29.15 Income deductions

Deductions from earned income, including self employment, and from unearned income are allowed. Earned income deductions. A deduction of $65.00 and one-half of the remainder applies to all determinations of earned income. Business expenses. Deductions of business expenses from self-employment income are limited to the following: (i) Operating costs necessary to produce cash receipts, such as office or shop rental; taxes on farm or business property; hired help; interest on business loans; cost of materials, livestock and equipment required for the production of income; and any business depreciation. (ii) The cost of any meals provided to children for whom an individual provides day care in their own home, at the currently allowed rate per meal. (iii) The actual operating expenses necessary to produce cash receipts for commercial boarding houses: an establishment licensed as a commercial enterprise that offers meals and lodging for compensation, or, in areas without licensing requirements, a commercial establishment that offers meals and lodging with the intention of making a profit. (iv) Room and board, alone or as part of custodial care, provided that the amount shall not exceed the payment the household receives for room and board. (v) Foster care payments made by AHS to licensed foster homes, including room and board of children in the custody of and placed by AHS when the Medicaid group includes a foster parent. (vi) Ordinary and necessary expenses for active management of capital investments, like rental property. These may include fire insurance, water and sewer charges, property taxes, minor repairs which do not increase the value of the property, lawn care, snow removal, advertising for tenants and the interest portion of a mortgage payment. Work expenses of blind individuals. In addition to other allowable deductions, work expenses from income of a blind individual include the following30: (i) Cost of purchasing and caring for a guide dog; (ii) Work-related fees such as licenses, professional association dues or union fees; (iii) Transportation to and from work including vehicle modifications; (iv) Training to use an impairment-related item such as Braille or a work-related item such as a computer; (v) Federal, state and local income taxes; (vi) Social Security taxes and mandatory pension contributions; (vii) Meals consumed during work hours; (viii) Attendant care services; (ix) Structural modifications to the home; and (x) Medical devices such as wheelchairs. Work expenses of disabled individuals. In addition to other allowable deductions, work expenses from income of a disabled individual include the following31: (i) Transportation to and from work, including vehicle modifications; (ii) Impairment-related training; (iii) Attendant care; (iv) Structural modifications to the home; and (v) Medical devices such as wheelchairs. Unearned income deduction Amounts used to comply with the terms of court-ordered support or Title IV-D support payments are deducted from unearned income. 30 Rates for mileage reimbursement are the rates established by the U.S. General Services Administration. The rates fluctuate periodically. For the current rate, refer to the U.S. General Services Administration’s website at www.gsa.gov/mileage. 31 Rates for mileage reimbursement are the rates established by the U.S. General Services Administration. The rates fluctuate periodically. For the current rate, refer to the U.S. General Services Administration’s website at www.gsa.gov/mileage. Spenddowns (01/01/2024, GCR 23-086) When the total countable income or, if applicable, resources of an individual exceeds the applicable income or resource standard for eligibility after allocations are made, and exclusions and disregards, if applicable, are applied, an individual requesting Medicaid, including Medicaid coverage of long-term care services and supports, may use the spenddown provisions set forth in this section to attain financial eligibility. As stated in § 28.04(c), the income spenddown provisions under this section apply to an individual requesting MCA, including Medicaid coverage of long-term care services and supports under MCA, whose income exceeds the applicable income standard for eligibility for MCA and who is seeking MCA eligibility as medically needy and is subject to an income spenddown in order to be eligible. For this purpose, all references to “countable income” in this section shall mean the individual’s MAGI-based income as described in § 28.03(d) adjusted, if applicable, by apportioning the income of financially responsible family members according to the requirements set forth in § 28.04(b). Since there is no resource test for MCA eligibility, none of the resource spenddown provisions under this section apply. See § 7.03(a)(8)(i) for the individuals who may qualify for MCA as medically needy. Spending down is the process by which an individual incurs allowable expenses to be deducted from their income or spends resources to meet financial eligibility requirements. Spenddown is calculated using an accounting period of either one or six months, depending on the type of Medicaid services requested (see § 30.02). For purposes of calculating the spenddown for an individual requesting MCA eligibility as medically needy, other than Medicaid coverage of long-term care services and supports under MCA, a six month accounting period is used.