State of Wisconsin Department of Health Services

Release 24-02 August 22, 2024

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15.7 Income Deductions

15.7.1 Maintaining Home or Apartment

If a person residing in a medical institution (see Section 27.1.1 Institutions Introduction) has a home or apartment or was residing in an assisted living facility prior to institutionalization, deduct an amount from their income to allow for maintaining the home, apartment, or room at the assisted living facility that does not exceed the Institutions Home Maintenance Allowance Maximum (see Section 39.4.3 LTC Post-Eligibility Allowances). The amount is in addition to the $45 personal needs allowance. It should be enough for mortgage, rent, property taxes (including special assessments), home or renters' insurance, utilities (heat, water, sewer, electricity), and other incidental costs. If the member was residing at an assisted living facility prior to institutionalization, use the facility’s room and board rate, up to the maximum, for the home maintenance deduction.

Make the deduction only when both the following conditions are met:

• A physician provides a statement (verbally or in writing) certifying that the person is likely to return to the home or apartment within six months.
• The person's spouseA spouse is that person recognized by Wisconsin law as another person's legal husband or wife. Wisconsin does not recognize common law marriage. is not living in the home or apartment.

Deduct this amount for no more than six months. If the person is re-admitted to the institution, grant a six-month continuance. A physician must again certify that the person is likely to return to the home or apartment within six months.

The home maintenance allowance can be granted at any time. It is not limited to the first six months the person resides in the medical institution.

Example 1

Bob entered a nursing home in June 2013 as a private pay patient. In June 2014, he qualifies for Medicaid and is potentially eligible for the home maintenance allowance. Bob's doctor says he is expected to return home by November 2014. He is eligible for a home maintenance deduction from his income, when determining the amount of his income available for his cost of care, starting in June 2014.

 

Note	The home maintenance allowance may only be given for Institutional Medicaid. It does not apply to HCBW Medicaid.

15.7.2 Special Exempt Income

Special exempt income includes:

• Income used for supporting others (see Section 15.7.2.1 Support Payments).
• Court-ordered attorney fees (see Section 15.7.2.3 Fees to Guardians or Attorneys).
• Court-ordered guardian and guardian ad litem fees (see Section 15.7.2.3 Fees to Guardians or Attorneys).
• Expenses associated with establishing and maintaining a guardianship (see Section 15.7.2.3 Fees to Guardians or Attorneys).
• Expenses associated with a self-support plan (see Section 15.7.2.2 Self-Support Plan).
• IRWEImpairment-Related Work Expenses (see Section 15.7.4 Impairment-Related Work Expenses).
• Maintaining a home or apartment (see Section 15.7.1 Maintaining Home or Apartment).
• Costs associated with real property listed for sale (see Section 16.2 Assets Availability).

For specific exemptions, see Section 15.3 Exempt and Disregarded Income.

15.7.2.1 Support Payments

Support payments are payments that a Medicaid memberA recipient of Medicaid; formerly referred to as a "client." makes to another person outside the FTGfiscal test group for the purpose of supporting and maintaining that person. Support payments are either court-ordered (see Section 15.7.2.1.1 Court-Ordered or non-court-ordered (see Section 15.7.2.1.2 Non-court-Ordered).

Include the support payment amount as part of an institutionalized person's monthly need (see Section 27.6 ILTC Monthly Need) and cost of care (see Section 27.7 ILTC Cost of Care Calculation).

A person in the fiscal group who has legal responsibility for a person in a nursing home may be paying that person's patient liability. If so, deduct this amount from the group's income.

Note	Support payments are different from the community spouse income allocation (see Section 18.6.2 Community Spouse Income Allocation for more information).

15.7.2.1.1 Court-Ordered

The income deduction for monthly court-ordered support expenses is the amount that the member is "obligated" to pay as stipulated in the court order. Do not allow payments for arrearagesPayments of child support which were due for a prior period. and annual R & D expenses.

Actual payments may be deducted for court-ordered lying-in costs for the costs of the birth of the child. Unlike monthly court-ordered expenses, actual payments for lying-in costs are frequently paid at various times and are usually not tied to a regular payment schedule.

Note

If the court order stipulates that the individual must pay a monthly amount toward lying-in costs, allow the court-ordered amount (obligated amount) as an income deduction. If the member is required to pay lying-in costs but no specific monthly amount is ordered, allow actual payments for lying-in costs as an income deduction.

15.7.2.1.2 Non-Court-Ordered

Include non-court-ordered support payments only if they are paid to the following:

• Institutionalized spouse. The maximum amount that can be included is the AFDCAid to Families with Dependent Children cat needy income limit for a group size of one (see Section 39.3 AFDC-Related Income Table) minus the spouse's net income.
• Minor child who is living with a non-legally responsible relative. The maximum amount that can be included is the AFDC cat needy income limit for a group size of one plus the child's medical expenses minus the child's net income.

Do not include non-court-ordered payments if they are to one of the following:

• A spouse or minor child who receives SSISupplemental Security Income. A program based on financial need operated by the Social Security Administration that provides monthly income to low income people who are age 65 or older, blind, or disabled.
• A spouse who is eligible for SSI but refuses to apply for it

15.7.2.2 Plan to Achieve Self-Support

A member whose eligibility is based on blindness or disabilityThe law defines disability for Medicaid as "The inability to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." may deduct income that is received under an approved plan to achieve self-support (PASS). A PASS allows qualifying blind or disabled individuals to receive income and accumulate resources for training or purchasing equipment necessary for reaching employment goals that will lead to self-support. Where all requirements are met, income from any source, earned or unearned, is deducted and allowed to accumulate to the extent specified in the plan.

To qualify for this deduction, the member must perform in accordance with the plan. The plan must:

• Be specific, current, and in writing.
• Be approved by the Social Security Administration as verified by submission of the plan and the Social Security Administration’s approval letter.
• Specify the amount to be set aside and the expected cost and time required to accomplish the objective.
• Provide for identification and segregation of goods and money accumulated and conserved.

15.7.2.3 Fees to Guardians or Attorneys

15.7.2.3.1 Disallowed Deductions

The following fees to guardians or attorneys are not allowed income deductions:

• Fees paid to a legal guardian or attorney that are not court-ordered payments. Do not include such payments in the person's monthly need, and do not deduct them from his or her monthly income.
• Fees paid to a third party to reimburse a prepayment the third party made of a guardianship fee. Do not allow the payment even if the third party obtained a court order to recoup the prepayment.

Exception: Deduct this third party prepayment if all the following are true:

• The third party was the county acting as guardian ad litem. A guardian ad litem is someone appointed by the court to represent the best interests of a juvenile or disabled person during a particular court proceeding.
• The prepayment was to an attorney who was not a county employee at the time the services were delivered.
• A court ordered the institutionalized person to reimburse the county's prepayment.

15.7.2.3.2 Allowed Deductions

The following fees to guardians or attorneys are allowable income deductions:

• Court-ordered guardian and/or attorney fees paid directly out of the person's monthly income.
• Expenses paid by the person for establishing and maintaining a court-ordered guardianship or protective placement for himself or herself.

15.7.3 Medical/Remedial Expenses

Medical/remedial expenses are used in all the following:

• HCBWHome and Community-Based Waiver programs
• Patient liability calculations for residents of a medical institution
• Cost share and MAPPMedicaid Purchase Plan premium calculations
• MAPP eligibility calculation if expenses are over $500 monthly (see Section 26.4.2.1 Deduction for Medical and Remedial Expenses over $500 for more information on this MAPP specific deduction)

Medical expenses are anticipated, incurred expenses for services or goods that have been prescribed or provided by a professional medical practitioner (licensed in Wisconsin or another state). The expense is for diagnosis, cure, treatment, or prevention of disease or for treatment affecting any part of the body. These are expenses that are the responsibility of the member, and cannot be reimbursable by any other source, such as Medicaid, private insurance, or employer.

The following are examples of medical expenses:

• Deductibles and copayments for Medicaid, Medicare, and private health insurances
• Health insurance premiums.
• Bills for medical services that are not covered by Wisconsin Medicaid
• For purposes of meeting a Medicaid deductible, medical services received before the person became eligible for Medicaid (Past medical bills cannot be used for MAPP premium calculations.)

Medicaid overpayments, unpaid patient liabilities, and unpaid cost shares are not medical expenses. They cannot be deducted from income to lower a current or future patient liability or cost share or used to meet a deductible.

Remedial expenses are costs incurred for services or goods that are provided for the purpose of relieving, remedying, or reducing a medical or health condition. These are expenses that are the responsibility of the member and cannot be reimbursable by any other source, such as Medicaid, private insurance, or employer.

Some examples of remedial expenses are:

• Case management
• Day care
• Housing modifications for accessibility
• Respite care
• Supportive home care
• Transportation
• Services recognized under Wis. Stat. § 46.27
• Community Options Program expenses that are included in the person's service plan

Remedial expenses do not include housing or room and board services.

15.7.4 Impairment-Related Work Expenses

IRWE are expenses used to determine eligibility for Medicaid, MAPP, and premium calculations. IRWE are anticipated incurred expenses by the member (and for MAPP only, their spouse) related to the member’s impairment and employment. The expense cannot be one that a similar worker without a disability would have, such as uniforms. The expense cannot be reimbursable by a legally obligated third party such as Medicaid, private insurance, or the member’s employer. If an anticipated IRWE is later paid by an unanticipated source, it is still allowable for past months in which it was budgeted but not for future months.

Example 2

On March 25, Cecil was told by Harvey’s Auto Repair Shop that his wheelchair accessible van required repairs to fix the specialized door ramp. Cecil received an estimate of $2,000 for the repairs. The $2,000 estimate was determined to be a standard charge for this type of repair in the community. On March 26, Cecil applied for MAPP in Milwaukee County. At this time, the anticipated expense of the van repair was deducted from Cecil’s income. Cecil delayed making the repairs until May 27, when the van’s wheelchair accessible door completely quit working. At that time, Cecil’s friend Robin paid Harvey’s Auto Repair Shop for the repairs to Cecil’s van door. Cecil reported the repairs and the source of the money for the repairs to his IMincome maintenance worker. Cecil’s IM worker should not deduct the anticipated cost of the van repairs for any subsequent eligibility and premium determinations.

Deduct any MAPP member's expenses which:

• Do not exceed his or her gross monthly earned income (plus room and board income, if any).
• Are reasonably related to his or her earned income. Expenses which are reasonably related to earned income include those incurred in performing on the job and improving the person's ability to do the job.

Bills from months prior to the months for which eligibility is being determined are not an allowable IRWE. This is true even if it is currently being paid.

Determine a standard charge for the item or service based on what is representative for the member’s community. If you count an expense as an IRWE, do not also use the expense as a medical/remedial expense.

Some examples of IRWE are modified audio/visual equipment, typing aides, specialized keyboards, prostheses, reading aids, vehicle modification (plus installation, maintenance, and associated repair costs), and wheelchairs.

Do not allow the expense of getting to and from work as an IRWE, unless the expense is related to the member’s disability.

Exceptions: Always count the expenses of getting to and from work and the child care expenses as an IRWE for blind individuals.

15.7.5 $65 and ½ Earned Income Deduction

The $65 and ½ earned income deduction is an EBDElderly, Blind, or Disabled FTG deduction.

To calculate the $65 and ½ earned income deduction, subtract $65 from the member’s monthly earned income. Divide the result by two, and add $65. This is the earned income deduction.

Example 3

Michelle has monthly income of $1,240. Her $65 and ½ earned income deduction is $1,240.00 -      65.00 __________ $1,175.00 $1,175.00/2 = $587.50 Countable Income   $   587.50 +     65.00 __________ $   652.50 Earned Income DisregardAn amount not counted when determining a person's total net income. Michelle’s earned income deduction amount is $652.50.

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The information concerning the Medicaid program provided in this handbook release is published in accordance with: Titles XI and XIX of the Social Security Act; Parts 430 through 481 of Title 42 of the Code of Federal Regulations; Chapters 46 and 49 of the Wisconsin Statutes; and Chapters HA 3, DHS 2, 10 and 101 through 109 of the Wisconsin Administrative Code.

Notice: The content within this manual is the sole responsibility of the State of Wisconsin's Department of Health Services (DHS). This site will link to sites outside of DHS where appropriate. DHS is in no way responsible for the content of sites outside of DHS.

Publication Number: P-10030