Applicants and SCHA clients can use certain medical expenses as income deductions. Families whose head, spouse, cohead, or sole member are at least 62 years of age or are a person with disabilities are eligible for the medical expense deductions. If the household qualifies for medical expense deduction, that applies to all members in that household.
There are two criteria for medical expense deductions according to HUD (24 CFR 5.603-b).
- “They must be anticipated – that is, they must be regular, ongoing expenses that a family expects to pay in the 12 months following examination or reexamination.”
- “They must be unreimbursed – that is, they may not be covered by an outside source such as insurance.”
The medical expense deduction is that portion of a family’s total annual unreimbursed medical expenses that exceeds 3 percent of the family’s annual income.
What is covered?
SCHA looks at the previous year’s expenses and any documented on-going expenses to determine future deductions. An ongoing expense may be something such as dentist appoints twice a year or prescription medicines. Items such as eyeglasses, artificial teeth, and hearing aides are considered necessary equipment and will be allowed as a medical expense. In addition, if someone is making regular payments for a necessary medical procedure, the payments are considered an expense. Medicare Part D premiums may be eligible as an expense.
Summary of Allowable Medical Expenses from IRS Publication 502
- Services of medical professionals
- Surgery and medical procedures that are necessary, legal, non-cosmetic
- Services of medical facilities
- Hospitalization, long-term care, and in-home nursing services
- Prescription medicines and insulin, but not nonprescription medicines even if recommended by a doctor
- Improvements to housing directly related to medical needs (e.g., ramps for a wheel chair, handrails)
- Substance abuse treatment programs
- Psychiatric treatment
- Ambulance services and some costs of transportation related to medical expenses
- The cost and care of necessary equipment related to a medical condition (e.g., eyeglasses/lenses, hearing aids, crutches, and artificial teeth)
- Cost and continuing care of necessary service animals
- Medical insurance premiums or the cost of a health maintenance organization (HMO)
What is not covered?
If someone has a necessary medical procedure and pays the remainder of the bill at one time, that bill is not considered since it is not an ongoing expense. Additionally, non-prescription medications and supplies, even those recommended by a medical practitioner, are not considered.
What does this mean?
If you are an elderly or disabled household you might be eligible for medical expense deduction when filing for housing assistance. All possible deductions must follow BOTH categories listed above or the expenses will not pass. Households that want a possible medical expense deduction should bring all medical expense documentation to their initial or reexamination appointment. SCHA will review the records and inform the household if the expenses count as a deduction.
We understand this is a confusing and rather complex topic, which is why we strongly suggest if your household is eligible to bring in the materials to your meeting. SCHA will sort through and determine what is allowable.