Minnesota Supreme Court Rules that Payments Made to a Parent to Care for a Disabled Child Count as Income

On February 12, 2020, the Supreme Court of Minnesota held that some of the payments made by the state under a program for families with children having developmental disabilities who need to stay at home, which are made to offset the cost of necessary services and equipment, are not excluded from the annual income computation for purposes of calculating eligibility under HUD Section 8 rules.

Facts of the Case

1. The plaintiff received funds through the Minnesota Developmental Disability Waiver program;
2. This program provides funding to pay for the necessary services and equipment for keeping a disabled person living at home;
3. The plaintiff chose to allocate a portion of the budget to herself as a paid parent to provide some of the necessary services to her son;
4. The County found that, although most of the benefits paid were excluded from her income for purposes of determining her Section 8 eligibility, the amounts she paid herself were not, citing 24 C.F.R. §5.609(c)(16);
5. The cited provision excludes from income “Amounts paid by a State agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home;”
6. Plaintiff counsel argued that the amounts in question were excluded from income under section 5.609(c)(16);
7. The County argued that the amounts must be included in income because they were not used to “offset” and “cost” to the plaintiff, since the plaintiff did not actually incur an out-of-pocket expense;
8. The hearing officer ruled that plaintiff’s payments to herself were not excluded from income;
9. Plaintiff appealed and the hearing officer’s decision was upheld, so the plaintiff appealed to the State Supreme Court.

Finding

The Supreme Court affirmed the decision.

Reasoning

1. “Cost” means monetary expense, and as the plaintiff incurred no monetary expense, there was no “cost” to offset;
2. Federal income exclusions include “amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family member;”
3. Equating cost and expense, cost is a monetary expense per the regulation;
4. “Cost” as used in this regulatory context can only mean an actual monetary expense that has been, or will be, incurred by the family to keep the disabled family member living at home;
5. “Cost” means “out-of-pocket expenses” to be “reimbursed or ‘offset’ by the state;” and
6. The amounts the plaintiff received as payment for her services in caring for her son were not paid to offset the cost of services and equipment because the plaintiff incurred no actual monetary expense. Therefore, they were not excluded from annual income by federal regulation.

Summary

This case makes it clear that in order to exclude money paid for medical expenses, it must be a payment that either (1) may only be used for medical expenses, or (2) is a direct reimbursement for medical expenses that have actually been incurred.