Medical Expense Deduction: Issues and Best Practices
Ty JonesAASD Conference
September 23, 2013
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Our Plan for Today 1.Overview of Medical Expense Deduction
Policy 2.Advocates’ Perspective 3.Lessons from South Dakota4. Q & A
Why Talk About this Deduction?• The excess medical deduction plays an important role in
targeting food assistance to households with high out of pocket medical costs.
• The excess medical expense deduction is one of the most underutilized of the SNAP income deductions.
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Share of Elderly or Disabled Households Claiming Medical
Expense Deduction
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8%
92%
SNAP House-holds with Elderly or Disabled Members =12,256,213
SNAP House-holds Claim-ing Medical Expense De-duction = 996,594
Wide Variation Across States in Share of Eligible Claiming the Deduction
U.S. Total Kansas Colorado South Dakota0%
5%
10%
15%
20%
25%
11.6%
1.4%
10.2%
22.7%
Shar
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hou
seho
lds w
ith e
lder
ly/d
isabl
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laim
-in
g th
e m
edic
al d
educ
tion
Source: USDA Household Characteristics Data, 2011
Why Aren’t More Households Claiming the Deduction?
• State policies & procedures • Participant and advocate lack of awareness
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Types of Medical Expenses that Qualify
Allowed Expenses• Medical and dental
services,• Hospital bills,• Prescriptions,• Medical equipment,• Transportation to & from
medical services/treatment
• Attendant or home health aide
• Medical insurance premiums or Medicare supplemental insurance policies
Disallowed Expenses
• Expenses incurred that include the cost of a special diet,
• Costs of health and accident policies,
• Medical expenses covered by vendor payments, and
• Medical expenses covered by reimbursements.
State Applications Can Help Households Claim the Deduction
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Application Design Can Hinder the Deduction Use
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Verification Policy Can Be a Barrier• Federal regulations require:–The amount of any medical expenses deductible shall be verified prior to initial certification.–Other factors such as the allowable services provided or the eligibility of the person incurring the cost, shall be verified, if questionable.
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Paper Verification is Not the Only Way• Clients and advocates identify verification as a key
barrier to eligible households claiming medical expenses.
• States and workers often only accept paper documentation.– No specific document can be required. – Other forms of verification could work also, collateral
contacts.– State agencies have a duty to assist with verification 11
Strategies to Ensure Eligible Households Claim Medical Expenses
States are assessing the medical expense take-up rates and reviewing their policy and procedures.– Require verification only at initial certification. – Lift unnecessary restrictions on allowable medical
expenses– Standard Medical Expense Deduction waiver– Outreach to senior and disabled individuals and advocacy
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Standardized Medical Deduction Waiver
• A waiver from USDA started in 2005• Currently 14 State agencies are operating with
these waivers• Designed to:– Test the impact of increasing access to SNAP by the
elderly and disabled– Increase administrative efficiency– Reduce the risk of quality control errors.
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Standard Medical Deduction Waiver in 14 States
What’s A Successful Standard Medical Deduction?
• Increases use of medical expense deduction amongst eligible households, directing more food assistance to vulnerable seniors and people with disabilities.
• Households with extreme medical expenses continue to claim actuals.
• Offset to rest of SNAP population is minimum.• Increases administrative efficiency.
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Caveat Emptor: Standard Medical Deduction Waivers Aren’t A Silver Bullet • Cost-Neutrality
Determination• Offset Dilemma• Gathering Data• Constraints on Staff
Time• Risks to households
with high medical costs
What is Cost Neutrality?
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Cost of Standard Medical Deduction
Federal Government Cost
Benefits to Participants
Offset(SUA, income)
Increased Benefits to Participants
Standard Medical Deduction
Possible Downsides To Standard Medical Deduction
Cost of Standard Medical Deduction
Federal GovernmentCost
Benefit Cut to Other SNAP Participants
Offset(SUA, income)
Increased Benefits to Participants
Standard Medical Deduction
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So What’s a State To Do?• Gather Data
– How many claim the deduction now?• Assess Barriers• Set Clear Policy and Expectations– Verifications– Assess impacts on households with high medical costs
• Review Training• Engage Advocates and Assisters
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