(a) For each applicant or recipient, the household income is:(1) the sum of the individual income (as calculated under §366.1109 of this subchapter (relating to Calculation of Individual Income)) for each individual in the applicant's or recipient's household composition (as determined under §366.1107 of this subchapter (relating to Determination of Household Composition)); and(2) less a standard income disregard equal to five percentage points of the Federal Poverty Level for the applicable household size, as permitted by 42 CFR §435.603(d)(4).(b) For an applicant or recipient for the Medically Needy Program under Subchapter H of this chapter (relating to Medically Needy Program), the household income is:(1) the sum of the individual income (as calculated under §366.1109 of this subchapter for the following individuals in the applicant's or recipient's household composition (as determined under §366.1107 of this subchapter):(A) the applicant or recipient;(B) the applicant's or recipient's parents; and(C) the applicant's or recipient's spouse;(2) less a standard income disregard equal to five percentage points of the Federal Poverty Level for the applicable household size, as permitted by 42 CFR §435.603(d)(4); and(3) additional deductions allowed for spend down.