HUD Medical Expense Deduction for Seniors: How Rent Is Figured (2026)

Under HUD's HOTMA rules, a $550 elderly family deduction (2026) and an older parent's unreimbursed medical costs above 10% of annual income come off her income before rent is set.1 The medical piece is the HUD medical expense deduction for seniors, and both deductions existed before HOTMA: the law raised the elderly family deduction from $400, and the medical expense line sat at 3% of income before January 1, 2024.1 If her rent notice went up while her income barely moved, HUD's new 10% medical expense line may be the reason, and HUD offers phase-in and hardship relief that soften it.1

In This Guide

• How HUD Figures a Senior's Rent, Step by Step
• The Deduction Every Elderly Family Gets
• How the HUD Medical Expense Deduction for Seniors Works
• If Her Rent Went Up: Relief Under the HUD Medical Expense Deduction for Seniors
• Which Rules Apply to Her Building Right Now
• How Utilities Change the Check She Writes
• Worked Example: One Income Under Three Sets of Rules
• Does HUD Help Count Against Her SSI?
• What to Bring to Her Recertification
• Frequently Asked Questions
• Learn More

How HUD Figures a Senior's Rent, Step by Step

Most families have heard the short version of how subsidized rent works, and our guide to affordable senior housing covers it. The short version leaves out the part that decides whether a parent with heavy medical bills pays more or less: what comes off her income before the percentage is applied. Once you can see the steps, a confusing number on a notice usually starts to make sense.

In the public housing and Section 8 programs of the U.S. Department of Housing and Urban Development (HUD), the family's rent contribution is called the total tenant payment. Under 24 CFR 5.628, it works like this:2

1. Annual income. The agency or owner counts the family's yearly income. Our guide to what counts as income for Section 8 and HUD senior housing explains which payments go in and which are left out.
2. Deductions. It subtracts the deductions the regulations allow, which include a deduction for any elderly or disabled family and deductions for certain unreimbursed medical expenses of elderly or disabled families. What's left is adjusted income.2
3. The highest of four amounts. The total tenant payment is the highest of 30% of monthly adjusted income, 10% of monthly income, a welfare payment specifically designated for housing costs if the family receives one, or the minimum rent, rounded to the nearest dollar.2
4. The utility allowance. If she pays some utilities herself, an allowance for them comes off the total tenant payment (more on that below).4

For public housing and the Housing Choice Voucher program, the housing agency may set a minimum rent of up to $50, and it must exempt a family that can't pay it because of financial hardship.2

In a Section 8 project-based building, the minimum rent is $25, and it covers her share of both rent and utilities. The owner must waive it if she can't pay because of financial hardship, for example because she lost government assistance, her income dropped or there was a death in the family.5 Section 202 PRAC and Project Assistance Contract (PAC) buildings have no minimum rent at all: her payment there is the greatest of the first three amounts.6

Step 2 is where age and medical bills come in. Unless her deductions take more than two-thirds of her income, 30% of her monthly adjusted income will be larger than 10% of her monthly income, so the deductions directly lower her payment.2 That's why the two deductions below matter so much.

The Deduction Every Elderly Family Gets

HUD treats a household as an elderly family when its head, co-head, spouse or sole member is at least 62.7 If your parent is 62 or older and heads her household, or lives alone, her household qualifies. A disabled family gets the same deduction.

The regulation, 24 CFR 5.611, sets the elderly or disabled family deduction at $525 and has HUD adjust it each year for inflation, rounded down to a multiple of $25. HUD's published inflation table puts the deduction at $550 effective January 1, 2026, and at $575 effective January 1, 2027, for public housing, Housing Choice Vouchers, Section 8 project-based rental assistance, and Section 202 buildings under Section 202/8 or a Section 202/811 Project Rental Assistance Contract (PRAC).1

The Housing Opportunity Through Modernization Act of 2016 (HOTMA) raised HUD's elderly or disabled family deduction from $400 to $525, adjusted each year for inflation ($550 for 2026). HUD's guidance says the new amount applies at a family's next interim or annual reexamination after its housing agency or owner implements it, and HUD's table carries a note that an agency or property not yet complying with HOTMA doesn't use it.1 So the $550 is real money off her income in 2026, but only in a building that has made the switch. If it hasn't, ask what figure it is using.

How the HUD Medical Expense Deduction for Seniors Works

This is the deduction that matters most for a parent with steady medical bills, and HOTMA changed it. It's worth slowing down here, because the higher line shrinks the deduction for every family that takes it, and wipes it out for a family whose costs fall between 3% and 10% of income.1

Under the HOTMA version of 24 CFR 5.611, an elderly or disabled family may deduct its unreimbursed health and medical care expenses only to the extent they exceed 10% of annual income. HUD's notice says that before January 1, 2024, the threshold was 3% of annual income.1 "Unreimbursed" means costs she pays herself that no insurance or other source pays back.

Put simply, the first 10% of her yearly income spent on medical care now counts for nothing in the rent math. Only the part above that line comes off. A parent whose unreimbursed medical costs equal 8% of her income could deduct the part above 3% under the old rules and nothing under the new ones.1 Only elderly or disabled families can take it.

What counts as a medical expense for HUD rent

HUD's notice says health and medical care expenses "include medical insurance premiums and long-term care premiums that are paid or anticipated during the period for which annual income is computed."1 If she pays a monthly premium for health coverage or a long-term care policy, that premium belongs in the total. For anything else she pays out of pocket, ask her agency or owner for its own list of what it accepts.

One more category matters in HUD-assisted apartment buildings such as Section 202 housing. HUD's multifamily occupancy handbook treats a tenant's unreimbursed, out-of-pocket costs for a live-in aide's nursing services (such as giving medications) or personal care (such as bathing or dressing) as eligible medical expenses, but not homemaker services such as housekeeping and meal preparation.7 The aide's own income is excluded from the family's annual income under HUD's rules.7

This HUD rule is not the medical expense deduction the IRS allows on a tax return. That one has its own rules, covered in our guide to tax deductions and credits for senior care.

If Her Rent Went Up: Relief Under the HUD Medical Expense Deduction for Seniors

If you're staring at a higher rent figure and wondering whether you missed something, you probably didn't. The move from 3% to 10% shrinks the medical deduction for every family that takes it, and the larger elderly family deduction doesn't always make up the difference, as the worked example below shows. HUD built in two kinds of relief, and both are worth asking about by name.1

The phase-in is for a family that was already receiving the medical deduction because its expenses exceeded 3% of annual income as of January 1, 2024. Under HUD's HOTMA phase-in, an eligible family deducts unreimbursed medical expenses above 5% of annual income at first, above 7.5% twelve months later, and above 10% twenty-four months later.1

Hardship relief is separate. A family whose eligible expenses went up, or whose financial hardship comes from a change in circumstances that wouldn't otherwise trigger an interim reexamination, may get a deduction for expenses above 5% of annual income. HUD's medical expense hardship relief ends when the circumstances end or after 90 days, whichever comes first, and the agency or owner may extend it for additional 90-day periods.1 A new diagnosis or a jump in a premium is the kind of change to raise. Ask the agency or owner in writing whether her change qualifies.

Which Rules Apply to Her Building Right Now

Here's the part that trips up even careful families: two buildings on the same street can be using different rules in 2026. The HOTMA deduction amounts and the 10% medical threshold apply only once the housing agency or property owner implements HOTMA. HUD will enforce compliance starting January 1, 2027 for most public housing agencies (agencies in the Moving to Work program, and those using only HUD's Family Reporting Software, are excepted), and the same date is the full-compliance deadline for owners of HUD Multifamily properties.1

For Multifamily buildings, which include project-based Section 8 properties, HUD has attached a condition to that date. Its HOTMA provisions tied to TRACS Release 203A, the next version of the system owners use to report tenant rents to HUD, can't be implemented until HUD officially publishes that release, and on September 2, 2026 HUD posted a draft of the release's guide for stakeholder comment. Owners that want to adopt HOTMA before January 1, 2027 may calculate incomes and rents by hand.3,5

So the first question to ask is simple: "Have you implemented HOTMA for my mother's household yet?" The answer tells you which deduction amount and which medical threshold her next reexamination will use. In a project-based Section 8 or Section 202 building, also ask the owner or management agent whether her next recertification, including one in January 2027, will use HOTMA rules.3

The deductions apply across the main HUD rental programs older adults live in, but the way the final check is set differs by program:

The table draws on HUD's deduction rules, its rent and utility regulations, and its multifamily occupancy handbook.1,2,4,8,6 In a Section 202 PRAC building, the rental subsidy covers the difference between the building's HUD-approved operating costs and the tenant's contribution, and a household stays eligible for it until its total tenant payment equals or exceeds the gross rent.8

If she has a voucher, her share of the rent is usually 30% of adjusted monthly income, and at her first lease in a unit priced above the payment standard it can't exceed 40%.9 Our guide to using a Section 8 voucher in assisted living walks through the voucher math in more detail. If her apartment is a tax-credit property instead, its rent rules are in our guide to tax credit senior apartments.

How Utilities Change the Check She Writes

The total tenant payment isn't always the amount on her rent check. When she pays some utilities directly, HUD's rules account for them through a utility allowance, which HUD's voucher guidebook defines as an estimate of the monthly cost of a reasonable consumption of utilities by an energy-conservative household of modest circumstances.4

In Section 8 programs other than vouchers, tenant rent is the total tenant payment minus the utility allowance, and HUD's multifamily handbook applies the same calculation in Section 202 Project Assistance Contract (PAC) and PRAC buildings. Her rent can even be $0 when the utility allowance is bigger than her total tenant payment, and she then receives a utility reimbursement equal to the allowance minus the total tenant payment.4

A voucher agency must review its utility allowance schedule every year and revise an allowance when the utility rate has changed by 10% or more since the last revision. It may not include non-essential costs such as cable or satellite TV, and it must approve a higher allowance on request when one is needed as a reasonable accommodation for a household member with a disability.4 If your parent runs medical equipment at home, that last rule is worth raising.

Worked Example: One Income Under Three Sets of Rules

If she pays her own utilities, the check she writes is lower than these totals by her building's utility allowance.

Does HUD Help Count Against Her SSI?

If your parent receives SSI, it's natural to worry that a rent subsidy might be treated as income. The Social Security Administration (SSA) says in its operating instructions for staff that the value of housing assistance paid under the federal housing laws is excluded from SSI income and resources, and the instructions name subsidized housing such as public housing, reduced rent and cash toward utilities provided through HUD. The instructions also note that "Section 8" housing is HUD housing assistance.11

What to Bring to Her Recertification

Recertification can feel like a test you didn't study for. It doesn't have to. Your goal is to make sure every dollar she's allowed to deduct gets counted, and that the agency or owner tells you which rules it's using. If she already missed her recertification, see what happens and how to fix it.

Keep copies of everything you hand over. If the new figure still looks wrong, ask the agency or owner to show you the calculation line by line, using the steps at the top of this guide.

Learn More

Find personalized help getting your parent's medical costs counted at her HUD recertification at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.