Medical expense deduction

Who can deduct a medical expenses?

Households with at least one “elderly” or “disabled” person can deduct non-reimbursed medical costs over $35 a month. [7 U.S.C. § 2014(e)(5); 7 C.F.R. § 273.9(d)(3); MPP §§ 63-502.33, 63-1101.25.] For purposes of the medical expense deduction, “elderly” is defined as age 60 or older.  [MPP 63-102(e)(1)(A).]  For purposes of the medical expense deduction, disabled means receiving certain disability benefits, such as Social Security disability benefits, government agency retirement disability benefits, disability-based general assistance, disability based Medi-Cal, veterans’ disability benefits, or other interim disability benefits pending the SSI approval. [7 C.F.R. § 271.2; MPP § 63-102(e)(1)(B-K).]

What medical expenses can be deducted?

The costs of special diets are excluded as medical expense. [MPP § 63-502.33; 7 C.F.R. § 273.9(d)(3).] Allowable medical costs include:

  • Costs of medical and dental care
  • Hospitalization or nursing care (including hospitalization or nursing care of an individual who was a household member immediately prior to entering a hospital or nursing home)
  • Prescription medication
  • Over-the-counter medication, ointments, or other treatments (including insulin and vitamins but not nutritional supplements) when prescribed or approved by a licensed qualified health professional [USDA FNS Memorandum, Deductible Excess Medical Expenses, November 23, 2015]
  • Health and hospitalization insurance policies (excluding the costs of health and accident or income maintenance policies)
  • Medicare premiums
  • The cost of health insurance premiums
  • Co-payments for appointments or prescriptions
  • Acupuncture, chiropractic or herbal treatments; health care supplies and equipment
  • Incontinence supplies
  • Dentures, hearing aids and prosthetics
  • Costs for obtaining/maintaining any animal specially trained to serve the needs of elderly or disabled program participants [USDA FNS Memorandum, Deductible Excess Medical Expenses, November 23, 2015]
  • Reasonable transportation to health care appointments or pharmacies by either public transportation or private car transportation at the federal transportation rate;
  • Lodging expenses needed to obtain medical treatment
  • Special telephone equipment for a person with disabilities
  • Prescription eyeglasses and contact lenses
  • Care for a child with disability
  • Attendant services performed by someone outside of the household (even if that person is a relative)
  • Rehabilitation services
  • Psychotherapy
  • Acupuncture, chiropractic or herbal treatments
  • Any paid or outstanding medical bills for which there is no third party reimbursement (a bill can be averaged over the remaining months in the CalFresh certification period or claims in one month, whichever is better for the household).
  • Service animals.  Costs of securing and maintaining a service animal are allowable medical expenses.  [USDA FNS Memorandum, Deductible Excess Medical Expenses, November 23, 2015.] Service animals must be specially trained to assist the individual with the medical condition for which the animal is prescribed to be considered as service animal for purposes of CalFresh.  Expenses for an emotional support animal that meets this criteria are countable for purposes of CalFresh.  If it is evident that an animal is specially trained, no verification is needed.  If it is questionable whether the animal qualifies as a service animal, counties can only ask if the applicant/recipient if animal is required for a disability and what tasks the animal is trained to perform.  [ACL 21-13.]

[7 U.S.C.. 2012(q); 7 C.F.R. § 273.9(d)(3); MPP § 63-502.331; ACL 21-117.]

Only medical expenses that the household paid out-of-pocket can be deducted. Expenses that are covered by Medi-Cal or other public or private medical insurance cannot be deducted. [MPP § 63-503.254(a)(2)(QR).] A household with a hospital bill can deduct the entire amount that is not reimbursable by any public or private insurance coverage. [MPP § 63-503.251(c).]

If the household receives a medical bill, other than for hospital expenses, the deduction will be determined in the following ways:

  • If the elderly or disabled household member is insured by Medicare, Blue Cross/Blue Shield, or other private insurance company, the household can deduct 20% of the total bill;
  • If the elderly or disabled household member is covered by Medi-Cal [Medicaid], the household can deduct the member’s share of cost or the doctor’s bill, whichever is less;
  • If the elderly or disabled household member is uninsured, the household can deduct the total amount of the uninsured medical expenses that can be verified.

[MPP § 63-503.251(b).]

If the household has not yet paid or has not received a bill and cannot reasonably anticipate the expense amount, the CalFresh office will not allow the deductions. [7 C.F.R. § 273.10(d)(1)(i); MPP § 63-503.254.] For example, a recipient who has applied for Medi-Cal [Medicaid] could not claim any medical deductions while waiting for Medi-Cal approval since Medi-Cal could cover the expenses retroactively. The CalFresh office should allow the non-reimbursable amount to be deducted in a later month when the recipient can provide proof of non-reimbursement. [See 44 Fed. Reg. 55160 (Sept. 25, 1979) (preamble to final medical deduction regulation) and 47 Fed. Reg. 11878 (March 19, 1982) (recap of that discussion)

Allowable transportation costs include transportation to health care appointments and pharmacies and to other locations to fill prescriptions, fittings for dentures, hearing aids or glasses.  [ACL 19-89.]  Households must verify expenses for public transportation, taxis and ride shares.  For travel by private vehicle, the county must accept a verbal or written statement that the travel was required for medical reasons unless that statement is questionable.  County staff then calculates the mileage using a mapping application.  A copy of the map must be kept in the client’s case file.  Gas receipts are not required.  Mileage counts at the IRS rate which is currently 58 cents per mile.  [Id., ACL 21-13.]

Counties must assist households in obtaining verification of transportation expenses if needed.  [Id.]  Counties should not re-verify medical expenses if they are unchanged or a change is $25 or less.  Households remain eligible for the standard medical expense deduction if they report their medical expenses continue to exceed $35 per month.  [Id.]  Failure to verify medical expenses is not a basis to deny or discontinue a case.  [ACL 21-117.]

Determining the amount of the medical expense deduction

The medical expense deduction had been a dollar for dollar deduction for qualifying medical expenses over $35 per month.  However, effective October 1, 2017, based upon a federal waiver, California will use a standard medical expense deduction of $120 per month when the elderly and/or disabled household household incurs over $35 per month in medical expenses.  [ACL 17-35.]  If verified medical expenses are over $155 per month, the household can choose to deduct actual medical expenses instead of using the standard medical expense deduction.  [Id.]  Applicants or recipients can claim the medical expense deduction using the CF 31 form.  [ACL 18-141.]  The standard medical expense deduction waiver has been extended until September 30, 2025.  [ACL 21-117.]

Medical expense deductions and semi-annual reporting

The CalFresh office should have a simple method for households with elderly or disabled members to prove medical expenses that the household pays every month. [7 U.S.C. § 2014(e)(5)(B)(i); 60 Fed. Reg. 17628 (1995) (preamble to final rule).] The household does not have to give the CalFresh office verification of their actual medical expenses every month. [Id.] If the household claims a medical expense but cannot verify it within the time required, the household should not be denied or terminated. However, the household will not get credit for the deduction until the verification is submitted.

Semi-annual (SAR) reporting households that have regular medical expenses can anticipate medical expenses for each month during the semi-annual period and use the average monthly expense in computing benefits. [MPP § 63-509(a)(3)(A).]

When the standard medical expense deduction is in effect, a household can report medical expenses at any time during the certification period.  If the report results in an increase in benefits, the change is effective no later than the first allotment issued 10 days after the date the change was reported.  No supplemental benefits can be issued for previous months.   [ACL 21-13; ACL 21-117E.]

A household that reports a one-time medical expense above $35 during its certification period can choose to have a one-time only deduction or have the expense averaged over the remaining months of its certification period. [MPP § 63-503.252(a).] Averaging of the expense will begin in the month in which the household reports and verifies the medical expense or the month in which the household incurs the expense, whichever is later. [MPP §§ 63-503.252(a), 63-509(d)(1).]

The United States Department of Agriculture Food and Nutrition Service issued a guide about the medical expense deduction that includes household member eligibility for the deduction, allowable medical expenses, and procedures for verifying medical expenses and calculating the deduction.  CDSS transmitted the Food and Nutrition Service guide.  [ACL 21-13.]