The CAO must allow specific deductions from the income of the Healthy Horizons family before comparing the family’s total income with the limit for the family size.
The CAO must allow deductions from unearned income before allowing earned income deductions.
The CAO must allow deductions from unearned income for any expense which the individual must pay to be eligible for or to receive that income. These expenses include, but are not limited to, the following:
Attorney fees.
Court costs.
Bank fees, including the following:
Cost of checks.
NOTE: Expenses are allowed for standard checks but not for specialty or designer checks.
Annual ATM fees.
Minimum balance fees.
ATM withdrawal fees.
Per-check fees.
Transportation costs, including the following:
Actual cost of taking public transportation or of using another individual’s vehicle.
Use of the individual’s vehicle to access unearned income that is in a bank account.
NOTE: This deduction is set at the mileage reimbursement rate established by the U.S. General Services Administration (GSA) (currently 0.67 cents per mile). Effective: January 1, 2024.
The individual must provide proof of bank expenses and transportation costs. Proof includes, but is not limited to, bank statements, checks that show payment of bank fees, and ATM receipts.
Because some bank expenses, such as cost of checks and annual balance fees, are normally for one- or two-year periods, and ATM fees and minimal balance fees vary from month-to-month, expenses should be counted as follows:
Use verified bank expenses for the past year. The individual does not have to provide proof of each expense. If his or her stated bank expenses are reasonable, only one month of proof is needed.
Add all bank expenses and transportation costs and divide by 12 to determine a monthly amount.
Use the monthly amount for the unearned income expense.
Example: Ms. A. is applying for Healthy Horizons in August. Ms. A. states that her Social Security Disability payments are direct deposited into Bank XYZ. She says that she must pay a $5 monthly service charge because she cannot keep the minimum account balance and pay a $20 annual ATM fee (in January of each year) and a $3.50 a month in ATM fees. She also says that she drives six miles round trip twice a month to the nearest ATM machine to withdraw cash
. Ms. A. shows her most recent bank statement, which shows her account balance. The bank statement also shows the $5 monthly service charge and $3.50 in ATM fees. Because the $20 annual ATM fee and the stated travel distance are reasonable, no other proof is needed. Ms. A. will receive a monthly deduction of $16.29 from her Social Security Disability benefits. This amount is determined as follows:
Minimum account balance fee ($5.00 × 12) |
$60.00 |
Annual ATM fee |
+20.00 |
ATM fees ($3.50 × 12) |
+42.00 |
Transportation (12 miles ×0.67 cents/mile × 12 months) |
+96.48 |
Annual bank fees and transportation costs |
$218.48 |
Months |
÷12 |
Monthly deduction |
$18.21 |
Guardian fees if having a guardian is a requirement for receiving the income.
A deduction for guardian fees from earned income and unearned income is permitted if the individual must have a guardian to get the income.
SSA authorized representative payee fee.
The CAO must allow as a deduction the monthly fee paid to a qualified organization authorized by the Social Security Administration to receive the individual’s monthly RSDI or SSI benefit or federally administered state supplementary payment. The fee is either 10% of the monthly benefit or $25 a month, whichever is less.
The replacement cost of real or personal property that is covered by an individual damage award or insurance settlement.
Expenses related to collecting rental income (See Section 319.711 for allowable deductions from unearned rental income.)
NOTE: Personal income taxes are not allowable expenses from unearned income.
After deducting unearned income expenses, the CAO must deduct the first $20 of total unearned income received by the applicant/recipient group in a calendar month. If there is no unearned income or the unearned income after allowable expenses is less than $20, the CAO must deduct the rest of the $20 from the applicant/recipient group’s total earned income. The $20 deduction cannot be applied to income based on need and funded by the federal government or a nongovernmental agency, such as Veterans Affairs, Bureau of Indian Affairs, Catholic Charities, or the Salvation Army.
The CAO must allow the $20 deduction from the following veterans benefits received by veterans and their dependents:
Service-connected disability compensation.
Military retirement pensions.
Benefits received because of:
A special act of Congress.
Service in the Indian Wars (January 8, 1817–December 31, 1881).
Service in the Civil War (1861–1865).
Service in the Spanish-American War (April 12, 1898–July 4, 1902).
The following deductions from unearned rental income are allowed:
NOTE: Allowable expenses are prorated if only a portion of the property is designated for rent.
Expenses related to producing or collecting rental income, such as property taxes, advertising for tenants, landscaping, snow removal, utilities, or money paid to a rental agency to handle the property.
Real estate insurance costs, whether or not the mortgage holder requires insurance.
Interest portion of a mortgage payment.
NOTE: Divide the previous year's interest amount by 12 to find the monthly amount.
Incidental repair costs, such as patching a roof, patching a driveway, or replacing a light switch or faucet.
NOTE: The CAO must not allow deductions for depreciation, depletion, individual expenses unrelated to the rental income, or capital expenditures. (A capital expenditure is money spent to add to or to increase the value of the rental property, such as replacing a roof, building a new driveway, rewiring a house, or installing new plumbing.) The CAO must contact the IRS if it is uncertain whether an item is a capital expenditure.
The CAO must add up the total countable gross monthly income of the Healthy Horizons family members before allowing the earned income deductions. If the spouse or parent is not a Healthy Horizons applicant or recipient, the CAO must take the earned income deductions from the family’s total combined earnings. If both spouses or both the child and the parent have earned income and are Healthy Horizons applicants or recipients, each is entitled to the earned income deductions and impairment-related work expenses.
NOTE: Earned income includes profit from self-employment. The CAO must count profit from rental income as earned income if the individual reports it to the IRS as a trade or business. Otherwise, rental income is unearned.
The CAO must allow deductions from earned income in the following order:
1. The $20 monthly deduction if there is no unearned income, or any portion of the $20 deduction not deducted from the unearned income.
NOTE: There can be only one $20 deduction a month for an applicant/recipient group.
2. $65 a month from the earned income of each employed Healthy Horizons applicant or recipient.
NOTE: If a spouse or parent is not an applicant or recipient for Healthy Horizons, combine the earned income of all family members included in the eligibility determination for Healthy Horizons and allow the $65 deduction from the combined income.
NOTE: An employed husband and wife, or parent and child, meeting the eligibility requirements for the Healthy Horizons Program are each entitled to a $65 deduction.
3. Impairment-related work expenses. This deduction is given to each employed applicant or recipient who is under 65 and disabled. Allowable expenses include, but are not limited to, the following:
Payments for attendant care services that are required when traveling to and from work or while at work.
Example: An attendant gets the individual ready for work and helps him when returning from work, which takes about two hours a day. The rest of the attendant’s eight-hour day is spent cleaning the individual’s house. Only one-fourth of the attendant's daily wages are deducted as an impairment-related work expense.
Payment for a medical device that is required in order for the individual to be able to work.
Examples: Wheelchairs, hemodialysis equipment, canes, crutches, inhalators, and pacemakers.
Payment for a prosthetic device that is required in order for the individual to be able to work.
Example: Artificial replacement of arms, legs, and other parts of the body.
Payment for impairment-related nonmedical appliances and equipment or residential modifications that are required in order for the individual to be able to work.
Examples: Telecommunication devices for the deaf, tools designed to accommodate the individual’s impairment, and installation of an outside ramp for a wheelchair or special outside railings or pathways for an applicant or recipient who needs crutches.
Payments for drugs and medical services and prescribed medical supplies needed to control the impairment.
Payments for installing, maintaining, and repairing any of the items listed above.
Payments for similar items and services that are not listed above but are directly related to the impairment and needed by the individual to work.
Important: Impairment related expenses are not allowed for an individual age 65 or older, even if the individual is working and has a disability.
4. Half the remaining earned income. An employed husband and wife or parent and child meeting the eligibility requirements for the Healthy Horizons program are each entitled to half the remaining earned income deduction.
Updated January 24, 2024, Replacing August 12, 2022