Expenses 430-05-55-10

(Revised 10/01/18 ML3532)

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The following expenses are allowed as a deduction from countable income:

• Medical expenses
• Dependent care costs
• Child support paid
• Representative payee Fee
• Shelter costs

 

Calculating Expenses

A household may choose one of the following methods to calculate expenses.

 

Anticipated Expenses

Household expenses must be calculated based on expenses the household expects during the certification period. Anticipation is based on the most recent month's bills, unless the household is reasonably sure that a change will occur.

 

Billed Expenses

Except for averaged expenses, a deduction is allowed only for the month an expense is billed or otherwise becomes due, regardless of when the household plans to pay the expense. Amounts carried over from past billing periods are not deductible.

 

Averaged Expenses

For expenses that are not billed on a monthly basis the household may elect a one-time deduction or to have expenses averaged.

 

For fluctuating expenses the household may elect to use actual expenses or averaged expenses.

 

A worker must assist the household in deciding which of the following methods provides the household with the greater benefit.

 

Converted Expenses

Expenses must be converted if the expense is billed on a weekly or biweekly (every two weeks) basis. If expense conversion is applicable, it must be documented in the case file.

To convert a weekly billed expense, total the weekly payments and divide by the number of payments (4 or 5) to arrive at the weekly average. The weekly average is then multiplied by 4.3.

To convert a biweekly billed expense, total the biweekly payments and divide by the number of payments (2 or 3) to arrive at the biweekly average. The biweekly average is then multiplied by 2.15.

 

Examples:

1. Expenses Not Billed Monthly - A household certified from January 1 through June 30 reports an allowable medical expense of $100 on March 15. The worker must act on the reported change.

The household may choose to have the $100 medical deduction averaged over the remaining months of the review period (April, May, and June), and must then be removed for July OR it may be used in its entirety in April and must then be removed for May.

In this example without further medical expenses, the worker must inform the household that using the medical expense, as a one time expense in April would provide a greater benefit.

2. Fluctuating Expenses - An elderly household with ongoing fluctuating monthly prescription costs is certified for one year. The fluctuating costs should be averaged using a prior period that is indicative of what the household anticipates to have as ongoing medical expenses for the new review period.
   
   
3. Converted Expense – A household reports and verifies their rent is $800 and the household is billed $200 each Friday. The household verifies their four weekly payments. The $800 total monthly payment is divided by 4 and multiplied times 4.3 for a total of $860.

 

If a household chooses averaging, the worker must document this in the case file. The method chosen must be used for the entire review period.

 

Annual expenses such as property taxes or homeowners insurance that are billed yearly must be allowed as a one-time payment or averaged over 12 months.