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Example Ms. Walker lives with her two children and is applying for MA for herself and her two children. She earns $600 per month. When determining the group's eligibility under the AR standards, the earned income disregard is applied: Earned Income Disregard = $90 + $30 + 1/3 of ($600 – $90 – $30) = $280. Her countable net earned income equals gross earnings minus her earned income disregard. Net Earned Income = $600 – $280 = $320. (2) Dependent Care Deduction Subtract the actual amount paid by the group out-of-pocket for the care of a dependent child or incapacitated adult living in the home up to the following maximums from earned income: • $175 per child (or incapacitated adult) if the child is age two or older. • $200 per child if the child is under age two. The dependent care expenses must be incurred in order to allow a family member to work in order to be deductible. The dependent care expense can be for the care of a family member who is not included in the AR Medicaid group. The dependent care expense may not be paid to a member of the group. If a group receives a child care subsidy to help it pay for child care expenses, count only the amount paid by the group when determining the Dependent Care Deduction.

Example 1 Ms. Walker's net earned income after subtracting out the earned income disregard is $320. She spends $200 per month on child care: $150 for her 4-year-old and $50 for her 10-year- old. Her net earned income is reduced by $200 and now equals $120. Example 2 Ms. Ryson and her son apply for Medicaid. Ms. Ryson also has a daughter (age 10) who receives SSI and is in her own SR case. Ms. Ryson pays $100 per month for after-school care for her son and $200 per month for after-school care for her disabled daughter. Ms. Ryson is eligible for a $100 dependent care deduction based on the child care expenses she pays for her son and $175 based on the child care expenses she incurs on behalf of her daughter. (Since her daughter is over age two, the dependent care deduction is capped at $175.) Example 3 Ms. Ewings and her two children apply for Medicaid. The family receives a child care subsidy from the District's Office of Early Childhood Education. While the full cost of the child care for the two children is $600 per month, Ms. Ewings only pays $100 per month - the subsidy pays the remainder. Ms. Ewings is eligible for a $100 dependent care deduction.