Work Expense Deductions

Work expense deductions are allowances for certain expenses incurred during the course of earning income. The work expense deductions explained in this section may apply to either MA Method A or MA Method B.

MA Method A for Families with Children.

Work Expense Deduction.

Pregnant Woman and Infant Work Expense Deduction.

MA Method B and Medicare Savings Programs.

Impairment-Related Work Expense Deduction.

Blind Work Expense Deduction.

Types of Work Expenses.

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MA Method A for Families with Children

MA Method A has two work expense deductions:

l  Work Expense Deduction (apply when determining if children ages 2-18 meet the 150% FPG standard).

l  Pregnant Woman and Infant Work Expense Deduction.

Note:  Do not apply these deductions to MA for adults without children.

Work Expense Deduction

Apply a work expense deduction when determining if children ages 2-18 meet the 150% FPG income standard.

Note:  Do not allow the work expense deduction when determining whether the child can spend down to the 100% FPG standard if the child does not meet the 150% FPG standard.

Example:

Daniel applies for MA for his 10-year-old daughter Diana. Daniel earns $4,500/month.

Action:

Deduct the work expense deduction from Daniel’s earned income. Daniel’s net income is deemed to Diana, and it exceeds the 150% FPG standard.

Determine if Diana can meet a spenddown using the 100% FPG standard. Do not apply the work expense deduction to calculate income for the 100% FPG standard.

Subtract the first $90 of the gross income from each of the following:

n  The earned income Money received from employment or self-employment. This includes but is not limited to salaries, wages, tips, commissions, vacation, and sick pay. of the child.

n  The earned income of each person whose income is deemed to the child, regardless of whether the person is an applicant or enrollee.

Note:  Do not reduce income to less than 0.

Example:

Tracy applies for MA for her four-year-old son, Alex. Tracy earns $1,500 per month. Alex earns $80 per month as a child model.

Action:

Subtract $90 from Tracy's income, and $90 from Alex’ income, leaving $1,410. Count $0 earned income for Alex.

Pregnant Woman and Infant Work Expense Deduction

Apply the Pregnant Woman and Infant Work Expense Deduction when determining if the following are less than the listed FPG income standard.

Note:  Do not allow any other deductions in the income calculation.

n  A pregnant woman who has income equal to or more than 275% FPG.

n  An infant (child through the month of his or her second birthday who is not eligible as an auto newborn A basis of eligibility for a child who receives automatic MA or MCRE eligibility through the month of his or her first birthday. The child's mother must have been enrolled in a Minnesota Health Care Program during the month of birth and the child must continue to live in Minnesota.) has income equal to or more than 280% FPG.

Note:  The client can spend down to the 100% FPG standard if income for the pregnant woman or infant exceeds the applicable standard after applying the work expense deduction. Allow other deductions as applicable to a spenddown.

Subtract the amount for the household size listed below from earned income.

Note:  Deduct the work expense once from the total combined gross earnings of the client and income deemed to the client.

Example:

Jamal and Sheila, a married couple, apply for MA for their one-year-old son Alex. Both Jamal and Sheila are employed and have day care expenses. No one in the household has received MA before.

Action:

First deduct $145 from the combined gross earnings. Alex is eligible for MA without a spenddown if income after the deduction is equal to or less than 280% FPG. If income after the deduction exceeds 280% of FPG standard, Alex must spend down to the 100% of FPG standard. Recalculate Jamal and Sheila's income without the $145 work expense deduction. Allow the dependent care deduction and the 17% earned income disregard.

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MA Method B and Medicare Savings Programs

MA Method B and the Medicare Savings Programs have two work expense deductions:

l  Impairment-Related Work Expense Deduction - for clients with a disabled basis of eligibility.

l  Blind Work Expense Deduction - for clients with a blind basis of eligibility.

Do not allow either of these work expense deductions for items reimbursable or paid for by another source.

Note:  When an expense qualifies both as a work expense and a Plan to Achieve Self-Support (PASS) deduction, the client must choose whether to allow the expense as a PASS disregard or a work expense deduction.

Impairment-Related Work Expense Deduction

The impairment-related work expense deduction applies to disabled (but not blind) people who are under age 65. Clients who use an eligibility basis based on age (65 or older) are not allowed a work expense deduction.

Note:  SSI may treat some elderly employed people as disabled. However, these clients should have an elderly basis under MA.

An impairment-related work expense is an expense for items or services that are directly related to enabling a person with a disability to work and that the person necessarily incurs because of physical or mental impairment.

Deduct impairment-related expenses from earned income if:

n  the severity of the impairment requires the person to purchase or rent items and services in order to work; and

n  the expense is reasonable; and

n  the client pays the cost and is not reimbursed from another source (such as Medicare, private insurance); and

n  one of the following occurs:

m the client pays the expense in the month he or she receives the earned income and the income is for work the client did in the same month as using the item or service.

m the client is working but pays the expense before receiving the earned income.

Example:

Jerry needs a special attachment for his prosthetic arm in order to perform his job. He is responsible to purchase it. Jerry purchases the attachment in February.

Action:

Allow the cost of the attachment as an impairment-related work expense deduction because Jerry worked and purchases the attachment in February.

n  Deduct impairment-related work expenses after the $65 earned income disregard and before deducting one-half of the remaining earned income. See MA Method B Income Calculation.

Do not allow expenses for a transportation method also used by non-disabled people such as a bus or unmodified vehicle.

Example:

Jolene takes the metro bus to work because she cannot drive due to her disability.

Action:

Do not allow the cost of the bus as an impairment-related work expense. Jolene would have to pay to ride the bus to work if she was not disabled.

Use the same rate allowed as a flat rate deduction for self-employed people if transportation expenses, such as for a modified vehicle, are allowed, and the client is using mileage as a deduction. See Transportation.

Blind Work Expense Deduction

The blind work expense deduction applies to blind people who are under age 65. Do not allow a work expense deduction for clients who use an eligibility basis based on age (65 or older).

Note:  SSI may treat some elderly employed people as disabled/blind. However, these clients should have an elderly basis under MA.  

A blind work expense is earned income of a blind person that is used to meet any expenses reasonably attributable to earning the income. Deduct any work-related items paid by a blind person as a blind work expense, regardless of:

n  any non-work benefit that may be derived from the item; or

n  the items relationship to the person’s blindness.

Allow a deduction for income or FICA taxes withheld from earnings.

Use the same rate allowed as a flat rate deduction for self-employed people if transportation expenses are allowed.

Deduct blind work expenses after the entire earned income disregard. See MA Method B Income Calculation.

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Types of Work Expenses

This chart provides guidance on types of expenses that are deductible as Blind Work Expenses or Impairment-Related Work expenses, or both. The chart is not intended to be all-inclusive. Refer to the policy discussed above to determine whether an expense that is not listed below can be deducted as a work expense.

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