Elderly or disabled households that have no disability assistance expenses may claim as a deduction medical expenses that are in excess of three percent of their "annual (gross) income."
The distinction between elderly/disabled households and family (non-elderly/non-disabled) households is essential to applying this allowance correctly. Click on the underlined key words above if you need clarification on these definitions.
Medical expenses that may be considered include all medical expenses anticipated to be incurred during the coming year that are not covered by insurance. Medical expenses can include such items as:
- Services of a physician or other health care professional;
- Services of a hospital or other health care facility;
- Medical insurance premiums;
- Prescription and nonprescription medicines;
- Dental expenses;
- Eyeglasses and eye examinations;
- Live-in or periodic medical care assistance (such as visiting nurses or care attendants);
- Medical or health products or apparatus (such as hearing aids or batteries);and
- Periodic payments on accumulated medical bills.
Although medical expenses are permitted only for elderly or disabled households, once a household qualifies as an elderly or disabled household the medical expenses of all household members are considered.
For example, if a household included the head (grandmother, age 65), her daughter (age 35), and her granddaughter (age 12), the medical expenses of all three family members would be considered.
One of the most challenging aspects of determining allowable medical expenses is "anticipating" a household's medical expenses for the coming year. We will go onto that topic below.
Some households may qualify for deductions of both medical expenses and disability assistance expenses.
NOTE: Allowable medical expenses are established at the time of income certification. Under a HOME-funded TBRA program, the household may request a reexamination of medical expenses if a major illness or emergency would significantly affect the anticipated amount.
Anticipating Medical Expenses
Some anticipated medical expenses can be easily documented, such as:
- Medicare and other medical insurance premiums,
- the cost of ongoing prescriptions, and
- payment agreements for accumulated medical bills.
PJs should request such documentation whenever possible.
However, using the previous year's medical expenses is not generally appropriate. The family may have had medical expenses last year that will not be repeated this year (such as an appendectomy) or the family may have new medical problems that were not reflected in last year's costs (such as a family member being recently diagnosed as having diabetes).
Even so, the experience from the previous year can provide a useful basis for anticipating future expenses. PJs can use last year's history to help the family anticipate costs.
For "general" medical expenses (such as prescription and nonprescription medicines), using the previous year's expenses is acceptable unless the family provides documentation that higher expenses can be anticipated.
For example, if all household members went to the dentist twice during the previous year, it is appropriate to assume they will do so in the coming year.