5165-2 CHILD OR DEPENDENT CARE
Within certain limits, costs incurred and actually paid for the care of a dependent child or an incapacitated adult as a necessary cost of earning income is allowed as a deduction.
The childcare and/or incapacitated adult care deduction is allowed each month the expense is incurred. Verification of the expense is required. The expense is deducted after the $90 work expense or the $150 plus 33 percent earned income deduction has been applied.
There are no restrictions on who the client may pay for the care of a dependent child or incapacitated adult or upon where the care is provided. An individual may select a care provider and receive the disregard even if the provider lives in the same home as the Family Medicaid family. However, if the person who is providing the care has their needs included in the Medicaid household, the deduction is not allowed.
There are limitations upon the amount allowed as a Family Medicaid deduction and upon whether a child or an incapacitated adult qualifies for the deduction:
Two different maximum deductions apply, based on the age of the dependent receiving care. The actual cost of care, up to the following maximums, may be deducted:
$200 per month for each child under age 2; and
$175 per month for each child age 2 or older or incapacitated adult.
The lower standard ($175) is applied beginning with the benefit month following a child's second birthday.
5165-2 B. INCLUDED IN THE HOUSEHOLD
Deductions for child care or incapacitated adult are allowed only for individuals whose needs are included in the household.
This limitation applies even if an individual claims that he/she cannot work without receiving a deduction for a particular person who is not included in the household.
If a flat rate is charged for the care of more than one child or incapacitated adult and the person who provides the care does not separate the charges by individual, divide the total amount paid by the number of persons receiving the care. The result is the amount allocated to each individual for whom the deduction is allowed.
Verification of child care and incapacitated adult care costs is always required. Any expenses claimed which are not supported by documents or other verification will not be allowed as deductions.
Applicants who claim they pay for child care or incapacitated adult care must be given a reasonable amount of time (at least 10 days) to provide proof of the actual or anticipated amount(s) paid of incurring this expense. Any incurred expenses claimed which are not verified will not be allowed as deductions.
Often the caseworker will find that a close relative or family member is claimed as a provider. This is a common and often legitimate situation. However, the caseworker should look for verification that money actually changes hands within the family or household.
In computing net countable earned income the child care and/or incapacitated adult care allowance is the last deduction given and is subtracted after the $90 work expense deduction or $150 + 33% earned income deduction has been applied.
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