Standard Deduction

[63-502.31]

Exception: Allow one per household, per month.  See Deductions and Allowances for chart.

Earned Income Deduction [63-502.32]

Allow 20% of gross earned income as an earned income deduction.

Exception: Do NOT allow the earned income deduction when computing an overissuance for that portion of earned income which the household intentionally failed to report (i.e. IPV), as proven by:

• An administrative disqualification hearing, or
• A court of appropriate jurisdiction.

Exception: Do not allow the 20% earned income deduction on any unreported portion of the earned income.

Excess Medical Costs [63-502.33]

Definition

Allow a deduction for unreimbursed medical expenses in excess of $35.00 per month incurred by any household member who is:

• Receiving disability benefits under the Social Security Act on their own account, or
• Age 60 or older.

When a household member turns 60, allow a deduction for medical expenses in the month after the 60th birthday.

When a one-time medical expense is averaged, the medical expense is averaged over the remaining month of the certification period and $35 is deducted form the average for each month.

California’s Standard Medical Deduction (SMD) Demonstration Project

The CDSS has been authorized by the USDA, FNS, to operate SMD from October 1, 2017, to September 30, 2021. With an extension approval, California has been authorized to continue operating the SMD Demonstration Project from October 1, 2021, to September 30, 2025.

 

Under the SMD Project, CDSS established a standard deduction of $150 for households with an elderly and/or disabled member, with verified medical expenses between $35.01 and $185 per month.

To qualify for the SMD, a household with an elderly or disabled member must verify that their monthly medical expenses are more than $35. However, they are not required to verify all of their monthly medical expenses. For instance, if the household incurs medical expenses of $40 and $50 per month, they only need to provide proof of one expense that exceeds $35.

 

Households  with an elderly and/or disabled member that want to claim monthly medical expenses exceeding $185.00 must provide proof of the actual expenses. If a household claims medical expenses above $185.00 per month without verifying them, the household may receive the SMD based on verified expenses between $35.01 and $185.00.

 

The following table summarizes establishing medical deductions.

Verified Medical Expenses	Eligibility
$35 or less a month	Not eligible for medical deduction
$35.01 to $185 a month	Eligible for the SMD (i.e. $150)
$185.01 a month and over	Eligible to deduct actual medical expenses in excess of $35

 

The following are guidelines for applying medical deductions at intake and recertification:

At…	Then allow…	And verify…
Intake: If the household has medical expenses between $35.01 to $185,	Standard Medical Deduction	The household has medical expenses greater than $35 a month. Verification of expenses exceeding $35 must be received to allow the SMD.
Intake: If the household has monthly medical expenses greater than $185,	Actual Medical Expenses	The actual monthly medical expense(s). If the household chooses not to provide verification of expenses exceeding the SMD (<$185), then allow the SMD instead of actual expenses.
Redetermination: If the household has actual medical expenses between $35 and $185, and There is no change, or there is a change in the amount, but the monthly medical expense is in the range of $35.01 to $185,	Standard Medical Deduction	No verification is required unless the household’s declaration is questionable.
Redetermination: If the household has not already claimed medical deductions, and the household states that an eligible member has medical expenses between $35 and $185,	Standard Medical Deduction	Verification of expenses exceeding $35 must be received to allow the SMD.
Redetermination: If the household has monthly medical expenses greater than $185,	Actual Medical Expenses	The actual monthly medical expense(s). If the household chooses not to provide verification of expenses exceeding the SMD (<$185), then allow the SMD instead of actual expenses.

Allowable Expenses

Excess medical costs shall include expenses for:

• Medical and dental care, including psychotherapy and rehabilitation services, provided by a licensed practitioner or other qualified health professional authorized by state law.
• Hospitalization or outpatient treatment, nursing care, and nursing home care, including payments by the household for an individual who was a household member immediately before entering a hospital or nursing home, provided by a facility authorized under state law.
• Prescription drugs and other over-the-counter medication (including insulin) when prescribed by a licensed practitioner or other qualified health professional. In addition, costs of medical supplies, sick-room equipment (including rental), or other prescribed equipment (e.g., teletypewriter for the deaf) are deductible.
  • Postage and handling costs associated with the shipment of prescription drugs are considered a deductible expense.
  • The cost of the postage for mail-order prescription medication is part of the cost of the prescription medication. Therefore, it is also a deductible expense.
• Co-payments for appointments or prescriptions
• Acupuncture, chiropractic, or herbal treatments
• Health care supplies and equipment, incontinence supplies
• Maintaining care attendants, home health aides, homemakers, or childcare services necessary due to age, infirmity, or illness
• Health and hospitalization insurance policy premiums. Do not allow the cost of:
  • Sickness and accident policies, such as those payable in lump-sum settlements for death or dismemberment.
  • Income maintenance policies include continuing mortgage or loan payments while the beneficiary is disabled.
• Medicare premiums.
• Medicare Prescription Drug Card Program:
  • The $600 prescription drug credit will be budgeted at $50 monthly for twelve months.
    • The prescription drug credit will be allowed to any cardholder whose income is no more than 130% of the FPL.
    • The $50 per month is allowed regardless of whether the participant incurs out-of-pocket expenses.
      • ExampleExample

        A client received the drug discount card and a $600 prescription drug credit in October 2004, the EW will budget $50 as a medical expense for the next 12 months, regardless of whether the client has a break in benefits.

• Prescription drug card discounts will be budgeted at $23 per month, regardless of whether the client is eligible for the $600 credit or they actually incur any drug costs.
  • ExampleExample

    If the client is entitled to the $600 credit, the household would receive a $50 and a $23 medical expense deduction (total $73), plus any out-of-pocket expenses. (If out-of-pocket expenses did not exceed $35, then no out-of-pocket expenses would be allowed.)

• Note: The $35 excess medical deduction applies only to out-of-pocket expenses. The Medicare prescription drug credit, prescription drug card discount, and enrollment fee are not considered out-of-pocket expenses.

• Any share of cost or spend down expenses for medical costs incurred by Medi-Cal recipients, including any allowable medical expense incurred, reported, and verified Medi-Cal does NOT cover that.
• The cost of securing and maintaining any service animal, such as, but not limited to, a seeing eye, hearing, or service dog (guard dog for the disabled), and the cost of dog food and veterinarian bills. An animal must be specially trained to perform a function that the elderly or disabled person cannot readily perform independently.

Note: If an emotional support animal is trained to assist an elderly or disabled person, it must be treated as a service animal. The costs of securing and maintaining an emotional support animal that meets the definition of a service animal are allowable medical expenses.

Note: Verification of a Service Animal’s Status
If it is evident that an animal is specially trained to perform a function that an older adult or disabled person cannot readily perform on their own, the County must consider this animal a service animal and allow the costs of securing and maintaining the service animal as medical expenses. A case comment noting the eligibility worker’s observation (in-person contact) or confirmation of the service through the questions is sufficient verification for this purpose.
EW must not require formal documentation or proof of certification or licensing to verify that an animal is a service animal.

ExampleExample

If it is questionable whether an animal qualifies as a service animal, EWs may only ask the recipient/applicant the following questions:

1. If the animal is required because of a disability and
2. What tasks is the animal trained to perform?
3. A case comment that states the animal is required because of a disability and lists the tasks the animal is trained to perform is sufficient verification when the status of a service animal is questionable.

Note: Medical Reimbursement for Service Animals
Direct payments to service animal owners intended to cover costs associated with a service animal must not be considered income to determine CalFresh eligibility and must be excluded from unearned income as medical reimbursement.

ExampleExample

•  Eyeglasses or contact lenses prescribed by a physician skilled in eye disease or by an optometrist; dentures, hearing aids, and prosthetics (including assistive devices).
• The actual cost of transportation to health care appointments, trips to a pharmacy or other location to fill prescriptions, fittings for dentures, hearing aids, or glasses, and trips to the doctor, dentist, etc. Households must verify expenses if they claim the out-of-pocket, non-reimbursed cost for medical travel of elderly and/or disabled members by third parties such as public transportation, taxis, or ride-sharing companies such as Uber or Lyft.

Note: Medical travel trips are not required to be within the county of residence.

Verification of Medical Travel by Private Vehicle

When a qualified client travels by private vehicle, rather than paying for a ride directly to a third party, they may claim the expense based on the trip's mileage. To verify medical travel by private vehicle, the EW must accept a verbal or written client statement that travel was required for medical reasons unless questionable.

The Eligibility Worker (EW) can use the information provided by the household, including the starting and ending location of the travel required for medical reasons, to determine the total mileage amount, including round-trip mileage, if applicable. A copy of the map or directions documenting the mileage amount must be kept in the case record as verification of the travel expense. Gas receipts are not required.

Standard Statewide Mileage Rate for Medical Travel

When determining the expense amount for mileage incurred for medical travel using a private vehicle, The EW must multiply the number of miles for the trip by the statewide mileage rate. The EW must review the current IRS standard business rate to ensure that the correct mileage rate is used.

• Lodging to obtain medical treatment or services.
• The cost of maintaining an attendant, homemaker, home health aide, or child care services housekeeper is necessary due to age, infirmity, or illness. In addition, an amount equal to the one-person coupon allotment will be deducted if the household furnishes most of the attendant's meals. The allotment for this meal-related deduction shall be that in effect at the time of the most recent certification. The EW shall update the allotment amount at the next scheduled recertification, the next recomputation, or the next reported change by the household, whichever is earlier. If a household incurs attendant care costs that could qualify under the medical and dependent care deductions, it will be treated as a medical expense.
• 20% of the total medical bills (other than hospital expenses) will be the household’s medical cost when the eligible household member is covered by Medi-Care or Blue Cross/Blue Shield or private insurance and the unreimbursed portion of actual costs UNKNOWN.
• Unpaid medical bills occurred before certification and were obligated to be paid during the certification.

Nonallowable Costs [63-503.251]

Do not allow a deduction for:

• Medical bills paid before the month of initial application.
• Special diet expenses (e.g., “Boost” or “Ensure”)
• Premiums for accident policies
• Medical expenses that are reimbursable by insurance or other public or private sources
• Medical marijuana
• Vitamins and supplements unless prescribed by a physician.

Forms

• The household must complete the Medical Expenses Section of the CF 285 or SAWS 2 Plus at Intake and Recertification.
• CF 31-"CalFresh Supplemental Form for Special Medical Deductions” is a recommended form and is used when:
  • Adding a person to an existing case and the person being added is elderly (60 or older) or disabled (disability approved by Social Security), or
  • An existing CalFresh household member turns 60 or is determined disabled mid-period.

Verification

The household member must provide verification before any deduction can be applied to the CalFresh budget. Medical deductions should NOT be allowed if the applicant or recipient fails to provide the required verification.

Examples of various types of verifications are:

• Medical bills or receipts
• Medical transportation bills or receipts
• Health or dental insurance policies or premiums
• Medicare card (for Medi-Cal only)
• Doctor statement or disability finding by an agency (SSA/SDI/VA, etc.)
• Medical verification form (CW61)
• CalFresh Supplemental Form for Excess Medical Deductions (CF 31)
• Request for Verification (CW 2200)

Related Topics

Dependent Care

Disallowed Expenses

Shelter Costs