(1) In determining eligibility and benefit amount, payments for the care of a dependent child or incapacitated adult living in the household will be deducted from the household's earned income. The maximum amount which can be deducted is $200 per month per person receiving dependent care.

(a) If the payment is for the care of a child, it is deductible only if the child is:

(i) under the age of 16 years; or

(ii) physically or mentally incapable of caring for himself or herself, as determined by a licensed physician or psychologist.

(b) Only payments for care of the dependent person during the period of time the household member is at the place of employment or is in transit between the day care site and the place of employment may be deducted.

(c) Tuition or other payments to a private educational institution for a child who is six years of age or older cannot be deducted for any period of time when public schools are in session in the area where the child lives.