirmation of the household’s expenses by a person outside of the household. The collateral contact may be made either in person or over the telephone. The worker may select a collateral contact if the household fails to designate one or designates one that is unacceptable to the worker. Examples of acceptable collateral contacts for medical expenses include billing personnel in the doctor’s office or the hospital, insurance agents, nursing home or home health care providers, or rental agencies.
When information obtained from a source outside of the household contradicts statements made by the household, the household shall be afforded the opportunity to resolve the discrepancy prior to using the information to determine benefits.
The household has primary responsibility for providing documentary evidence to support statements on the application and to resolve any questionable information. The worker may, but is not required to, assist the household in obtaining verification. Households may supply documentary evidence in person, through the mail, or through an authorized representative. The worker can not require the household to present verification in person. The worker shall accept any reasonable documentary evidence provided by the household and shall be primarily concerned with how adequately the verification proves the statements on the application.
Households entitled to expedited service may postpone verification of medical expenses if the verification can not be obtained in time to meet the 7-day processing time frame. The verification must be provided prior to the second month’s issuance.
If a household does not have needed verification at the interview, the worker should allow the household 10 more days to provide that verification. If the verification is not provided within 10 days, benefits will be determined without allowing a deduction for the unverified expense. When the verification is provided, the worker will allow the expense in accordance with the procedures for acting on reported changes. If the household is entitled to expedited service, those procedures must be followed.
At recertification the same verification procedures apply as at initial certification, except that the worker shall not verify unchanged expenses unless the information is incomplete, inaccurate, inconsistent, or outdated.
Example: A household is being recertified in May. Total recurring expenses have not changed, but the household reports a new expense of $10 a month for prescriptions. The worker shall request verification of this new expense, but she/he can not request verification of the recurring expenses that have not changed. However, the worker can require verification of the recurring expenses if information about those expenses appear to be incomplete, inaccurate, inconsistent or outdated.
Changes voluntarily reported during the certification period shall be subject to the same verification procedures that apply at initial certification.
Example: A household reports a $20 change in a medical expense during the certification period. The worker will act on that change, but he/she will not require verification of that change unless it is incomplete, inaccurate, inconsistent, or outdated.
If the change will result in an increase of the household’s benefits, the worker shall make the change effective no later than the first allotment issued 10 days after the date the change was reported. Verification must be provided prior to the issuance of the second normal monthly issuance after the change was reported. If the household does not provide the verification by that time, the benefits will revert to the allotment amount being issued prior to effecting the change.
Example: A household reports on May 5 that expenses have increased by $30. The household’s normal issuance date is the 1st of each month. The worker would make the change effective with the June 1 allotment. The household does not provide the verification before July 1. The August allotment level will revert back to that being received in May.
Some States have elected the option to verify changes prior to taking action. If this is the case, the worker shall allow the household 10 days from the date the change was reported to provide the verification. When verification is provided within this time frame, the change must be effected no later than the first allotment issued 10 days after the change was reported.
If the household does not provide the verification within 10 days but does provide the verification at a later date, the change shall be made effective no later than the first allotment issued 10 days after the date the verification was provided.
Example: A household reports a $30 increase in expenses on May 5. The household’s normal issuance date is the lst of each month. The household has until May 15 to provide verification. The household does not provide the verification by that time so the worker will not change June’s allotment. On May 25 the household brings in verification. The worker will make the change effective in the July’s allotment.
When a change is reported that will decrease the household’s allotment, the change will be made effective in the next allotment after the Notice of Adverse Action has expired. If verification is required, it must be obtained prior to recertification.
DOCUMENT! DOCUMENT! DOCUMENT!
Case files MUST be documented to support eligibility, ineligibility, and the benefit level determination. Documentation shall be in sufficient detail to permit a reviewer to determine the reasonableness and accuracy of the determination.
The worker shall thoroughly document all aspects of eligibility. Documentation shall include, but is not limited to, the following:
- The household members’ entitled to the medical deduction and the verification obtained to prove that entitlement;
- All medical expenses – The worker should document the source of verification, which expenses are allowable, and which expenses are not allowable (i.e., the expense is not an allowable expense or the expense is past due, etc.);
- Treatment of reimbursements, when the verification for reimbursement was received, or verification that reimbursements are not applicable;
- Time periods covered by the expenses;
- The determination to average and the time periods over which the expenses have been averaged;
- All verification obtained;
- Any non-cooperation by the household, or the non-receipt of any requested verification;
- The determination that information provided by the household appeared incomplete, inaccurate, inconsistent, or outdated. If verification received from someone outside of the household was inconsistent with the household’s statements, document why the information was considered inconsistent and how the issue was resolved.
- If the household reports an expense but chooses not to have it included as a deduction, that fact should be documented.
- If a household needs to provide missing verification, document the date verification was requested and the type of verification needed. Document the date verification was received. If the household does not provide the verification, document that fact to support subsequent action.