4.6.4 Medical Expenses

4.6.4.3 Budgeting Medical Expenses including MA Deductible Expenses

4.6.4.4 Treatment of Medical Expense Deductions for Medicare Prescription Drug Discount Cardholders

The medical expense deduction is determined using verified allowable monthly medical expenses incurred by elderly, blind, or disabled FS FoodShare group members exceeding $35 per month.

4.6.4.1 Allowable Medical Expenses

Allow previously acquired charges (not yet paid) and current payments when calculating a medical expense deduction. Previously acquired charges include charges incurred anytime before or during the certification period, as long as the individual has an agreement to pay the charges and is still obligated for the expense.

Past unpaid medical bills can be used to prospectively budget recurring medical expenses at application or recertification.

One time medical expenses (i.e. hospital bills) can be budgeted for one month or averaged over the remaining certification period.

Medical expense payments made during the certification period are allowable. Medical expenses paid prior to the certification period are not allowable.

Example 1: Jack has surgery in January and receives a hospital bill for $400 in February. Jack then applies and becomes eligible for FS in April. At the time of application, Jack has not made any payments toward the medical bill. The ESS Economic Support Specialist can use the entire $400 hospital bill when calculating Jack's medical expense deduction.

Example 2: Jack has surgery in January and receives a hospital bill for $400 in February. He makes his first $50 monthly payment toward his medical bill in March. Jack then applies and becomes eligible for FS in April. The ESS cannot use the $50 March payment when calculating the medical expense deduction. The worker can, however, use the remaining $350 of the hospital bill ($400 - $50 = $350) to calculate the deduction.

Allowable medical expenses are:

Medical and dental care including psychotherapy and rehabilitation services provided by a state licensed practitioner or other qualified health professionals, including chiropractors and acupuncturists.
Hospitalization or outpatient treatment, nursing and nursing home care. This includes payments by the FS group for a person who was a FS group member immediately before entering a state recognized hospital or nursing home.
Prescription drugs when prescribed by a licensed medical practitioner authorized under state law. This includes the cost of postage for mail-order prescription drugs.
Over-the-counter medication (including insulin) when approved by a licensed practitioner or other qualified health professional.
Sickroom equipment (including rental), or other pre-scribed equipment, and medical supplies.
Health and hospitalization insurance premiums, including Medicare premiums. Nursing home care insurance policies are deductible only if the policy states that the benefits are intended to pay medical bills - then it is reasonable to conclude that the household member intends to use the benefits for paying medical bills rather than normal living expenses.

Only allow the premium of the elderly, disabled, or blind food unit member. For example, a mother pays $165 for herself and her disabled son. If she only covered herself the payment would be $100, therefore $65 is the expense for the child a person's biological, step, or adopted son or daughter, regardless of age.. Count the $65 as an allowed medical expense.

In the absence of specific information on how much of a premium is for the eligible food unit member, prorate the premium and allow the EBD Elderly, Blind, or Disabled member's portion of the premium as the expense.

Dentures, hearing aids, and prosthetics.
Purchase and maintenance costs of any animal specifically trained to perform some function that the member cannot readily perform or help compensate for a physical condition, to serve the needs of disabled program participants, including the cost of food and veterinarian care.

The trainer does not need to have any special credentials and can be the person claiming the deduction as long as the animal is trained to do a specific function the owner cannot do for themselves.

Reimbursement for these expenses is an allowable deduction if:

1. It does not exceed the actual expense.
2. It does not represent a gain or benefit to the household as do normal living expenses such as rent or mortgage, personal clothing or food eaten in the home.
3. It is provided specifically for an identified expense.
4. It is used for the purpose intended.

Eye glasses and contact lenses prescribed by an ophthalmologist or optometrist.
Reasonable cost of transportation and lodging to obtain medical care. For transportation, allow:

The actual cost of the public carrier; or,

If a private vehicle, the lesser of the mileage rate paid by the county or by the state for unrepresented state employees. See http://www.dhfs.state.wi.us/bfs/pdf/APP/Travel/trav10.pdf to obtain the current state rates.

Charges for an attendant, homemaker, home health aide, child care, or housekeeper necessary due to age, infirmity or illness.

Treat attendant care costs that qualify either as a medical or dependent care deduction as a medical deduction. Deduct an amount equal to the 1 person allotment if the household furnishes the majority of the attendant's meals. Use the allotment in effect the last time eligibility was determined. You must update the amount at the next scheduled review but may do so earlier.

Any cost-sharing, co-payment, or MA Medical Assistance, also known as Medicaid or Title 19 deductible expense incurred by an MA recipient, including MA deductible pre-payments.
Payments made on a loan's principal if it was used to pay a one-time medical expense. Do not allow loan expenses, such as interest.
BadgerCare and Medicaid Purchase Plan (MAPP) premiums.
The SeniorCare enrollment fee.
Lifeline / MedicAlert. The costs of Lifeline or MedicAlert devices used by persons to contact medical help in emergencies are an allowable medical expense deduction for FoodShare benefits if prescribed by a licensed practitioner or other qualified health professional.

4.6.4.2 Medical Expenses Not Allowed

Do not allow:

Expenses paid by or that will be paid by insurance.
Expenses paid by or to be paid by any governmental program, including MA and Medicare, except discounts or subsidies authorized through the Medicare-Approved Prescription Drug Discount Card. Any discounts and Transitional Assistance subsidies through the Medicare-Approved Drug Discount Card used to purchase drugs are disregarded when determining the amount of the food unit’s medical expense deduction.
Costs of health and accident policies such as: any payable in lump sum settlements for dismemberment or death, or income maintenance policies covering mortgage or loan payments while the beneficiary is disabled.
Loan repayments for anything other than the loan's principal.
Premiums for nursing home insurance policies that would not be used to cover allowed medical expenses.
Lying in costs for the birth of a child.

4.6.4.3 Budgeting Medical Expenses including MA Deductible Expenses

Medicare premiums and any cost-sharing or deductible expenses incurred by MA recipients are allowable medical expense deductions. The deductible expenses actually incurred, or anticipated to be incurred on a monthly basis may be used to determine the amount of the FS medical expense deduction. The MA deductible amount itself does not necessarily determine the amount of the FS medical expense deduction, and should not automatically be averaged over the FS certification period to arrive at an excess medical expense deduction. Only allow the medical expenses incurred by elderly, disabled, or blind FS group members.

Example 3: A FS group member has a MA deductible of $400 for a 6 month MA certification period. Based on the verified expenses in the previous 6 months, the person anticipates he will incur $100 per month in medical expenses. Enter $100 in expenses on CARES Client Assistance for Reemployment and Economic Support screen AFME and CARES will allow $65 in excess medical expenses for each month ($100 - $35 = $65). When the FS/MA group member meets the MA deductible and MA opens, the worker should remove the monthly excess medical deduction. Remember to check the medical expense screens whenever MA opens and adjust the expenses accordingly.

However, if an individual makes a pre-payment or incurs a one time medical expense that may be used to meet the MA deductible, s/he has 4 choices in how that expense will be counted as a FS medical expense deduction:

Deduct it as a lump sum for 1 month, or
Enter into a payment plan with the medical provider and claim the monthly payment obligation under the payment plan. The monthly obligation can be claimed for as long as the original payment plan is in place, however amounts still due after they were budgeted during a previous FS certification period may not be included as part of the monthly expense. No incurred expense can be counted more than once, or
Choose to average the one time medical expense over the remaining months of the FS certification period. The averaging of the one time medical expense cannot extend past the certification period in which the expense was originally counted.
Choose to average the one-time medical expense over the period it was intended to cover.

Example 4: A FS group member who is disabled has a MA deductible of $600. He meets the deductible with a one-time expense of $850. He chooses to average the expense over the period it was intended to cover. The worker averages the non-reimbursable portion of the expense, $600, over the remaining months of the MA deductible period.

Example 5: A customer is certified for 12 months for FS and 6 months for MA with an $800 deductible. During month 2 the customer incurs a one-time medical expense of $4000. The MA deductible is met and the person becomes eligible for MA for the rest of the MA certification period. The non-reimbursable amount is $800 since MA pays the remainder of the bill after the deductible is met. For purposes of FS eligibility, s/he can do 1 of these:

Choose to have the entire non-reimbursable expense ($800) applied to one month as an excess expense in the next possible benefit month.
Enter into a payment plan with the provider and the incurred monthly payment amount due is used to determine the excess medical expense. The payment plan can extend beyond the FS certification period as long as no part of the medical expense is counted more than once. For instance, if the payment plan calls for $40 payments to be made each month for 20 months, the $40 expense can be counted each month for 20 months. However, if the client falls behind in the payment plan and in the 21st month enters into a second payment plan to cover the remaining balance, DO NOT allow the remaining balance as a medical expense because it was already deducted during the previous 20 months.
Request that the $800 be averaged over the remaining 10 months of the FS certification period. In which case, the monthly excess medical expense deduction would be:

$80 - $35 = $45 each month for 10 months.

Request that the $800 be averaged over the remaining 4 months of the MA certification period, or the period the expense is intended to cover. In which case, the monthly excess medical expense deduction would be $200 - $35 = $165 each month for 4 months.

The second option is also available when a client is billed for an allowable one-time medical expense prior to certification and has arranged to pay the expense on monthly basis over a period of time. If during this period of time the client applies for FS, the monthly installment amount due is an allowable expense for the excess medical deduction.

Except when an expense is averaged during a certification period, the expense should be budgeted in the month it is billed or otherwise becomes due, regardless of when the client intends to pay the expense. Allow the expense in the next possible benefit month. Under all of the one-time medical expense options, the amount incurred (not amount paid) is counted. The client may or may not pay the bill, that is why it is important to make sure that the expense is not counted more than once.

4.6.4.4 Treatment of Medical Expense Deductions for Medicare Prescription Drug Discount Cardholders

Under Medicare Part D, only unreimbursed out-of-pocket expenses for prescription drugs are considered when determining a HH's medical expense deduction.

Medicare-Approved Drug Discount Cards and Transitional Assistance subsidies were phased out May 15, 2006.

This page last updated in Release Number: 09-02

Release Date: 06/26/09

Effective Date: 06/26/09