If you live in HUD-assisted housing and your household qualifies as elderly or disabled, the HUD medical expense deduction lets you subtract unreimbursed medical costs above 10 percent of your annual income from the figure used to calculate rent.1eCFR. 24 CFR 5.611 – Adjusted Income Because most tenants pay 30 percent of adjusted monthly income, every qualifying dollar above that 10 percent floor cuts what you owe. The deduction runs across Section 8 Housing Choice Vouchers, public housing, and other HUD-assisted programs.
Who Can Claim the Deduction
Only two kinds of households qualify: elderly families and disabled families. The head of household, spouse, co-head, or sole member has to be at least 62 years old, or must have a disability that meets HUD’s definition.2eCFR. 24 CFR 5.403 – Definitions An adult child, grandchild, or roommate who isn’t elderly or disabled doesn’t make the household eligible on their own.
Once the household qualifies through that one person, the deduction covers medical costs for everyone in the unit.3U.S. Department of Housing and Urban Development. HUD Occupancy Handbook 4350.3 REV-1 – Glossary A 65-year-old head of household can include a 30-year-old daughter’s dental bills if she lives in the unit. Age or disability status is verified at initial application and again at each annual recertification.
Expenses That Qualify
HUD uses IRS Publication 502 as its baseline for what counts. The expense has to be medically necessary, documented, and not reimbursed by insurance or anyone else. One thing worth knowing up front: HUD counts expenses you expect to incur over the next 12 months, not just what you’ve already paid.4HUD Exchange. Step 5 – Determine the Medical Expenses Deduction A new medication, a scheduled surgery, or installments on a payment plan all count as anticipated costs.
Categories that typically qualify:
- Prescription drugs and insulin, including related supplies, where insurance hasn’t picked up the cost.5Internal Revenue Service. Publication 502 – Medical and Dental Expenses
- Dental care, from cleanings and fillings to dentures and orthodontics.
- Vision care, including exams, prescription glasses, and contacts needed for medical reasons.
- Hearing aids, batteries, repairs, and maintenance.
- Health insurance premiums, including Medicare Part B, supplemental policies, and long-term care insurance.6eCFR. 24 CFR Part 5 Subpart F – Section 8 and Public Housing Family Income and Family Payment
- Medical transportation, whether bus fare, taxi, or the 2026 IRS standard rate of 20.5 cents per mile for driving to appointments.7Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile
- Service animal costs, including food, grooming, and veterinary care.5Internal Revenue Service. Publication 502 – Medical and Dental Expenses
Disability Assistance Expenses
A related but separate category covers expenses that let a disabled household member, or another family member, hold a job. Attendant care, wheelchairs, and specialized equipment fall here. These costs get added in alongside medical expenses, but they’re capped at the earned income the assistance makes possible.1eCFR. 24 CFR 5.611 – Adjusted Income Pay an attendant $8,000 so your spouse can work, but your spouse only earns $6,000, and the deductible amount is $6,000. Any portion reimbursed by another agency or insurance is excluded.
Expenses That Don’t Qualify
Plenty of health-related spending fails the test. HUD guidance specifically excludes:
- Cosmetic procedures like face lifts, hair transplants, electrolysis, and liposuction. Surgery to correct a congenital condition, accident, or disfiguring disease is the exception.8U.S. Department of Housing and Urban Development. HUD Occupancy Handbook 4350.3 REV-1 Exhibit 5-3 – Examples of Medical Expenses That Are Deductible and Nondeductible
- Gym and health club memberships, even when a doctor recommends exercise.
- Vitamins and supplements, unless a licensed practitioner recommends them in writing for a specific diagnosed condition.
- Nonprescription drugs like aspirin or antihistamines, unless tied to a specific medical condition through a written recommendation from a licensed practitioner.
- Household help such as a cook or cleaner. Nursing-type services from that same person may qualify separately.
The written-recommendation rule catches people out at recertification. If you use supplements or over-the-counter medicines regularly, get a letter from your doctor identifying the condition being treated before you sit down with your caseworker.8U.S. Department of Housing and Urban Development. HUD Occupancy Handbook 4350.3 REV-1 Exhibit 5-3 – Examples of Medical Expenses That Are Deductible and Nondeductible
How the Calculation Works
Under the Housing Opportunity Through Modernization Act (HOTMA), only medical expenses above 10 percent of annual income count. The 10 percent floor took full effect on January 1, 2024, replacing the earlier 3 percent threshold.9HUD Exchange. HOTMA Resident Fact Sheet – Health, Medical, and Childcare Deductions
The math is straightforward. A household with $20,000 in annual income and $4,000 in qualifying unreimbursed medical costs first subtracts the $2,000 floor. The remaining $2,000 becomes the medical expense deduction, which comes off annual income when the housing agency calculates adjusted income.
Elderly and disabled households also get a separate flat deduction of $525 per year, applied whether or not they have any medical expenses. HUD adjusts that figure annually for inflation.1eCFR. 24 CFR 5.611 – Adjusted Income For most tenants, rent lands at 30 percent of monthly adjusted income,10U.S. Department of Housing and Urban Development. HCV Guidebook – Calculating Rent and HAP Payments which is why cutting adjusted income through this deduction has a direct effect on the monthly bill.
Hardship Relief From the 10 Percent Floor
The jump from 3 percent to 10 percent hit long-time recipients hard. HUD created two hardship exemptions.
Category 1: Phased-In Relief
Families already receiving a medical expense deduction as of January 1, 2024 got a graduated threshold: 5 percent in year one, 7.5 percent in year two, and the full 10 percent after 24 months.11HUD Exchange. HOTMA Hardship Exemptions Resource Sheet For housing agencies that implemented HOTMA at the earliest date, that phase-in has now ended. Where agencies adopted the rules later, some households are still in the tail end.
Category 2: Ongoing Hardship
Category 2 stays open regardless of whether a family previously received the deduction or used Category 1. Qualification depends on showing a financial hardship from rising medical costs or a change in circumstances that wouldn’t otherwise trigger a reexamination. The threshold drops to 5 percent of annual income for 90 days, and housing agencies can extend that in additional 90-day periods while the hardship continues.11HUD Exchange. HOTMA Hardship Exemptions Resource Sheet If a spike in medical bills is wiping out your deduction against the 10 percent floor, ask your caseworker about Category 2 before your next recertification.
What to Document
Since HUD counts anticipated expenses along with past ones, your paperwork should cover both. Housing agencies require third-party verification, which means official documents from the provider or insurer, not your own estimate.
For prescriptions, ask your pharmacy for a printout showing a full year of co-pays and out-of-pocket costs. Most chains produce these on request. For doctor visits, hospital stays, and dental work, collect billing statements that separate what you paid from what insurance covered. For a procedure or new ongoing treatment coming up, a letter from your provider describing the expected cost documents the projected expense.
Medical transportation needs a mileage log with date, destination, and purpose for each trip, priced at the 2026 IRS medical rate of 20.5 cents per mile.7Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile Keep transit fare receipts if you don’t drive. For insurance premiums, a billing statement or the Social Security notice showing your Medicare Part B deduction is enough. Chronological organization and copies of everything keep a caseworker from cutting expenses simply because a receipt is missing.
Mid-Year Adjustments When Costs Spike
You don’t have to wait for annual recertification if a major medical expense hits. HOTMA requires housing agencies to conduct an interim reexamination when a family’s annual adjusted income is estimated to drop by 10 percent or more.12HUD Exchange. HOTMA Interim Income Reexaminations Resource Sheet Because unreimbursed medical costs are a deduction from adjusted income, a large enough increase in those costs can push adjusted income below the trigger and cut your rent.
Individual housing agencies can set a lower percentage threshold, but none are allowed to use a flat dollar amount as the trigger.13U.S. Department of Housing and Urban Development. Notice PIH 2023-27 – Implementation Guidance for HOTMA Sections 102 and 104 Contact your caseworker as soon as unexpected costs arise. Every month you wait is a month of paying more rent than you should.
If a Deduction Is Denied
You can challenge a denial or reduction. The process depends on the program.
Public housing residents start with an informal settlement discussion at the housing agency office, in person or in writing. The agency prepares a written summary and lays out how to request a formal hearing if the informal outcome doesn’t resolve things.14eCFR. 24 CFR Part 966 Subpart B – Grievance Procedures and Requirements At a formal hearing, you can review all relevant agency documents beforehand, bring a lawyer or other representative, present evidence, and cross-examine witnesses. The hearing officer issues a written decision.
Housing Choice Voucher participants can request an explanation and, if unsatisfied, an informal hearing. You have the same rights to review documents, bring a representative at your own expense, and present and question evidence.15eCFR. 24 CFR 982.555 – Informal Hearing for Participant The person conducting the hearing cannot be the same person who made the original denial, and the decision must be in writing based on the evidence presented.
Documentation is what changes outcomes on appeal. A denied expense that comes back with a provider letter, an itemized receipt, and proof it wasn’t reimbursed is difficult for a hearing officer to reject a second time.