Medical Expense Deduction:
Issues and Best Practices
Ty Jones
AASD Conference
September 23, 2013
1
Our Plan for Today
1.Overview of Medical Expense Deduction
Policy
2.Advocates’ Perspective
3.Lessons from South Dakota
4. 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.
3
Share of Elderly or Disabled Households
Claiming Medical Expense Deduction
SNAP
Households
Claiming
Medical
Expense
Deduction =
996,594
SNAP
Households
with Elderly or
Disabled
Members
=12,256,213
8%
92%
4
Wide Variation Across States in Share of Eligible Claiming the
Deduction
25%
Share of households with elderly/disabled
claiming the medical deduction
22.7%
20%
15%
11.6%
10.2%
10%
5%
1.4%
0%
U.S. Total
Source: USDA Household Characteristics Data, 2011
Kansas
Colorado
South Dakota
Why Aren’t More Households
Claiming the Deduction?
• State policies & procedures
• Participant and advocate lack of awareness
6
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.
7
State Applications Can Help Households
Claim the Deduction
8
Application Design Can Hinder the Deduction Use
9
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.
10
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 groups
12
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.
13
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.
15
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
16
What is Cost Neutrality?
Cost of Standard
Medical
Deduction
Federal
Government
Cost
Standard
Medical
Deduction
Offset
Increased
Benefits to
Participants
(SUA, income)
Benefits to
Participants
17
Possible Downsides To Standard Medical Deduction
Cost of Standard
Medical
Deduction
Federal
Government
Cost
Standard
Medical
Deduction
Increased
Benefits to
Participants
18
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
20