FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
1
Section 340
Change #15-2021
September 3, 2021
FNS 340 DEDUCTIONS
Change #15-2021
SEPTEMBER 3, 2021
340.01 REQUIREMENT
The deductions listed in this section are the only deductions allowed when
calculating a household’s net monthly income. Evaluate all households to determine
allowable deductions.
340.02 EARNED INCOME DEDUCTION
Twenty percent of the monthly gross earned income, or adjusted gross income for
self-employed households, is deducted to allow for expenses associated with
employment such as transportation, special clothing, withholding taxes, and other
incidental expenses. Do not allow this deduction for earnings that are excluded.
North Carolina Families Accessing Services through Technology (NC FAST)
automatically calculates this based on information entered into the system.
340.03 STANDARD DEDUCTION
Allow every Food and Nutrition Services (FNS) unit with earned and/or unearned
income a monthly standard deduction according to household size. Only eligible
FNS unit members are included in the household size for calculation of the allowable
standard deduction. NC FAST automatically calculates this based on information
entered into the system. See DSS-8560 Caseworker Desk Reference for current
standard deduction amounts.
340.04 DEPENDENT CARE DEDUCTION
A. Establish eligibility for the dependent care deduction.
1. The FNS unit must incur a dependent care expense for any dependent,
child or incapacitated adult, in the FNS unit; and
2. The FNS unit must incur the dependent care expense to accept, continue,
or seek employment; attend training; or attend school (including high
school) to prepare for employment; and
3. The dependent care provider cannot be included in the FNS unit.
4. Allow as an expense the amount payable for dependent care by the FNS
unit. This includes additional transportation expenses incurred as a result
of transporting FNS members to and from the dependent care provider.
When determining the mileage incurred to provide the dependent care
transportation, do not include the normal mileage incurred by the FNS unit
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
2
Section 340
Change #15-2021
September 3, 2021
to go to and from work. Only allow the dependent care transportation
expense for the additional mileage incurred by the FNS unit. Allowable
mileage can be found by going to the IRS website and searching for
business mileage rate.
EXAMPLE 1: The child care center is located on the route the FNS unit
member drives to work. When the stop at the child care
center is added, the mileage does not change. No
additional transportation expense is incurred. The FNS unit
is not eligible for a dependent care transportation deduction
as no additional expense occurs.
EXAMPLE 2: The FNS unit members works at the child care center which
the child attends. The FNS unit is not eligible for a
dependent care transportation deduction as no additional
expense occurs.
EXAMPLE 3: The FNS unit member takes her child to a child care center
not located on her route to school. When the stop at the
child care center is added, she drives an additional 10
miles in the morning and an additional 10 miles in the
afternoon. She provides this transportation 5 days a week
The FNS unit is eligible for a dependent care transportation
deduction. The actual related transportation expense is the
20 miles, per day, that are associated with the travel to the
child care center.
B. Do not allow the dependent care expense if:
1. Paid entirely through government assistance, or
2. Covered by an excluded reimbursement through any source.
EXAMPLE:
$175
Cost of dependent care
- 175
Amount of subsidized child care
payment from DSS
$ 0
No deduction
C. Verification of the Dependent Care Expense
Using the DSS-8650 Notice of Information Needed, request the dependent
care expense for the month prior to the month of application or recertification
as long as the deduction is representative of the ongoing deduction.
NOTE: Accept client’s statement of dependent care transportation mileage
unless it is questionable. Online sources can be used if the mileage is
unknown or questionable.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
3
Section 340
Change #15-2021
September 3, 2021
1. Give the FNS unit at least ten calendar days to provide verification.
2. If the FNS unit states that the verification is not readily available, offer to
assist in obtaining the verification.
3. Do not request a specific type of verification as any source that reasonably
verifies the deduction is acceptable. Some acceptable sources of
verification include, but are not limited to:
a. FNS unit records, such as agreements, canceled checks, etc.;
b. Agency records; and
c. Verbal or written verification from the dependent care provider.
4. If verification cannot be obtained from any source:
a. Consult with the FNS unit to determine the amount of the expense
based on the best available information.
b. Request a signed statement from the FNS unit regarding the
dependent care expense and document the case file thoroughly with
the reason the verification could not be obtained.
D. Determine the Allowable Dependent Care Deduction
1. If dependent care is paid weekly or biweekly, convert the dependent care
to a monthly amount. Use actual dependent care expenses including
cents; do not round.
2. Count as a deduction only the amount the FNS unit pays in excess of any
government assistance amount and/or any fees paid by the FNS unit.
EXAMPLE:
$250
Cost of child care
$150
– Amount of subsidized child care payment from
DSS
$100
Allowable child care deduction
E. Documentation of the Dependent Care Deduction
1. Document the dependent care deduction in the case file. Include:
a. Amount payable per child or incapacitated adult by the client,
b. Frequency of payment,
c. Provider’s name, address, and telephone number,
d. Child (ren) or incapacitated adult in care,
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
4
Section 340
Change #15-2021
September 3, 2021
e. Hours of care, and
f. Any type and amount of government assistance paid for the dependent
care.
2. To enter the deduction in NC FAST:
a. Use the actual dependent care expense, including cents; do not round
and convert amounts paid weekly, bi-weekly, or semi-monthly to a
monthly amount.
b. If the expense is paid less often than monthly, average and convert to
a monthly amount.
c. Enter the actual monthly converted expense paid for each dependent
in NC FAST.
d. If one dependent care payment is paid for more than one child or
incapacitated adult, enter each child’s or incapacitated adult’s portion.
EXAMPLE: Mrs. Bell pays $400 for full time care for one child and
$150 for afterschool care for two children. Enter $400 for
the child who receives full time care. Enter $75 each for
the two children who receive afterschool care.
340.05 SHELTER DEDUCTIONS
A. A FNS unit is entitled to a shelter/utility deduction when shelter and/or utility
expenses exceed 50% of the monthly income after the earned income,
standard, medical, dependent care, and child support deduction have been
subtracted.
B. Only that portion of the shelter and/or utility expense which represents the
regular monthly payment is used in the calculation of the household’s shelter
expense. Do not include the amount intended to cover any past due
payments.
C. Allow a deduction for expenses that are incurred or billed, whether paid or
not, up to the monthly shelter cap. NC FAST calculates this automatically. If
the FNS unit contains a specified person, it is not subject to the shelter cap.
D. Allow a deduction if a shelter expense is billed in the name of a non-FNS unit
member but is the responsibility of the FNS unit to pay.
340.06 ALLOWABLE HOUSING EXPENSES
The following are allowable housing expenses.
A. Rent;
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
5
Section 340
Change #15-2021
September 3, 2021
B. Mortgage (principal and interest), including second and third mortgages,
regardless of the use of the money;
C. Lot rent for a mobile home or mortgage payment on land when the home is
owned or rented;
D. Home improvement/home equity loans, regardless of how the FNS unit uses
the money;
E. Real property taxes. Includes all taxes/assessments listed such as sewer,
fire, school, trash, recycling, and state and local assessments;
F. Insurance on the home (structure only) but not on furniture or personal
belongings;
1. If the FNS unit resides in a mobile home, recreational vehicle, or
automobile, taxes and insurance are allowable. For FNS purposes, a
these are considered real property.
2. If the tax or insurance bill does not show amounts for personal property
separate from amounts for the dwelling and land, allow the entire expense
as a deduction. Document fully that these expenses cannot be identified
separately.
G. Condominium fees and homeowner’s association dues;
H. Taxes and/or insurance expenses itemized as part of mortgage closing
expenses when a FNS unit purchases a home;
I. Costs of repairing a home that was substantially damaged or destroyed due
to a natural disaster, such as a fire or flood, as long as the expenses will not
be reimbursed;
J. Shelter expenses for a home temporarily unoccupied by the FNS unit
because of employment (such as, migrant employment) or training away from
home, illness, or the abandonment of the home due to a natural disaster or
casualty loss.
1. For an unoccupied home to be included in the shelter expenses, the FNS
unit must intend to return to the home, such as migrants.
2. The current occupants of the home, if any, must not be claiming the
shelter expenses for FNS purposes.
3. The home may not be leased or rented during the absence of the FNS
unit.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
6
Section 340
Change #15-2021
September 3, 2021
K. When the FNS unit resides in a group home, any expense for a room, which
can be identified separately from other expenses, is allowed as a shelter
expense. If only one payment is made for room and meals, allow as a shelter
expense the amount of the payment that exceeds the maximum FNS benefit
amount (also known as the Thrifty Food Plan) for the size of the FNS unit.
L. Car payment and other fees associated with living in the car, if the car is used
as primary residence.
340.07 NON-ALLOWABLE HOUSING EXPENSES
A. Any expenses related to housing not actually occupied by the FNS unit,
except as specified in 340.06 J.
B. Down payments, closing expenses, discount points, and other expenses
incidental to closing a mortgage when purchasing a home, except as
specified in 340.06 H.
C. An expense which is reimbursed or covered by a vendor payment. A vendor
payment is a payment made in money on behalf of a household/individual by
an outside party. See FNS 315.33 for information on vendor payments.
D. Site preparation to locate a mobile home.
E. Late charges or fees on mortgage or rent payments.
F. Past due rent or mortgage amounts.
G. Other expenses not directly related to shelter, such as lawn care, except as
provided in 340.06 G. above.
H. Deposits on rental property.
I. The amount of rent being recouped by HUD for a prior underpayment made
by the recipient.
NOTE: If a FNS unit has been granted a suspension of rent or mortgage
payments (a moratorium), do not allow the rent or mortgage
expense until it is incurred again.
340.08 VERIFICATION OF HOUSING EXPENSES
A. Requirements
1. Verify the expenses at initial application, at recertification if there has been
a change, and when a change in residence, with changed deductions, is
reported.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
7
Section 340
Change #15-2021
September 3, 2021
2. Request verifications using the DSS-8650 and allow the FNS unit at least
ten calendar days to provide verification.
3. If verification is not provided within ten calendar days, process the
application, and allow no deduction.
4. If verification is provided within the certification period (CP), adjust benefits
for the month after verification is provided if time allows.
5. If needed, offer assistance to the FNS unit in obtaining verification.
6. Resolve any discrepancies prior to allowing the deduction.
B. Do not request a specific type of verification as any source that reasonably
verifies the deduction is acceptable. Some acceptable sources of verification
include, but are not limited to:
1. Rent or Mortgage
a. Obtain written or verbal statement from the landlord.
b. View payment notice, mortgage book, or closing statement for a new
mortgage. These will indicate if the taxes and insurance are escrowed
in the mortgage payment.
c. View receipts and make sure the amount on the receipt does not
include late charges, past due amounts, or HUD recoupments.
2. Property Taxes/Property Insurance
a. View bills, receipts, or county tax records.
Note: Do not use the tax rate times the value to calculate the tax bill
as some citizens, such as seniors, receive discounts.
b. Obtain a written or verbal statement from the taxing authority or
insurance company. Do not allow late fees or past due amounts.
3. Miscellaneous Shelter Expenses
a. Obtain documentary evidence from the source.
b. Use a collateral contact when documentary evidence is not available.
C. Documentation of Shelter Expenses
1. Document any verifications received in the appropriate the NC FAST
casefile. Include:
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
8
Section 340
Change #15-2021
September 3, 2021
a. The method of verification. If a verbal statement is obtained, document
who provided the information, how the verification was obtained (such
as by telephone or in person), and exactly what was stated by the
source.
b. The monthly amount billed or incurred. Always convert to a monthly
amount if paid weekly, biweekly, or semi-monthly.
c. Date verification received.
2. Entering Housing Expenses
a. In NC FAST, each shelter expense is entered separately.
b. Do not round.
NOTE: Use verified housing expenses for the month prior to the month of
application or recertification as long as the deduction is
representative of the ongoing deduction.
340.09 UTILITY EXPENSES
Allow as a shelter deduction any utility expenses that are identified separately from a
rent or mortgage payment. This includes:
A. Allowable Utility Expenses
1. Heating and cooling expenses;
2. Electricity;
3. Cooking fuel;
4. Water and sewage;
5. Septic tank installation and maintenance;
6. Well installation and maintenance;
7. Garbage and trash collection fees; and
8. The basic service fees for one telephone, including the basic phone
service rate; telecommunication relay charge; federal and State taxes;
Emergency 911 access fee; long distance access fees; and all FCC
charges.
NOTE: Use the utilities for the month prior to the month of application or
recertification as long as the deduction is representative of the
ongoing deduction.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
9
Section 340
Change #15-2021
September 3, 2021
B. Non-Allowable Utility Expenses
1. Deposits charged on utilities, including a telephone;
2. Late fees and past due amounts;
3. The costs of appliances;
4. Internet charges;
5. Repair or replacement expenses for appliances or any other portion of the
home due to wear and tear or mechanical problems;
6. Costs connected with cutting wood, such as cutting permits, gas for a
chain saw, or equipment used to cut wood when a FNS unit heats or cools
with wood.
C. The utility expense allowed may be a standard amount or a telephone utility
allowance. There are three utility standards. They are the Standard Utility
Allowance (SUA), Basic Utility Allowance (BUA), and the Telephone
Utility Allowance (TUA).
D. Eligibility Requirements for the SUA
The FNS unit is eligible for the SUA if the household:
1. Incurs a heating or cooling expense which is billed separated from rent or
mortgage payments.
2. Rents or is purchasing a home and pays heating or cooling expenses
directly to the utility provider.
3. Rents a home with individual metering for a heating or cooling expense
which is billed by the landlord.
4. Owns or rents a home and does not pay a mortgage or rent payment but
incurs a heating or cooling expense.
5. Does not currently incur a heating or cooling expense but expects to have
one in the upcoming season. (For example, the client moves into a new
home and has not received a bill.)
6. Incurs heating or cooling expenses during the CP in excess of those
reimbursed by energy assistance programs other than Low Income
Energy Assistance Program (LIEAP).
7. Incurs a heating or cooling expense which is not totally covered by a
vendor payment.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
10
Section 340
Change #15-2021
September 3, 2021
8. Includes any member of the LIEAP household who received an energy
assistance payment made under LIEAP in the past 12 months, regardless
of whether the FNS unit has any expenses in excess of the LIEAP
amount, or
9. Lives in a public or private housing unit that has central utility meters and
residents are charged only for excess heating or cooling expenses.
Determine if the FNS unit has been billed for excess heating or cooling
expenses within the last 12 months.
a. Do not consider the purchase of kindling wood as a heating expense.
b. The cooling expense must be from central or room air conditioning, not
from fans.
NOTE: Fees charged by a utility company for initial installation of
service are included in the SUA.
E. The FNS unit is ineligible for SUA when it:
1. Lives in a public or private housing unit that has central utility meters, and
the heating or cooling expenses are included in the rent; or
2. Has not received a LIEAP check for its current residence address within
the last 12 months; or
3. Has its heating and cooling expenses totally covered by a vendor payment
(a payment made in money on behalf of a household/individual by an
outside party) other than LIEAP; or
4. Is reimbursed for the total amount of the heating or cooling expense.
F. Eligibility Requirements for the BUA
The FNS unit is eligible for the BUA if the household:
1. Rents or is purchasing a home and pays at least two non-heating/non-
cooling utility expenses directly to a utility provider.
2. Incurs at least two non-heating/non-cooling utility expenses including
cooking fuel, electricity used for non-heating/non-cooling purposes, water
and sewage charges, well and septic tank installation and maintenance,
natural gas for water heaters, telephone, and garbage and trash charges.
If the FNS unit incurs at least two of these expenses, the FNS unit is
eligible for the BUA. Remember, if the FNS unit’s only utility expense is for
a telephone, the FNS unit is not eligible for the BUA. Allow the FNS unit
the TUA.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
11
Section 340
Change #15-2021
September 3, 2021
3. Rents a home with individual metering or billing for at least two non-
heating/non-cooling expenses which are billed by the landlord.
4. Owns its home or rents a home and does not pay a mortgage or rent
payment but incurs at least two non-heating/non-cooling utility expenses.
5. Incurs at least two non-heating/non-cooling expenses that are not totally
covered by a vendor payment or reimbursement.
6. Lives in a public or private housing unit that has central utility meters and
incurred an excess utility expense for at least two non-heating, non-
cooling expenses in the last 12 months.
NOTE: Fees charged by a utility company for initial installation of service
are included in the BUA.
G. Eligibility Requirements for the Telephone Utility Allowance (TUA)
1. The FNS unit is eligible for the TUA if the only utility expense incurred is
for a telephone.
2. The telephone can be either a land line or a cellular phone.
3. The household qualifies for the TUA if a prepaid cell phone is the
household’s method of basic telephone service. Prepaid long distance
service is not considered a basic telephone service.
4. Budget the TUA for the entire CP.
NOTE: Fees charged by a utility company for initial installation of service
are included in the TUA.
H. Allowing the SUA, BUA, or TUA Expenses
1. Explain eligibility for using the SUA, BUA, or TUA expenses at application,
reapplication, recertification or change in situation. Accept the client’s
statement of the utility expenses and entitlement to the SUA, BUA or
TUA, unless questionable.
2. Explain each utility allowance at application, recertification, and reported
move by the FNS unit.
3. Document the utility deduction in the case file.
I. Verification of the SUA, BUA, or TUA
1. Verify entitlement to the SUA, BUA, or TUA when the client’s statement is
questionable. Document the case file as to why the client’s statement is
questionable and the reason for requesting verification.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
12
Section 340
Change #15-2021
September 3, 2021
2. Give the FNS unit a DSS-8650 allow the FNS unit at least ten calendar
days to provide verification of entitlement to the applicable standard. If
needed, offer assistance to the FNS unit in obtaining information.
3. View bills or receipts or obtain a written or verbal statement from the utility
company or vendor.
NOTE: The landlord can verify utilities are not included in the rent and
can verify the primary source. The landlord cannot verify who
pays the utility expense.
4. Resolve any discrepancies prior to allowing the deduction.
5. If verification is provided within the CP, allow the deduction. Adjust
benefits for the month after verification is provided.
J. Documentation of Entitlement to the SUA, BUA, or TUA
1. Document the client’s statement regarding the following in the NC FAST
case file.
a. The type of expense; and
b. The utility provider; and
c. The method of verification if client’s statement is questionable; and
d. The date verification was received.
2. NC FAST will allow the SUA, BUA, or TUA based on information entered
into the system.
340.10 SHARED RESIDENCE
A. Allow each FNS unit the applicable SUA, BUA, or TUA for the household size.
Do not prorate between the individual units, whether each household is a
FNS participant or not.
B. If all FNS units do not contribute to the heating and cooling expenses,
determine the appropriate utility allowance based on the expenses each
household incurs.
C. If the FNS unit lives in the same residence with another FNS unit that does
not share utility expenses, allow the SUA, BUA, or TUA if eligible. Do not
include other members of the residence when determining the appropriate
deduction.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
13
Section 340
Change #15-2021
September 3, 2021
340.11 SHARING A UTILITY METER/EXPENSE BUT LIVING IN SEPARATE
RESIDENCES
A. Allow each FNS unit the SUA or BUA for all residents who contribute to the
expense when there is a shared utility meter/expense, but the FNS unit lives
in separate residences. Do not prorate between the individual units, whether
each household is a FNS participant or not.
B. If each FNS unit does not contribute to the heating or cooling expenses, allow
the appropriate utility allowance for the expense the household incurs.
340.12 PROCEDURES FOR SPECIFIED PERSONS, INELIGIBLE MEMBERS, AND
DISQUALIFIED MEMBERS
A. FNS unit Containing a Specified Person
If the FNS unit contains a specified person as defined in FNS 212.02
Specified Person, allow a deduction for the full amount of the FNS unit’s
excess expenses. NC FAST does this automatically.
NOTE: Benefits must be restored if an SSI applicant is later determined to
be eligible for SSI benefits. In computing the restoration, allow the
unlimited excess shelter deduction retroactive to the date of the FNS
application or the date of initial SSI eligibility, whichever is later. NC
FAST will automatically calculate the ongoing excess shelter
expense based on information entered into the system.
B. FNS unit Containing an Ineligible Alien, an Ineligible Individual Who Fails or
Refuses to Obtain or Provide a SSN, or an Ineligible Able-Bodied Adult
Without Dependents (ABAWD).
1. Allow the eligible FNS unit members a prorata share of the shelter, legal
support obligation, and child care expenses that are paid by the ineligible
member from the ineligible member’s own income. Include all FNS unit
members in the utility expense for calculation of the utility deduction. This
includes eligible and ineligible FNS unit members.
2. Determine the prorata share by:
a. Dividing the allowable shelter expenses evenly for all FNS unit
members including ineligible and disqualified members; and
b. Multiplying the prorata share by the number of eligible and disqualified
persons included in the FNS unit. This is the allowable expense.
NOTE: An ineligible member is included in determining the utility
deduction (SUA, BUA, or TUA); this amount is not to be
prorated.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
14
Section 340
Change #15-2021
September 3, 2021
3. When an elderly or disabled individual (specified person) is the ineligible
member, the capped shelter amount must be used for the eligible FNS
unit members even if the shelter and utility expenses are paid by the
ineligible member.
4. NC FAST automatically calculates the prorata share based on information
entered in the system.
C. FNS unit Containing a Disqualified Member
1. Allow the FNS unit a full deduction for shelter and utility expenses even if
paid or incurred by a disqualified individual. Do not prorate the
expenses.
2. This applies to individuals disqualified due to:
a. Intentional Program Violation;
b. Felony drug conviction,
c. Fleeing felon,
d. Probation/parole violator,
e. Failure to comply with work registration requirements,
f. Voluntary quit, or
g. Disqualification due to transfer of resources.
3. With regard to transfer of resources, if household membership changes,
the penalty follows each member of the original household that transferred
the resource. That individual is subject to disqualification in the new FNS
unit.
D. Ineligible Students
Ineligible Students are not household members. Allow the prorata share of
the shelter, legal support obligation, and child care expenses paid by a
household that includes an ineligible student when the payments of these
expenses cannot be differentiated between the ineligible student and eligible
household members. If the payments can be differentiated, allow as a
deduction the expenses the eligible household members verify, they are
responsible for. If household expenses are paid by an ineligible student,
eligible household members cannot receive a deduction for those expenses.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
15
Section 340
Change #15-2021
September 3, 2021
DEDUCTIONS REFERENCE SHEET
Ineligible
Individual
Shelter Expense
Included in
SUA/BUA/
TUA
Legal Support
Obligation
Medical
Expenses
Ineligible Non-
citizen
If paid by the
individual allow a
prorated deduction.
Yes
If paid by the
individual allow
a prorated
deduction.
If paid for the
individual, do not
allow deduction.
Ineligible for failure
to provide SSN
If paid by the
individual allow a
prorated deduction.
Yes
If paid by the
individual allow
a prorated
deduction.
If paid for the
individual, do not
allow deduction.
Ineligible ABAWD
If paid by the
individual allow a
prorated deduction.
Yes
If paid by the
individual allow
a prorated
deduction.
If paid for the
individual, do not
allow deduction.
Disqualified for :
• IPV
• Work
Registration
• Drug Conviction
• Transfer of
resources
Allow full
deduction.
Yes
Allow full
deduction.
Allow full
deduction
• Ineligible Fleeing
Felons
• Probation /
Parole Violators
Allow full
deduction.
Yes
Allow full
deduction.
Allow full
deduction
Non-household
members such as:
• Separate
Household
• Ineligible
students
• Roomers
• Boarders
*Do not allow
deduction.
No
*Do not allow
deduction.
*Do not allow
deduction.
* If the HH’s expenses are paid to the providers, consider the payments as vendor payments.
Do not count as income and do not allow deductions for paid expenses.
* If the HH’s shelter expenses are shared with the Non-HH member, treat as a:
o Pass through payment – if the HH is renting the property, allow the household’s share
as a deduction.
o Unearned income – if the HH owns the property, allow the entire expense as a
deduction
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
16
Section 340
Change #15-2021
September 3, 2021
340.13 MEDICAL DEDUCTIONS
A. Eligibility
1. Any specified person (except ineligible aliens, ineligible ABAWDS, or
individuals ineligible for failure to enumerate) as defined in FNS 212.02
Specified Person is allowed a medical deduction for all medical expenses
that will not be paid or reimbursed by another source, such as portions
paid by insurance, Medicaid, Medicare, law suits, and special foundations,
like the Kidney Foundation.
2. A specified person who was a member of the FNS household immediately
prior to entering a hospital, nursing home, or who has died would be
allowed incurred medical expenses. Allow the FNS unit that contained the
specified person those medical expenses as a deduction if the household
is responsible for payment. NC FAST will allow this deduction based on
information entered into the system.
3. NC FAST only allows a deduction for amounts that exceed $35 per month.
No medical deduction will be given unless the specified person(s) in the
FNS unit has more than $35 in monthly medical expenses.
4. If individuals have medical insurance, Medicare, Medicaid, or pending
lawsuits, do not delay or deny the medical deduction if reimbursement of
expenses is uncertain or unlikely.
B. Allowable Medical Expenses
The following list includes most allowable medical expenses but is not all-
inclusive.
1. Health and hospital insurance premiums (only the portion deemed for the
specified person). If you cannot identify this amount, allow a prorata share;
2. Co-payments;
3. Cost associated with a service animal trained to serve the need(s) of an
elderly or disabled person. An animal must be specially trained to assist
the FNS recipient in order for its associated maintenance costs (from
veterinary bills to food and other expenses) to be allowable deductions. If
the animal has not been specially trained, it is not a service animal and its
expenses are not deductible. A pet or companion animal that a client
already has when prescribed a service animal does not automatically
become a service animal – the animal must have specialized training to
assist the individual with the medical issue for which the animal is
prescribed;
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
17
Section 340
Change #15-2021
September 3, 2021
4. Reasonable transportation and lodging to obtain medical treatment. This
includes trips to fill prescriptions for medicine, dentures, a hearing aid,
eyeglasses, sickroom equipment, etc. Allowable mileage is the current
business IRS mileage rate. The current milage rate can be found by going
to the IRS website and searching business mileage rate. If the
transportation could qualify as either a medical expense or a dependent
care expense, count as Dependent Care since there is not a limit to
Dependent Care Expenses;
5. Medicare Premiums including Medicare Part D premiums;
6. Monthly telephone fees for amplifiers and warning signals for handicapped
persons and costs of typewriter equipment for the deaf;
7. The following items if provided, prescribed, or approved by a licensed
practitioner or other qualified health professional:
a. Medical and dental care;
b. Dentures, hearing aids, and prostheses;
c. Psychotherapy and rehabilitation services;
d. Hospitalization, outpatient treatment, nursing care, and nursing home
care including payments by the FNS unit for an individual who was a
FNS unit; member immediately prior to entering a hospital or nursing
home. Care must be provided by a facility recognized by the State;
e. Rental and purchase of medical equipment and supplies;
f. Prescribed eye glasses and contact lenses;
g. Prescription and over-the-counter medications and medical supplies;
and
h. Cost of service of the following attendants when service is provided by
a non-FNS unit member: homemaker, Home Health Aide, dependent
care service, or housekeeper.
i. If the FNS unit provides the majority of the attendant’s meals, allow
a deduction equal to the current one-person coupon allotment.
ii. If the attendant care could qualify as either a medical expense or a
dependent care expense, count as Dependent Care since there is
not a limit to Dependent Care Expenses.
C. Non-Allowable Expenses
1. Cost of special diets, including Ensure, even if filled as a prescription;
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
18
Section 340
Change #15-2021
September 3, 2021
2. Premiums paid for health or other medical insurance policies if benefits
are payable in a lump sum for death or dismemberment;
3. Premiums paid for policies that are payable directly to the individual in a
set daily or weekly amount and do not specify that benefits are for medical
expenses;
4. Premiums paid for policies that continue payments on mortgages or loans.
These policies are widely referred to as “income maintenance policies”;
5. Costs of transportation or lodging for Medicaid recipients or other persons
when expenses are being paid by the county;
6. Late fees and interest charged on credit cards used to pay expenses;
7. Reimbursed medical expenses from a source such as Medicare Set-aside
Arrangements that are used to protect Medicare when a person is injured
as the result of another person’s negligence.
8. Senior citizen discounts given by pharmacies. Many pharmacies give a
senior citizen discount which is often not reflected in the customer’s record
of purchase. The discount is not included in the medical expense
deduction; and
9. Any expenses “written off” by the provider.
NOTE: If expenses are referred to a collection agency, they are not
considered to be written off.
D. Verification
1. Verify all medical expenses that the FNS unit is responsible for paying at
initial application.
2. Medical expenses do not always have to be verified at recertification.
Review the medical expense information provided by the household. Ask
the client if the expenses previously reported have changed. Verify the
medical expenses if:
a. The type or source of expense has changed. For example, the client
purchases prescriptions at a different pharmacy or the doctor changed
the client’s prescriptions.
b. The total of medical expenses has changed by more than $25. If the
expenses have changed by less than $25.00, do not verify unless c.
below applies.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
19
Section 340
Change #15-2021
September 3, 2021
c. The information/verification provided is incomplete, inaccurate,
inconsistent, or outdated.
3. If the FNS unit reports an anticipated change in medical expenses during
the application or recertification process, flag the case to add the expense
if already verified. If not already verified, flag the case to request
verification of the anticipated change when it is expected to occur. Send
the DSS-8650. Refer to FNS 515 SR Changes during CP to determine
the appropriate reaction to a change in medical expenses.
4. If a specified person reports that they cannot afford to purchase or obtain
medical services, (i.e., prescriptions, doctor visit, etc.), the expense cannot
be anticipated nor allowed as a deduction.
5. Give the FNS unit at least ten calendar days to provide verification.
6. Give the FNS unit a DSS-8650.
7. Offer assistance to the FNS unit in obtaining information.
8. Resolve any discrepancies prior to allowing the deduction.
E. Do not request a specific type of verification as any source that reasonably
verifies the deduction is acceptable. Some acceptable sources of verification
include, but are not limited to:
1. Current bills or receipts;
2. Statements from providers;
3. Pharmacy computer printouts;
4. Insurance policies or statements from insurance companies; and
5. Medicare Explanation of Benefits (EOB).
NOTE: If you cannot identify the amount the specified person is responsible
for paying, do not allow a deduction until an amount can be
determined.
340.14 MEDICAL EXPENSE TYPES AND BUDGETING PROCEDURES
A. One-time-only Expenses
1. One-time-only medical expenses are those expenses that cannot be
reasonably expected to recur. This includes such expenses as emergency
room visits due to an accident, a doctor visit for flu, etc.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
20
Section 340
Change #15-2021
September 3, 2021
2. One-time-only medical expenses that have a repayment plan established
between the customer and the medical provider are allowed as a recurring
expense. (See 340.14, B., Recurring Medical Expenses.)
3. Expenses Reported at Application
One-time-only expenses incurred and billed prior to the month of initial
application or reapplication (old bills) are allowed as a deduction if:
a. The applicant/recipient was a specified person at the time the bill was
incurred; and
b. The bill is unpaid (in full or in part); and
c. The bill has not been written off by the medical provider or paid by
another source; and
d. The bill was not incurred and billed in a prior CP unless it is under a
repayment plan. If the expense is under a repayment plan, it is treated
as a recurring expense. See 340.14, B.; and
e. The bill has never been allowed as a medical deduction for FNS
purposes in a prior CP. Allow as an expense an old bill incurred in a
prior CP but first billed and reported in the current CP as an expense
(such as a hospital bill).
4. Budgeting One-time-only Expenses at Application
a. The FNS unit has the option of having the old bill prorated over the
initial CP or allowed as a one-month deduction for the month of
application. Do not allow the old bill reported at application as a
deduction beyond the initial CP.
b. Unpaid or paid medical expenses incurred and billed in the month of
application are prorated over the initial CP or allowed as a one-time
deduction for the month of application.
c. If the FNS unit reports new medical expenses in the month of
application, evaluate them as an allowable deduction.
5. Expenses Reported at Recertification
a. Allow paid or unpaid one-time-only medical expenses incurred and
billed in the CP and reported by the last month of the CP.
b. Do not allow expenses that were reported after the CP expires unless
they are under a repayment plan. If the expenses are under a
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
21
Section 340
Change #15-2021
September 3, 2021
repayment plan, allow the deduction as a recurring expense. See
340.14, B.
c. Allow the deduction if it is reported as part of the recertification process
but provided later in the CP. This would not be considered a change in
situation since the information was provided at recertification.
6. Budgeting One-time-only Expenses at Recertification
a. The FNS unit has the option of having the one-time-only bill prorated
over the new CP; or
b. Allowed all in one month in the last month of the CP. If allowed all in
one month, a supplement must be issued for the last month of the CP.
EXAMPLE:
Certification Period = 12/98 – 11/99
Recertification Interview 11/15/99
Incurred and
First Billed
Reported
Allowable Deduction
11/27/99
11/27/99
Entire expense in 11/99 as
a supplement or prorated
over new CP.
11/27/99
12/02/99
None, unless set up under
a repayment plan. Allow as
a recurring expense.
7. Expenses Reported During the Certification Period
a. The FNS unit is not required to report changes in medical expenses
during the CP.
b. If a Simplified Reporting FNS unit reports a change in medical
expenses that would increase benefits during the CP, request
verification of the reported change in medical expenses prior to acting
on the change. Send a DSS-8650. Do not terminate benefits if the FNS
unit fails to provide verification.
c. Do not react to the change if a FNS unit reports a change in medical
expenses that would decrease benefits.
d. One-time-only medical expenses incurred and billed in a previous CP
but not reported until after the CP expires, are not allowed as a
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
22
Section 340
Change #15-2021
September 3, 2021
deduction unless the expense is under a repayment plan. If the
expense is under a repayment plan, allow a deduction as a recurring
expense. See 340.14, B.
Example: Certification Period – 12/98 – 11/99
Incurred and
First Billed
Reported
Allowable Deduction
5/99
5/99
Entire expense in 5/99 as
a supplement or prorated
over 5/99 – 11/99.
5/99
11/99
Entire expense in 11/99 as
a supplement or prorated
over new CP.
5/99
12/99
None, unless set up under
a repayment plan. Allow as
a recurring expense.
8. Budgeting One-time-only Expense During the Certification Period
a. Prorated over the remaining months of the current CP (including the
month reported); or
b. The entire expense is allowed in the month reported. If allowed all in
one month, a supplement must be issued for the month the expense is
reported.
B. Recurring Medical Expenses
1. Recurring medical expenses are those expenses that can be reasonably
expected to continue. This includes such expenses as prescriptions for a
chronic condition, regularly scheduled doctor visits, etc.
2. There are two types of recurring medical expenses.
a. Monthly expenses, and
b. Non-monthly expenses
3. At application and recertification, request verification of all reported
monthly medical expenses from the calendar month prior to the month of
application. See Section 340.13 (D) (2) for monthly medical expenses at
recertification.
4. Request verification of any reported non-monthly recurring medical
expenses from the appropriate time period.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
23
Section 340
Change #15-2021
September 3, 2021
5. Recurring Expenses Reported at Application and Recertification
a. Monthly Expenses
i. To determine monthly recurring expenses, use the calendar month
prior to the month of application or recertification. Use the full prior
month’s medical expenses.
ii. Do not include any expenses that have stopped. Document these
expenses as having stopped in the NC FAST case record.
iii. Installments are considered ongoing monthly expenses. Do not
allow a deduction for these expenses beyond the pay-off month.
b. Non-monthly Expenses
i. To determine recurring non-monthly expenses, request the
recurring expenses for the three calendar months prior to the month
of application or recertification.
ii. If the expense is incurred less often than quarterly, request
verification from the appropriate time period.
iii. Use only those expenses that are expected to continue during the
CP. These expenses include, but are not limited to:
• Prescriptions and supplies taken or used on a regular schedule
but purchased less often than monthly; or
• A regularly scheduled doctor visit every other month or
quarterly.
iv. To convert the allowable non-monthly expenses to a monthly
amount, divide the total expenses by the number of months
covered.
EXAMPLE: A prescription obtained every other month for $50
would be an allowable expense of $25 monthly ($50 ÷
2 = $25).
6. Budgeting Recurring Expenses at Application and Recertification
Determine the allowable monthly medical deduction for recurring
expenses by adding the total monthly expenses to the converted monthly
amount for non-monthly expenses.
7. Expenses Reported During the Certification Period
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
24
Section 340
Change #15-2021
September 3, 2021
a. The FNS unit is not required to report changes in medical expenses
during the CP.
b. If a FNS unit reports a change in medical expenses that would
increase benefits during the CP, request verification of the reported
change in medical expenses prior to acting on the change. Send a
DSS-8650. Do not terminate benefits if the FNS unit fails to provide
verification.
8. Budgeting Recurring Expenses During the Certification Period
a. Determine the allowable deduction for the changed medical expense.
b. Add this amount to the current expense being allowed. The result is
the new monthly medical deduction.
c. Delete any existing expense being replaced by a new or changed
expense.
340.15 SPECIAL PROCEDURES FOR MEDICAL EXPENSES
A. When a specified person resides in a group home, only allow the medical
expenses that can be identified separately from food and shelter payments
made to the home.
B. Verified anticipated changes in the FNS unit medical expenses are allowed if
they can be reasonably expected to occur during the CP based on available
information about the recipient’s medical condition, public or private insurance
coverage, and current medical expenses. This can be a “one-time-only” or a
“recurring” expense.
Example: A specified person states he will start a new medication next
month, and the pharmacist verifies the cost of the new medication.
If the FNS unit reports an anticipated expense but verification is
not available, flag the case to request verification when the
expense occurs.
C. The lump-sum annual adjustment that some veterans receive is not
considered a reimbursement for medical expenses. The amount of the
monthly pension payment and the annual adjustment are based on the
family’s other income and expenses. At the end of the year, the Veteran’s
Administration (VA) sends a letter to the family requesting verification of the
past year’s income and out-of-pocket medical and educational expenses. The
VA will then either establish a claim for an overissuance or make a retroactive
income payment to the family. Monthly pensions in the coming year may also
be adjusted. The annual adjustment is not considered to be a recurring
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
25
Section 340
Change #15-2021
September 3, 2021
payment or reimbursement because the family could receive a claim for
overissuance or a payment.
340.16 CASES WITH MEDICAL INSURANCE
A. Medicaid
Never prorate a Medicaid deductible over the CP. The specified person may
not meet the full Medicaid deductible. Allow only the anticipated and verified
medical expenses that a FNS unit is responsible for paying.
B. All Other Medical Insurance (Including Medicare)
Allow the percentage of expenses the insurance will not pay. If the customer’s
insurance pays 80% of his medical expenses after the deductible is met,
allow the customer 20% of his reported and verified medical expenses as a
deduction.
340.17 ALLOWABLE MEDICAL EXPENSES NOT COVERED BY MEDICARE,
MEDICAID, MQB, AND CAP
A. Medicare Qualified Beneficiaries
1. Prescriptions;
2. Over-the-counter medications or supplies;
3. Private medical insurance premium;
4. Medical care, lodging, and transportation (non-county initiated);
5. Dental care; and
6. Corrective lenses for eyes unless cataract surgery is done.
B. Medicare
1. Prescriptions;
2. Over-the-counter medications or supplies;
3. Private medical insurance premium;
4. Medical care, lodging, and transportation;
5. Dental care; and
6. Corrective lenses for eyes unless cataract surgery is done.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
26
Section 340
Change #15-2021
September 3, 2021
C. Medicaid
1. Over six prescriptions (unless life threatening);
2. Over-the-counter medications or supplies;
3. Private medical insurance premium;
4. Medical care, lodging, and transportation (non-county initiated);
5. Flu shots;
6. Routine foot care;
7. Artificial limbs;
8. Hearing aids and supplies; and
9. Co-payments.
D. Community Alternative Program (CAP)
1. Over-the-counter medications or supplies;
2. Private medical insurance premium;
3. Medical care, lodging, and transportation (non-county initiated);
4. Flu shots;
5. Routine foot care; and
6. Hearing aids and supplies.
340.18 DOCUMENTATION
A. Document in NC FAST the method of verification, the amount of the
expenses, the date verification is received, and the amount of all
reimbursements received or expected.
B. In NC FAST, actual medical expenses are entered separately; do not round.
340.19 CHILD SUPPORT DEDUCTION
A. Allow an income deduction for legally obligated child support payments, including
arrearages, that the FNS unit member anticipates paying to or for a non-household
FNS unit member. This includes payments made to a third party on behalf of the
non-household member (vendor payments). This deduction is allowed prior to
screening for the maximum allowable gross income limits.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
27
Section 340
Change #15-2021
September 3, 2021
B. Legally obligated child support is:
1. Court ordered; or
2. Ordered through an administrative process (such as IV-D); or
3. Ordered through a legally enforceable separation agreement.
C. Take the following steps when a FNS unit member reports they pay legally
obligated child support to or for a non-household member.
1. Verify both the child support amount ordered and the child support
amount actually paid (including arrearages which can be anticipated by
the FNS unit member.)
2. Allow as an income deduction the child support actually paid (including
arrearages) by the FNS unit member. This includes court ordered
payments of rent, mortgage, and other shelter expenses to the custodial
parent and child in lieu of child support and court ordered payments for
health insurance coverage for the child. Prorate the premium and exclude
the amount paid for a non-custodial child when the health insurance policy
covers household members and a non-custodial child.
3. Do not allow an income deduction for alimony payments, spousal support
payments, and property settlement payments paid by a FNS unit member.
D. Do not request a specific type of verification as any source that reasonably
verifies the deduction is acceptable. Some acceptable sources of verification
include, but are not limited to:
1. Court order (verifies obligation);
2. Administrative order (verifies obligation);
3. Legally enforceable separation agreement (verifies obligation);
4. Canceled checks (verifies actual payment);
5. Wage withholding statements (verifies actual payment);
6. Unemployment Insurance Benefits (UIB) withholding statements (verifies
actual payment);
7. Statements from the custodial parent on received child support payments
(verifies actual payment); and
8. Clerk of Court or ACTS Inquiry (verifies actual payment).
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
28
Section 340
Change #15-2021
September 3, 2021
E. If the FNS unit member who is currently paying child support has been under
an order to pay support for at least two months:
1. Verify two months of payments prior; and
2. Use the average of the two months as an income deduction for the CP if
the child support is paid monthly.
3. Convert child support payments paid on a weekly, bi-weekly or semi-
monthly basis to a monthly amount. The base period for child support
payments paid on a weekly, bi-weekly or semi-monthly basis is the month
prior to the month of application or recertification.
F. If the FNS unit member who is currently paying child support has been under
an order for less than two months:
1. Anticipate the income deduction for the CP based on the child support
legal order;
2. Convert to a monthly amount child support payments paid on a weekly,
bi-weekly, or semi-monthly basis.
G. If the FNS unit member has a new legally obligated child support order,
anticipate the income deduction for the CP based on the new child support
order.
H. Do not round each child support payment paid in the base period. Enter the
actual total amount of the child support in NC FAST. Each expense must be
entered separately. NC FAST will budget the amount of the child support
payment as a deduction.
NOTE: If the child support is paid by a disqualified FNS unit member (E&T,
Workfare, Voluntary Quit, Drug Felon, IPV, or disqualified due to
Transfer of Assets), allow the entire child support payment as an
income deduction for the eligible FNS unit members. If the child
support is paid by an ineligible FNS unit member (ineligible alien or
an individual ineligible due to failure to provide or obtain an SSN),
allow a prorata share of the payment as an income deduction for the
eligible FNS unit members. If the child support is paid by an
ineligible student, do not allow the child support payment as an
income deduction.
I. Issue a DSS-8650 and make the necessary change if verification is provided.
Do not terminate benefits if the FNS unit fails to provide verification.
NOTE: Proof of support from an ARMY member that makes payments for
child support via an allotment should be faxed to 317-510-7563.
FOOD AND NUTRITION SERVICES CERTIFICATION
INCOME AND RESOURCES
FNS 340 DEDUCTIONS
29
Section 340
Change #15-2021
September 3, 2021
340.20 DEDUCTION WAIVER FOR QUALITY CONTROL (QC) LOCK-OUT
A. North Carolina has elected to implement a waiver to allow a FNS unit to sign
the deduction explanation and waive their right to a deduction under certain
circumstances. That is, if they fail to report a deduction, they waive their right
to receive the deduction. If the waiver is signed, QC can not verify and include
these deductions when they review the case. The waiver statement is being
added to several state forms.
NOTE: Issue a DSS-8650 requesting verification of the expenses. The
deduction should be allowed if the expenses are verified through
other resources (i.e. property taxes verified using the county
Register of Deeds database).
1. Deductions must be included on the statement to be considered in this
waiver.
2. The statement must acknowledge that the deductions have been
explained to the FNS unit and that the FNS unit understands that failure to
report or verify the expense acknowledges that they do not want the
deduction.
3. The statement must be signed and dated.
4. The statement must be signed at every application or recertification and
must cover the QC review period.
A. Income Deductions Included in the Waiver
1. Legal child support obligation;
2. Child care expenses;
3. Medical expenses;
4. Shelter expenses;
5. Utility expenses; and
6. Operational expenses for self-employment.
B. Deductible items left off the statement will continue to be subject to the QC
review process.
C. This waiver does not eliminate the client’s responsibility to report a move to a
new residence and their new expenses for that residence. When the FNS unit
reports a move to a new residence, issue a DSS-8650 requesting verification
of the expenses.
