4122 INCOME DEDUCTIONS

Only the following deductions are allowed in determining a household's net food stamp income.

4122.1  STANDARD DEDUCTION

A standard deduction is allowed for each household. The amount of the standard deduction is determined by number of eligible household members. To be considered an eligible household member, the individual must be counted in the allotment determination. Individuals not counted include individuals who are disqualified, sanctioned, ineligible students, ineligible aliens, non household members, and able bodied adults without dependents (ABAWDS) who are disqualified due to time limits.

$142 is the standard deduction for 1-3 person households;
$153
is the standard deduction for 4 person households;
$179
is the standard deduction for 5 person households; and
$205
is the standard deduction for 6 or more person households.

EXAMPLE: Household has six members. One is disqualified for IPV, one disqualified for a felony drug conviction, and one is disqualified for a work registration sanction. The standard deduction is $142 because only 3 individuals are counted in the food stamp allotment count.

4122.2  EARNED INCOME DEDUCTION

A deduction of 20% of gross earned income is allowed. Excluded earned income is not subject to this deduction unless it is earned income offset by a farm loss or earned income reduced because of legally obligated child support payments.

Example: Household’s gross earned income is $1500 but $500 is offset because of either farm loss or legally obligated child support payments. $1000 is used for the gross income test but $1500 is multiplied by 20% to determine the earned income deduction ($300).  If the household had excluded earned income such as work study, no 20% deduction is allowed because no earned income is budgeted.

4122.3  MEDICAL DEDUCTION FOR THE ELDERLY OR DISABLED

In some instances, a deduction is allowed for a portion of a household's medical expenses. To qualify as a deduction, the expense must be incurred by an elderly or disabled household member as defined in Section 2012 and must be verified. Households entitled to the medical deduction are required to report and verify all medical expenses at application. Households are also required to report medical expenses at recertification. If new medical expenses are reported or the amount has changed, they must be verified. The household may choose to report and verify changes in medical expenses during the certification period, however, they are not required to do so.

The DSS-EA-314, Medical Expense Sheet is required to be completed by the household at application and certification. It is not required to be updated when changes are reported during the certification period. The electronic DSS-EA-314 may also be used to calculate medical expenses, especially prospective drug costs.

If the household reports and verifies a change in medical expenses during the certification period, the expense should be budgeted prospectively for all households. Retrospective budgeting of medical expenses is no longer allowed. If the household reports but does not submit verification of a change in their medical expense, act on the change if it would decrease benefits, or if the change would increase benefits, request verification and make the change upon receipt of the verification. Section 2800.

Spouses or other household members receiving benefits as a dependent of the SSI or Social Security disability recipient are not entitled to this deduction. Not all disabled persons, but only those receiving income from the sources specified in Section 2012 are entitled to the deduction. An individual is considered to be an SSI recipient upon receipt of the initial SSI payment, including an emergency check issued based on presumptive eligibility.

Only that portion of nonreimbursable medical expenses that exceeds $35 per month for the eligible household member is allowed. The $35 applies to all eligible combined expenses for the household. If there are two or more eligible household members, all allowable medical expenses for those members are added, and then $35 is deducted.

If the household's allowed medical expenses are at least $36 and less than $201, the household will receive a standard medical expense of $200. (The $200 is before the $35 disregard thus the actual medical deduction is $165.) Households with allowed medical expenses greater than $200 will receive a deduction for actual expenses less the $35 disregard unless they opt for the $200 standard medical expense.

All medical expenses reported by elderly or disabled members must be listed on ACCESS FMED panels, even if not allowed or not verified. If not allowed, enter code "N" under FS Med Exp Countable Code. If not verified, enter code "N" under FS Med Exp Verif Code. The verification date on the FMED panel must be completed to report when the expense was verified. The Opt Std Med Exp must be coded "Y" for households with at least $36 allowed medical expenses and less than $201, coded "0" if the medical expense is greater than $200 and households requests the standard, and blank if actual expenses are to be used. Actual expenses are used if the total allowed expenses are over $200 and the household doesn't request the standard, or if the total medical expenses are less than $36.

The cost of a special diet is not considered a medical expense. If the household has been or will be reimbursed for the medical expense only the unreimbursed part can be included as part of the medical deduction.

Example: John and Jane are both 65. John has allowable medical expenses of $100 and Jane has allowable medical expenses of $235.00. The $100 and $235 amounts are entered on ACCESS but the amount used in the eligibility and benefit calculation is $300 ($335 - $35). If John had $25 and Jane had $35, the amount used in the eligibility and benefit calculation is $200. ACCESS FMED panels will have the $25 and $35 entered but the third screen of eligibility will show $165 ($200 -$35).

Allowable medical costs are:

  1. Medical and dental care including psychotherapy and rehabilitation services provided by a licensed practitioner authorized by State law or other qualified health professional, such as a midwife.

  2. Hospitalization or outpatient treatment, nursing care, and nursing home care. Medical payments made for an individual who was an elderly or disabled household member immediately prior to passing away or entering a hospital or nursing home are also allowed if the remaining household members are legally responsible for the payment, if the remaining household members are not aged or disabled.

  3. Prescription drugs when prescribed by a licensed practitioner authorized under State law and other over-the-counter medication (including insulin) when approved by a licensed practitioner or other qualified health professional. Costs of medical supplies, sick-room equipment (including rental) or other prescribed equipment are also deductible. The cost of special diet or dietary supplements are not allowed as a medical deduction, even if prescribed by a licensed practitioner.

  4. Health and hospitalization insurance premiums. Only the portion of a medical insurance premium assigned to the elderly or disabled household member may be considered when computing the deductible amount. If the policy does not spell out how much of the premium is for each household member, the worker may prorate the premium amount among all household members. Only the prorated amount for the eligible member would be considered a deduction. If the policy holder is not elderly or disabled, but the family policy includes a person who is eligible for the medical deduction, that part of the premium for the eligible member may be used in computing the deduction.

    Costs of health and accident policies such as those payable in lump sum settlements for death or dismemberment or income maintenance policies such as those that continue mortgage or loan payments while the beneficiary is disabled are not deductible. However if the insurance policy (i.e. policies for cancer, nursing home, etc.) states the insurance benefits are to cover medical expenses, the premium is allowed.

  5. Medicare premiums (including Medicare Part D for drug costs) and any cost-sharing or spend-down expenses incurred by Medicaid recipients.

  6. Dentures, hearing aids, and prosthetics.

  7. Securing and maintaining a service animal including the cost of the animal, food and veterinarian bills. A service animal must be individually trained to provide assistance to an individual with a disability.

  8. Eyeglasses prescribed by a physician skilled in eye disease or by an optometrist.

  9. Reasonable cost of transportation and lodging to obtain medical treatment or services. IRS mileage and actual motel costs up to the current State allowed motel rate are defined as reasonable costs.

  10. Cost of maintaining an attendant, homemaker, home health aide, or child care services, housekeeper necessary due to age, infirmity, or illness. Also, an amount equal to the one person coupon allotment shall be deducted if the household furnishes the majority of the attendant's meals. The allotment for this meal related deduction shall be that allotment in effect at the time of initial certification. The allotment amount will be adjusted, if necessary, at the time of recertification. If a household incurs attendant care costs that could qualify under both the medical deduction and dependent care deduction, the cost must be treated as a medical expense.

  11. Medicare-Approved Drug Discount Card: Follow instructions outlined in FS General Letter 05-02 (August 2004) for medical expenses allocated to the drug discount card.

4122.4 DEPENDENT CARE DEDUCTION

The amount of actual costs for the care of a child or other dependent when necessary for a household member to seek, accept or continue employment, comply with employment and training requirements, or attend training or education preparatory to employment are an allowable deduction. Dependent care expenses are allowed only in the month the expense is billed, regardless of when the expense is paid. Deductions may only be allowed for expenses the household is responsible for. If the expense is paid by a vendor payment or reimbursement fund, the expense is not allowed. The household is allowed the total amount of the dependent care expense they are billed for, as long as the expense is not questionable. If questionable, follow procedures identified in Section 6230 and 6240.

Some examples of dependent care payments are:

  1. Unreimbursed dependent care expenses billed to a household directly from the provider for employment, work registration requirements, or training are allowed as a deduction.

  2. Payments made for a household from Child Care Services (CCS) are paid directly to the provider and not counted as income to the household nor is the portion of the dependent care expense paid by the program allowed as a deduction to the household.

  3. If dependent care funds are paid from one household member to another household member, the funds are not income to either household member if they are both included in the same Food Stamp household.  A deduction is not allowed either.

  4. The portion of dependent care expenses paid by the household with earmarked educational assistance funds may not be allowed as a deduction.

4122.5 SHELTER COSTS

Monthly shelter costs in excess of 50 percent of the household's net income after all the above deductions have been allowed are budgeted. The maximum (capped) shelter deduction is $458 for all households. The shelter deduction shall not exceed the maximum unless the household includes a member who is age 60 or over, or disabled (Section 2012). Households with an elderly or disabled individual receive the full amount that exceeds 50% of the household's monthly income after all other deductions.

Only the most current bills can be used for verification of shelter costs.  Past due amounts are not an allowable expense. Expenses need not be in the household’s name, but must be incurred by the household and the household must be expected to pay the expense.  

If heat is included in the rent payment and the household is eligible for Low Income Energy Assistance Payments (LIEAP), LIEAP will pay up to 30% of the rent expense to the landlord. The landlord, in turn, will charge a lesser rent amount to the household during the time he receives LIEAP payment. For the Food Stamp budget, allow the full rent payment, prior to the LIEAP rent reduction being considered, because all LIEAP payments are exempt for food stamp purposes. The SUA is also allowed if the household hasn’t moved, and anticipates a LIEAP payment the next heating season.

Households budgeted medical deduction for a former member, but do not currently include a member who is elderly, or disabled as defined in Section 2012, are not exempt from the maximum excess shelter deduction.

The shelter deduction applies only to continuing charges for shelter currently occupied by the household, except as provided in Section 4122.61. The shelter deduction will be adjusted periodically to reflect changes in the Consumer Price Index.

Allowable shelter costs include:

  1. Rent, mortgage, and other continuing charges leading to ownership of the property, such as loan repayments for the purchase of a mobile home, including interest on such payments. Payments on any liens or loans for which the home property is used as collateral are allowable. Condominium fees are considered an on-going shelter cost and allowed if verified.

  2. Property taxes and insurance on the shelter itself but not on the contents of the shelter. If the insurance does not separate coverage on the shelter from the coverage on the contents, the entire premium is allowed as a shelter cost.

  3. If the household is billed for heating, cooling, cooking fuel, electricity, water, sewage, garbage, and telephone expenses, including charges for initial installation of the utility, and the household is expected to pay the expense, the household is allowed a utility allowance. In addition, households whose fuel costs are paid by LIEAP shall be allowed to claim such fuel costs as a shelter expense even if the payment is made directly to the fuel provider. If the household receives a utility reimbursement payment, a utility allowance is allowed only if the utility expenses are greater than the reimbursement amount.

  4. The mandatory standard allowance for telephone expenses.

  5. Charges for the repair of the home which was substantially damaged or destroyed because of a natural disaster, such as a fire or flood. Shelter costs shall not include charges for the repair of a home that have been or will be reimbursed by private or public relief agencies, insurance companies, or from any other source.

    Yearly payments or expenses billed less often than on a monthly basis may be allowed in the month they are billed or may be averaged over the period they are intended to cover.

Shelter costs do not include:

  1. One-time deposits.

  2. Any other shelter-related expenses not specifically listed above.

  3. Closing costs, as a whole, would not be counted toward shelter costs. If the closing costs can be itemized to identify costs which are allowable deductions, such as insurance and property taxes, then these costs can be deducted as shelter costs.

4122.51 SHELTER COST OF UNOCCUPIED HOME

The shelter costs may be deducted for a home not currently occupied by the household for reasons of employment or training away from home, illness, or abandonment of the home caused by a natural disaster or casualty loss. For these costs to be deductible all the following criteria must be met:

  1. The household must intend to return to the home.

  2. The current occupants of the home, if any, must not be claiming the shelter costs for food stamp purposes.

  3. The home must not be leased or rented during the household's absence.

The household may claim both the shelter costs of its current residence and the costs of the unoccupied home in computing the shelter deduction, but the maximum excess shelter deduction still is applicable.  Only one utility allowance is allowed regardless of whether or not the household must pay utility expenses for their temporary home and the vacant home.  Use the highest applicable utility standard for the expense of the temporary home or the vacant home.

The household may claim both the shelter costs of its current residence and the costs of the unoccupied home in computing the shelter deduction, but the maximum excess shelter deduction still is applicable.

 


South Dakota Food Stamp Certification Manual • Revised October 2010