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6-II.D. HEALTH AND MEDICAL CARE EXPENSES DEDUCTION <br />[24 CFR 5.611(a)(3)(i) and 5.603(b) as updated for HOTMA] <br />Unreimbursed health and medical care expenses may be deducted to the extent that, in <br />combination with any disability assistance expenses, they exceed three percent of annual income. <br />The health and medical care expense deduction is permitted only for families in which the head, <br />spouse, or cohead is at least 62 or is a person with disabilities. If a family is eligible for a health <br />and medical care expense deduction, the medical expenses of all family members are counted <br />[VG, p. 28]. <br />Definition of Medical Expenses <br />HUD regulations define health and medical care expenses at 24 CFR 5.603(b) (as updated for <br />HOTMA) to mean “any costs incurred in the diagnosis, cure, mitigation, treatment, or prevention <br />of disease or payments for treatments affecting any structure or function of the body. Health and <br />medical care expenses include medical insurance premiums and long-term care premiums that <br />are paid or anticipated during the period for which annual income is computed.” Health and <br />medical care expenses may be deducted from annual income only if they are eligible under this <br />definition and not otherwise reimbursed. <br />Although HUD revised the definition of health and medical care expenses to reflect the Internal <br />Revenue Service (IRS) general definition of medical expenses, HUD is not permitting PHAs to <br />specifically align their policies to IRS Publication 502. PHAs must review each expense to <br />determine whether it is eligible in accordance with HUD’s definition. While PHA policies may <br />not specifically align with IRS Publication 502, HUD recommends PHAs use it as a standard for <br />determining allowable expenses, and the PHA may list examples of allowable expenses in their <br />policy provided they comply with HUD’s definition at 24 CFR 5.603 as updated for HOTMA. <br />The PHA may not define health and medical care expenses more narrowly than the regulation. <br />SAHA Policy <br />SAHA will use the most current IRS Publication 502 as a standard for determining if <br />expenses claimed by eligible families qualify as health and medical care expenses. <br />However, under no circumstances will SAHA deduct any expenses listed in IRS <br />Publication 502 that do not conform with HUD’s definition of health and medical care <br />expenses. <br />EXHIBIT 1