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Title 8: Medicaid Page 65 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Non-MAGI-Related Deductions Revised April 11, 2025 $20 General Income Deduction Do not apply the $20 general income deduction for the following coverage groups:  300% group.  State Supplementary Assistance recipients applying for or receiving in-home health-related care, or residential care facility services.  Home- and community-based services waiver recipients. Do not apply the $20 deduction to:  Income based on need, such as unearned income for support and maintenance (veteran’s compensation, for example).  Income of an applicant in a medical institution. Exception: Allow the $20 deduction when determining eligibility for QMB, SLMB, or Medically Needy.  In-kind support and maintenance valued according to the value of one-third reduction rule. $65 Plus One-Half Deduction Legal reference: 20 CFR 416.1112 Deduct $65 plus one-half of the balance from a person’s earned income, except as listed below. Apply the deduction of impairment-related work expenses before deducting the one-half of the balance. When both spouses are employed, add together their total earned income then subtract the earned income deduction of $65 plus one-half from the total. If the recipient is a child who has earned income, give the $65 plus one-half deduction to the child’s earnings also. Do not apply the $65 plus one-half deduction for the following coverage groups:  300% group in a facility or home- and community-based waivers.  Dependent person. Deduct only $65 for the dependent. The aged, blind, or disabled client gets $65 plus one-half. Deduction for Impairment-Related Work Expenses Legal reference: P.L. 100-508, 20 CFR 416.976 Deduct impairment-related work expenses from the earned income of clients who are disabled (but not blind) and under age 65, or were determined to be disabled before age 65. If the client is blind, see Deduction for Work Expenses for the Blind.