*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***
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Effective: October 1, 2011 |
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21.50.60 - Dependent Care Deduction |
Archived: June 1, 2016 (Previous Versions) |
Dependent Care Deductions are disregards from gross earned income for the cost of dependent care expenses. Only MA Method A for families with children and MA Method B use dependent care deductions.
Conditions for Use - MA Method A for Families with Children.
Applying the Deduction - MA Method A for Families with Children.
Conditions for Use - MA Method B.
Applying the Deduction - MA Method B.
Conditions for Use - MA Method A for Families with Children
The MA Method A Dependent Care Deduction is a disregard from earned income of dependent care expenses up to:
l $200 per month for each dependent under age two.
l $175 per month for each dependent age two and older.
Note: Do not apply this deduction to MA adults without children.
Use the dependent care deduction when a client whose earned income is counted to determine eligibility needs dependent care while:
l at work.
l in transit to or from work.
l not at work, but needs dependent care to maintain existing employment.
Example:
Joan has two children under 10 years old. She works at the local factory on the night shift. She hires the neighbor to watch the kids in the morning while she is sleeping.
Action:
Allow the expense for Joan because she works nights and pays for dependent care while sleeping during the day.
Do not require verification of dependent care costs.
Do not allow a deduction:
l if the care of the dependent child is provided by one of the following (regardless of whether the person is in the health care household):
n Parent.
Exception: If both parents are in the household, allow the dependent care deduction only if the non-working parent in the household is incapacitated or otherwise unable to provide care.
n Stepparent.
n Sibling under age 19.
l when care costs are paid by the child care fund or other third parties (other than child support as described below).
Note: Do not consider payments made by an employer to the day care provider but paid in full by the employee's own funds (such as Dependent Care Expense Accounts) to be third party payments.
Example:
Melinda has child care costs of $375 for her three-year-old son. The Sliding Fee Child Care Program pays $275 to the provider. Melinda is responsible for the remaining $100.
Action:
Allow $100 as a deduction from Melinda's earned income when determining her eligibility and the amount to deem to her son.
Applying the Deduction - MA Method A for Families with Children
Follow these policies when applying the Dependent Care Deduction:
l Allow dependent care costs as a deduction in the month incurred or paid.
l Deduct costs of care for a dependent child or incapacitated adult from the earned income of anyone who meets the Conditions for Use - MA Method A for Families with Children.
l When both parents are working during the same hours, allow half the day care costs as a deduction for each parent.
l Allow the dependent care deduction from the earned income of the parent or other caretaker to determine:
n the parent or caretaker's eligibility and
n the amount of the net earned income to deem to other household members applying for or receiving MA.
Example:
Thelma applies for MA for herself and her two children, Brett, age 13, and Mandy, age nine. Thelma is employed and pays $250 per month for dependent care for Mandy. She has no dependent care costs for Brett.
Action:
Allow a dependent care deduction of $175 (maximum allowable for a child over age two) when determining Thelma's net earned income. Use the same net earned income figure for Thelma's, Brett's, and Mandy's eligibility.
l Do not deduct amounts specifically ordered for dependent care that are included in a Child Support payment. Deduct the actual amount the custodial parent is paying. The Child Support payment is considered income to the child.
Example:
Alice applies for MA for herself and her daughter Linda, age nine. Alice receives court ordered child support payments for Linda of $450 per month. The court order specifies that $300 is for child support and $150 is for dependent care. Alice is employed and pays $200 per month for dependent care for Linda.
Action:
Allow $175 as a deduction from Alice's earned income to determine her own eligibility and the amount of net income to deem to Linda. Count the $450 Child Support payment as child support income for Linda.
Condition for Use - MA Method B
Clients who use the Method B eligibility basis of blindness may use the Dependent Care Deduction from earned income if the dependent care is essential to earning the income.
l Do not require verification of dependent care costs.
l Do not allow a dependent care deduction for people who use Method B due to age or disability.
l Do not allow a deduction for amounts paid by third parties (other than child support).
n Do not consider payments made by an employer to the day care provider but paid in full by the employee's own funds (such as Dependent Care Expense Accounts) to be third party payments.
Applying the Deduction - MA Method B
Allow the actual cost of dependent care as a deduction from earned income for people who meet the Conditions for Use - MA Method B.
l Do not deduct amounts specifically ordered for dependent care that are included in a Child Support payment. Deduct the actual amount the custodial parent is paying. The Child Support payment is considered income to the child.