Library: Policy
340:50-7-31. Deductions
Revised 10-2-19
(a) Deductible expenses. Households are allowed certain deductible expenses from income as described in (1) through (6) of this subsection and per Section 273.9(d) of Title 7 of the Code of Federal Regulations (7 C.F.R. § 273.9(d)). The household reports current medical, dependent care, legally-binding child support, and shelter expenses at certification, mid-certification renewal, and certification renewal. The household must also report current shelter costs when the household moves.
(1) Standard deduction. All households are allowed a standard deduction, per Oklahoma Department of Human Services (DHS) Appendix C-3, Maximum Food Benefits Allotments and Standards for Income and Deductions.
(2) Earned income deduction. Households with earned income are allowed an earned income deduction, per DHS Appendix C-3, to cover the cost of state and local income taxes, pensions, union dues, and work related expenses. Refer to Oklahoma Administrative Code (OAC) 340:50-7-30for information regarding business expenses for self-employed persons.
(3) Medical expense deduction. A medical expense deduction is only allowed for household members meeting the definition of elderly or disabled, per OAC 340:50-5-4. For these household members, medical expenses exceeding $35 per month are deductible when verified. The $35 is subtracted from medical expenses once per household, not per person, when the household has more than one elderly or disabled member. • 1
(A) Allowable medical expenses. Allowable medical expenses must be prescribed or approved by a state licensed or qualified practitioner and include:
(i) medical and dental care, including psychotherapy and rehabilitation services provided by a licensed practitioner or other qualified health professional authorized by state law; • 2
(ii) hospitalization or outpatient treatment, nursing care, and nursing home care, including payments by the household for a person who was a household member immediately prior to entering a hospital or nursing home provided by a facility recognized by the state; • 3
(iii) prescription drugs and other over-the-counter medication including insulin, when approved by a licensed practitioner or other qualified health professional authorized by state law. This does not include the cost of a Schedule I controlled substance under the Controlled Substances Act, Section 801 et. seq. of Title 21 of the United States Code, or any expenses associated with its use;
(iv) costs of medical supplies, sick-room equipment including rentals, or other prescribed equipment; • 4
(v) health, dental, and hospitalization policy premiums; • 5
(vi) Medicare premiums and any cost-sharing or spend-down expenses incurred by Medicare or SoonerCare (Medicaid) recipients;
(vii) dentures, hearing aids, and prosthetics; • 6
(viii) eye glasses prescribed by a licensed practitioner; • 7
(ix) reasonable cost of lodging and transportation to obtain medical treatment or services. • 8 Lodging costs are allowed when the elderly or disabled member is required to spend the night away from home to receive medical services. Reasonable transportation costs are based on the type of transportation used. When the elderly or disabled member:
(I) uses his or her vehicle, the state's current mileage reimbursement is allowed;
(II) uses public transportation, the actual cost of the transportation is allowed; or
(III) pays a non-household member for transportation, the amount charged by the person is allowed;
(x) maintaining an attendant, homemaker, home-health aide, child care services, or housekeeper due to age, infirmity, or illness. When this expense also qualifies as a dependent care expense per (4) of this subsection, it is considered a medical expense rather than a dependent care expense. Additionally, when the household furnishes a majority of the caretaker's meals, an amount equal to one allotment is added to the medical expense for meals provided. The allotment used is the amount in effect at certification; and
(xi) costs associated with all service animals specially trained to serve the needs of elderly or disabled program participants. This includes maintenance costs, such as veterinary bills, food, and other expenses for these service animals.
(B) Medical expenses not allowed. Expenses not allowed include:
(i) costs associated with special diets;
(ii) premiums for health and accident insurance policies, such as those payable in lump sum settlements for death or dismemberment;
(iii) premiums for income maintenance policies, such as those that continue mortgage or loan payments while the beneficiary is disabled;
(iv) items that can be purchased with food benefits, such as dietary supplements;
(v) the cost of meals or other incidentals when the person spends the night away from home to receive medical services; and
(vi) prescribed medical marijuana or any expenses associated with its use.
(C) Medical expense verification requirements. Households are required to report and verify medical expenses at certification and certification renewal. Households are not required to report changes in medical expenses during the certification period. • 9
(i) When a household voluntarily reports a reduction in medical expenses that will decrease the food benefit allotment, no verification is needed. However, the change requires notice of adverse action, per OAC 340:50-9-5.
(ii) When a household voluntarily reports additional medical expenses that will increase the food benefit allotment, the household must verify the additional expenses before the worker changes the medical expense deduction.
(iii) When the additional medical expenses are one-time expenses, such as hospital costs, dental expenses, or the purchase of prescription eyeglasses, the expense is only allowed when the person reports and verifies the expense before it becomes past due. When a portion of the expense will be paid by a vendor or insurance payment, the worker does not allow the expense until the amount owed by the person is verified. Once verified, the household may choose to: • 10
(I) deduct the entire expense in the month incurred or when it becomes due;
(II) average the expense over the remaining months of the certification period; or
(III) average the expense over the scheduled length of a payment plan.
(iv) When the worker finds out about a change from a source other than the household, the change is acted on when verified upon receipt, such as when the worker is notified via data exchange of a Medicare premium change. The worker does not contact the household for additional information. When the change requires household contact for additional information or verification, the worker does not make the change.
(v) When a household reports but does not verify an anticipated medical expense, the worker informs the household the expense will be allowed when the household provides verification.
(4) Dependent care. Dependent care is payment for the actual cost for the care of a child under 18 years of age or other dependent of any age with disabilities when necessary for a household member to seek, accept, or continue employment or to attend training or education preparatory to employment. Dependent care costs may include activity fees and the cost of transportation to and from the dependent care facility. • 11
(A) The deduction applies regardless of whether the household member is subject to the Supplemental Nutrition Assistance Program Employment and Training requirements.
(B) When the expense also qualifies as a medical expense per (a)(3) of this Section, it is considered a medical expense rather than a dependent care expense.
(C) There is no maximum dependent care deduction. The total reported by the client is an allowable expense as long as it meets the criteria in this Section.
(D) Dependent care is only verified when the expenses claimed actually result in a deduction and other information available to the worker is inconsistent with the household's claim that it incurs a dependent care expense. • 12
(5) Legally-binding child support. A deduction is allowed for verified legally-binding child support payments paid by a household member to or for a non-household member, including payments made to a third party on behalf of the non- household member. • 13
(6) Shelter costs. A household is allowed a shelter deduction when the monthly shelter cost exceeds 50 percent of the household's income after all other deductions are allowed, per 7 C.F.R. § 273.9(d)(6)(ii). The shelter deduction cannot exceed the maximum amount allowed per DHS Appendix C-3, unless the household includes an elderly or disabled member. Households with an elderly or disabled member receive an excess shelter deduction for the monthly cost exceeding 50 percent of the household's income after the deductions listed in (1) through (6) of this subsection are allowed. When the household includes a non-household member or disqualified member, refer to (b)(5) and (6) of this Section to determine whether to prorate shelter costs.
(A) Allowable rent or mortgage costs. Allowable rent or mortgage costs for the: • 14
(i) monthly rent or mortgage payment, or other continuing charges leading to the ownership of the shelter, such as loan repayments for the purchase of a mobile home, including interest on such payments;
(ii) charge for renting or buying the land on which a mobile home is located;
(iii) property taxes, state and local assessments, and insurance on the structure. A mobile home is taxed as part of the property tax when the land is owned or being purchased; • 15
(iv) personal property tax for unregistered mobile homes on rented land; or
(v) standard homeless shelter deduction, per DHS Appendix C-3, or the excess shelter deduction described, per (a)(6) of this Section, whichever results in the most food benefits for the household, when a homeless household incurs or expects to incur a shelter cost. • 16
(B) Expenses not considered as shelter costs. The worker does not consider as shelter costs, the cost for:
(i) insuring furniture or personal belongings when paid separately from the insurance on the home;
(ii) vehicle registration or a tag for a mobile or motor home; or
(iii) personal property tax except as allowed, per (6)(A)(iv) of this subsection.
(C) Allowable utility costs. When the household incurs utility expenses, it is eligible for one of three standard utility allowances based on criteria in (i) through (iii) of this subparagraph. The applicable utility standard amount is specified, per DHS Appendix C-3.
(i) The standard utility allowance (SUA) is based on annual averages that include costs for heating or cooling; and cooking fuel, electricity, basic phone service, water, sewage, and garbage. This includes households that receive Low Income Heat Energy Assistance Payments (LIHEAP). • 17
(I) The household is eligible for the SUA when the household is billed for heating or cooling during the year. Households billed less often than monthly for heating costs, such as butane or propane may continue to use the utility standard between billing months.
(II) When a household reports they no longer incur a heating or cooling expense, but still have a utility expense, the standard must be changed to the basic utility allowance (BUA) or telephone standard.
(III) When a household's heating or cooling expenses are partially reimbursed or paid by an excluded payment, such as a vendor payment, Housing and Urban Development (HUD), or Farmers Home Administration (FmHA) payment, the household remains eligible for the SUA.
(ii) The BUA includes utility charges the household incurs other than for heating and/or cooling, such as cooking fuel, water, sewage, garbage collection, and basic phone service.
(iii) The telephone standard is used when the household is not entitled to use the SUA or BUA, but has a phone cost. • 18
(D) When shelter costs for an unoccupied home are allowed. Shelter costs for an unoccupied home may be allowable when the household is temporarily away from home because of illness, a disaster or casualty loss to the home, or to attend an employment or training opportunity. • 19
(i) For the cost of a vacated home to be included in shelter costs the:
(I) household must intend to return to the home;
(II) current occupants of the home, if any, must not claim the shelter costs during the household's absence; and
(III) home must not be rented or leased during the household's absence.
(ii) A household that has an occupied home and an unoccupied home is only allowed one standard utility deduction.
(b) Expense calculation. The worker calculates a household's expenses based on the expenses the household expects to be billed for during the certification period. The worker anticipates expenses based on the most recent month's bills unless the household is reasonably certain a change will occur.
(1) Billing fluctuations. The household may elect to average expenses when the billed amount fluctuates monthly, is billed less often than monthly, or as in the case of some medical expenses, the expense changes throughout the certification period.
(2) When expenses are owed but not paid. The household is allowed a deduction in the month the expense is billed or otherwise becomes due, regardless of when the household intends to pay the expense. A particular expense may be deducted only once. • 20
(3) Reimbursed expenses. The portion of an expense paid by an excluded reimbursement or vendor payment is not deductible. The amount left after deducting the excluded payment is deductible and includes HUD and Farmers Home Administration (FmHA) rent and utility payments. Expenses are only deductible when the service is provided by someone outside of the household and the household makes a monetary payment for the service. • 21
(4) One-time expenses. The household may choose to average one-time expenses over the entire certification period in which they are billed, per 7 C.F.R. § 273.10(d)(3). When the household reports a one-time expense during the certification period, the household may choose to:
(A) deduct the entire expense for the next effective month; or
(B) average the expense over the remaining months in the certification period beginning with the next effective month. When the household is certified for 24 months and the one-time expense was incurred in the:
(i) first 12 months of the certification period, the household may elect to deduct the expense in one month, average the expense over the remaining months in the first 12 months of the certification period or average the expense over the remaining months in the certification period; or
(ii) the second 12 months of the certification period, the household may elect to have the expense deducted in one month or averaged over the remaining months in the certification period.
(5) When the household includes a disqualified household member. When the household includes a disqualified household member, per OAC 340:50-5-10.1, the worker does not prorate allowable deductions because the disqualified member's income is counted in its entirety, per OAC 340:50-7-29(d).
(6) When the household includes an ineligible household member. When the household includes an ineligible household member, per OAC 340:50-5-10.1, the worker prorates the allowable deductions evenly between the household members, including the ineligible member, with the exception of (A) and (B) of this subparagraph, because the ineligible member's income is also prorated, per OAC 340:50-7-29(d). When the household is:
(A) responsible for utility expenses, the household is allowed the full utility standard deduction for which it qualifies per (a)(6)(C) of this Section; or • 22
(B) homeless and incurs shelter costs, the household is eligible for the full standard homeless shelter deduction or for a prorated share of excess shelter deduction, whichever results in more food benefits for the household. • 23
(7) When the household includes a non-household member. When the household shares deductible expenses with a non-household member, the worker only deducts the amount the household actually pays or contributes toward household expenses with the exception of the utility expenses. When the household pays part of the utility expenses, the household is allowed the full utility standard deduction for which it qualifies, per (a)(6)(C) of this Section. When the payments or contributions cannot be differentiated, the worker prorates the expenses evenly among persons actually paying or contributing to the expense and deducts only the household's pro rata share with the exception of the utility expenses. • 24
INSTRUCTIONS TO STAFF 340:50-7-31
Revised 10-2-19
1. The worker enters the total verified monthly allowable medical expenses in the Family Assistance/Client Services (FACS) Expense tab "Elderly/Disabled Medical Expense." The computer subtracts $35 from the worker entered medical expenses to arrive at the household's medical expense deduction. The worker documents allowable expenses in FACS case notes.
2. These charges may also include, but are not limited to, office calls, hospital visits, house calls, special treatments, and chiropractic services.
3. Such costs may include, but are not limited to, room and board charges, drugs and medical supplies, therapy, surgery, and tests.
4. Over-the-counter medication must be a recommended part of the prescribed treatment plan, such as aspirin for arthritics. Medical supplies include, but are not limited to:
(1) needles and syringes used for insulin injection or other prescription medication;
(2) bandages and gauze for surgical patients; and
(3) the cost of crutches, wheelchairs, hospital beds, colostomy bags, and portable oxygen.
5. Some health insurance policies cover household members who are not entitled to a medical deduction as well as those who are. When the portion of the premium paid for elderly or disabled members cannot be determined, the premium must be prorated among all members included on the policy. The prorated amount for one member must be multiplied by the number of elderly or disabled members. The resulting amount is considered a medical cost.
6. Other corrective devices are corrective braces worn on the limbs and braces worn on the teeth for orthodontic purposes. The cost of hearing aid batteries is considered a medical expense.
7. Contact lenses prescribed by an ophthalmologist or optometrist are considered a medical expense.
8. The elderly or disabled member must provide proof that medical treatment occurred and receipts verifying the lodging expense. The person must verify transportation expenses when the person does not use his or her own car. Allowed lodging costs do not include meals or other incidentals.
9. The worker must verify the amount of any deductible medical expenses before allowing the expense at certification. At certification renewal, when the household reports its medical expenses have not changed or have changed by less than $25, the household is not required to provide verification unless the information provided is incomplete, inaccurate, inconsistent, or outdated. Verification of other factors, such as if an expense is allowable or the eligibility of the person incurring the cost, is required only when questionable.
10. The worker explains the three available options, per (a)(3)(C)(i)(I)-(III) of this Section, to the client and documents the client's choice in FACS case notes.
11. (a) Transportation costs to and from the dependent care facility are based on the state's current mileage rate.
(b) Activity fees do not have to be mandatory but must be specific and identifiable. Examples of allowable activity fees may include the cost of an art class for an after school or adult day care program, additional equipment fees charged for a sports camp, or the cost of field trips.
12. When a client is asked to verify dependent care costs, the worker must document in FACS case notes why costs were considered questionable.
13. (a) For purposes of this policy, child support is any court-ordered money designated to be paid for the support of a child. This may include, but is not limited to:
(1) child support;
(2) child support arrearages;
(3) medical insurance or other health care premiums;
(4) child care obligations; or
(5) other obligations specified in individual court or administrative orders.
(b) Verification of the court-ordered amount is obtained along with verification of the actual support payments made each month.
(c) Child support also means money owed to a state for services provided for a child including, but not limited to, Temporary Assistance for Needy Families, SoonerCare (Medicaid) benefits, and foster care.
14. Examples of shelter expenses include, but are not limited to:
(1) shelter expenses paid in advance. The monthly shelter cost is allowed as if the payments were made monthly;
(2) down payments toward the purchase of a house. Down payments are not allowed as deductions as they are not continuing charges; or
(3) a shelter expense owed to someone outside of the household. This is an allowable shelter expense when the household makes a monetary payment. When someone outside of the household pays shelter expenses to the vendor, the expense is not allowable unless the payment is considered a loan. Per Oklahoma Administrative Code (OAC) 340:50-7-22(10)(A) and OAC 340:50-7-45(b)(2)(B), the household must provide proof of the loan. When the household provides proof, the expense is allowed as a shelter deduction and the payment is excluded as income.
15. These types of shelter expenses may be billed less often than monthly and may be averaged over the interval between scheduled billings. For example, property taxes billed and paid yearly may be averaged over a 12-month period.
16. (a) The worker enters one of the four homeless shelter codes in the Case Information tab 'shelter type' field, Information Management System (IMS) block A23 of the Family Assistance/Client Services Interview Notebook: A, B, C, or D. The worker also enters 'yes' or 'no' in the 'homeless shelter costs' field of the FACS Shelter Tab, IMS block C61 to indicate whether the household has shelter costs associated with being homeless. When the answer is:
(1) 'no,' the worker enters zero in 'shelter cost' field, IMS block 54 and 'N' in the 'utility indicator' field, IMS block 59 of the FACS Shelter Tab; or
(2) 'yes,' the worker enters the claimed shelter expense in the 'shelter cost' field, IMS block 54 and when the household claims utility costs, the applicable utility indicator in the 'utility indicator' field, IMS block 59 of the FACS Shelter Tab. The system calculates the household's income and allows the shelter deduction that results in the most food benefits for the household.
(b) Example: The client is interviewed and claims to be homeless as he resides in his car. He claims his $200 car payment as shelter costs. He also states he has a cell phone cost. The worker enters 'D' in the Case Information tab 'Shelter' field, IMS block A23 and 'yes' or 'no' in the 'homeless shelter costs' field of the FACS Shelter Tab, IMS block C61. Then the worker enters $200 in the 'shelter cost' field, IMS block C54 and 'T' in the 'utility indicator' field, IMS block 59 of the FACS Shelter Tab. The system calculates the correct shelter deduction for the household, the $200 car payment or the $148 standard homeless shelter deduction. Once the case clears, the correct shelter cost will show in IMS.
17.(a)To use the standard utility allowance (SUA) to calculate shelter costs, the utility charges for heating or cooling costs must be separate from the household rent or mortgage costs and actually incurred by the household.
(1) Cooling costs are limited to operation of room air conditioners and central air conditioning systems.
(2) Heating costs may be represented by a furnace, wood stove when wood is purchased, fireplace, or electrical or kerosene space heater, when the space heater is used as the primary source of heat.
(b) The worker assesses the household's eligibility for the SUA at each application, reapplication, and when the household moves.
(c) Shared utility costs examples among more than one household are given in (1) through (4) of this subsection.
(1) When more than one household shares the same living quarters and shares one or more of the utility costs billed separately from rent or mortgage payments, (A) or (B) of this paragraph applies.
(A) When one household's name is on the utility bill and it alone pays the bill, the worker allows the full appropriate utility standard for that household.
(B) When multiple households live in the same residence and share one or more of the utility costs billed separately from rent or mortgage payments, each household may receive the full appropriate utility standard regardless of whose name is on the bill.
(2) When two or more families share a meter but have separate living quarters and the utility bill is addressed to only one family, the worker accepts the unaddressed household's statement of liability for the expense unless it is questionable.
(3) Households residing in low-income housing or other rental units with utilities included in the rent, but are liable for excess utilities are entitled to the basic utility allowance (BUA).
(4) When a rental household is billed monthly by the landlord for actual usage of heating or cooling expense as determined through individual metering or by a utility company bill, the household is entitled to the SUA. When the landlord bills the household for actual usage of utilities other than heating or cooling, the household is entitled to the BUA.
(d) Refer to the example in Instructions to Staff (ITS) # 19 of this Section when the household contains a disqualified member and ITS # 20 of this Section when the household contains a non-household member.
18. When the household's only phone is a cellular phone, the phone standard is given.
19. Households maintaining two residences are allowed deductions for both residences when they meet this criterion.
20. For example, rent due each month is included in the household's shelter costs, even when the household has not yet paid the expense. Amounts carried forward from past billing periods are not deductible even when included in the most recent billing and actually paid by the household.
21. For example, the portion of rent or utility covered by excluded vendor payments or medical costs reimbursed by insurance is not calculated as part of the household's shelter cost or medical expenses. After verifying the amount covered by an excluded vendor payment or insurance reimbursement, the worker deducts the portion of the expense owed by the household.
22. For example, when the household size is four, including the disqualified household member, the rent is $400, and the household pays heating and cooling costs, the worker divides the rent by four and enters $300 in the 'shelter cost' field C54 and S in the 'utility indicator' field C59 of the FACS Shelter tab.
23. Example: The household consists of two adults, one is an ineligible alien. The household claims it is homeless and incurs shelter cost of $300 and no utility costs. The eligible household member may receive the full-standard homeless shelter deduction or half of the claimed shelter costs totaling $150. The worker enters $150 in the 'shelter cost' field, IMS block C54, and 'N' in the 'utility indicator' field, IMS block 59, of the FACS Shelter tab. Once the case is saved and cleared, the correct shelter deduction will show in IMS.
24. For example, when the client states the food benefit household and the non-household member each pay half of the $400 rent and half of the utility expenses that include heating and cooling, the worker enters $200 in the 'shelter cost' field C54 and S in the 'utility indicator' field C59 of the Family Assistance and Client Services Shelter tab.
