Slide Number #1 Annie Stevenson Adjusted Income

Slide Number #2 Welcome to Lunch N Learn!  Today’s Topics: Elderly/disabled allowances Dependant and child care allowances Medical and disability allowances Verification of allowances

Slide Number #3 Welcome to Lunch N Learn!  Upcoming topics for the occupancy series: 5/2/08: Verification Issues 6/12/08: PH Rent Calculation 6/13/08: HCV Rent Calculation

Slide Number #4 Adjusted Income - Background  Previous sessions: Annual Income  Inclusions  Exclusions  Income from assets

Slide Number #5 Adjusted Income - Background  Formula: Gross Income  Including asset income Minus exclusions Equals annual income  First major building block in rent calculation

Slide Number #6 Adjusted Income - Introduction  Today’s topic: ADJUSTED INCOME  Second major building block in rent calculation

Slide Number #7 Adjusted Income - Introduction  Form HUD Section 8 Calculation of adjusted income

Slide Number #8 HUD Section 8: Expected Income Per Year

Slide Number #9 HUD Section 8: Expected Income Per Year

Slide Number #10 HUD Section 8: Expected Income Per Year

Slide Number #11 Definitions  Adjusted Income  Elderly Family  Disabled Family  Dependent  Household Vs. Family

Slide Number #12 Definition of Adjusted Income  Total Annual Income minus allowances Dependents Elderly/disabled allowance Child care Medical expenses Disability expenses Permissible deductions (PH only)

Slide Number #13 Deductions and Allowances

Slide Number #14 Dependent Allowance  $480 for each family member: Under 18 Full-time student 18 or older Person with a disability 18 or older  Head, spouse, co-head, foster child or foster adult, live-in aide are never a dependent

Slide Number #15 Elderly/Disability Allowance  $400 per family where the head or spouse is at least 62 or disabled  $400 is the maximum amount the family can receive, even if both head and spouse are elderly or disabled

Slide Number #16 Child Care Allowance  Includes reasonable child care expenses  PHA determines what is reasonable  Care provided for children under 13 years of age including foster children

Slide Number #17 HUD Interpretation of Child Care Expenses  A PHA may not disallow a deduction for child care expenses because there is an unemployed adult family member who may be available to provide the care.  A PHA may not decide who will provide child care for an applicant’s or a participant’s child(ren).

Slide Number #18 HUD Interpretation of Child Care Expenses  A PHA may not decide the type of child care available for a participant’s child(ren).  Citation: Verification Guidebook

Slide Number #19 Child Care Expenses  Care enables a family member to Work Actively seek work Attend school

Slide Number #20 Child Care Expenses  Costs may be higher in summer and during holidays  Applicant should certify whether any costs are being reimbursed  Child support payments don’t qualify

Slide Number #21 Child Care Expenses  Child care allowance for work cannot exceed the income that a family member earns If more than one member working - which worker enabled by child care?  Member works and attends school Prorate expense to compare with amount earned

Slide Number #22 Learning Activity 1  Becky Walker’s annual income is $14,621 All from employment  Becky has three children, all under 13 years of age. She is paying a total of $60 per week for child care while she works

Slide Number #23 Learning Activity 1 Answers 14,621

Slide Number #24 Learning Activity 1 Answers

Slide Number #25 Learning Activity 1 Answers 3,120 4,560 1, ,061

Slide Number #26 Allowance for Disability Assistance Expense  Anticipated expenses for: Care attendants Auxiliary apparatus  Wheelchairs, ramps, vehicle adaptations, special equipment for the blind, etc.

Slide Number #27 Allowance for Disability Assistance Expense  IF such expenses Enable a family member (could be person with the disability) to WORK Exceed 3% of annual income Don’t exceed the earnings of person enabled to work

Slide Number #28 Disability Assistance Expense  If the disability assistance expense enables more than one person to be employed PHA must combine the income of those persons to determine the cap

Slide Number #29 Allowance for Disability Assistance Expense  Question: Must a family meet HUD’s definition of a Disabled Family in order to qualify for Disability Assistance Expenses?

Slide Number #30 Disability Assistance Expense  Disability assistance expense/child care If both child care and disability assistance expense are needed to enable a person in the family to work,  the employment income used to justify the child care allowance may NOT also be used to justify disability assistance allowance

Slide Number #31 Learning Activity 2  Family Name: Gilmore Head: 38 Earned Income: $ 11,000 Spouse: 32 Earned Income: $ 9,000 Son: 14 (with a disability) Disability assistance expense/year $ 4,600  enables spouse to work

Slide Number #32 Learning Activity 2 Answers 20,000

Slide Number #33 Learning Activity 2 Answers 600 9, ,000 4,600 4,000

Slide Number #34 Learning Activity 2 Answers 1 4, ,520

Slide Number #35 Medical Expenses  Permitted ONLY for family where head, spouse or co-head is at least 62 or disabled  If family eligible, medical expenses deducted for all family members  Anticipate expenses to be incurred during 12 months following certification

Slide Number #36 Example Head disabled 50 years old Son 16 Daughter 12 Daughter 1 Live-in attendant  Whose anticipated medical expenses qualify?

Slide Number #37 Allowable Medical Expenses  PHA policy determines allowable medical expenses PHAs may use IRS Publication 502 as a tool Available at

Slide Number #38 Typical Allowable Medical Expenses  Professional services  Services of health care facilities  Prescription/nonprescription medicines  Medical insurance premiums/co-payments (includes Medicare premiums)

Slide Number #39 Typical Allowable Medical Expenses  Live-in or periodic medical assistance Nursing services Costs for assistive animal and its care  Long term care insurance premiums

Slide Number #40 Typical Allowable Medical Expenses  Transportation for treatment  Dental expenses  Eyeglasses, hearing aids  Monthly payment on accumulated medical bills

Slide Number #41 Medicare Prescription Drug Discounts and Assistance  PIH Transitional assistance ended in May 2006 Under MMA’s permanent plan, deduction is based on actual anticipated unreimbursed prescription costs Include Medicare prescription drug plan premium, if paid by family  See chart at end of notice

Slide Number #42 Medical Allowance  Medical allowance portion of anticipated medical expenses that exceed 3% of Annual Income

Slide Number #43 Learning Activity 3  Family Name: Alden  Head: 81  Spouse: 80  Annual Income: $13,500

Slide Number #44 Learning Activity 3  Anticipated medical expenses: Health Insurance premium- $55 monthly Eyeglasses $300 annually, each Doctor visits 4 times a year at $20 each visit Anticipated yearly prescription costs of $425 Balance Due on a medical bill of $325  (Will be paying it off at $15 a month)

Slide Number #45 Learning Activity 3  Anticipated medical expenses: Health Insurance premium - $55 monthly  $55 x 12 = $660 Eyeglasses $300 annually, each  $300 x 2 = $600 Doctor visits 4 times a year at $20 each visit  $20 x 4 = $80

Slide Number #46 Learning Activity 3  Anticipated medical expenses: Anticipated yearly prescription costs of $425  $425 x 1 = $425 Balance Due on a medical bill of $325  (Will be paying it off at $15 a month) $15 x 12 = $180

Slide Number #47 Learning Activity 3  Total anticipated medical expenses: Health Insurance premium - $ 660 Eyeglasses - $ 600 Doctor visits - $ 80 Prescriptions - $ 425 Medical bill - $ 180  TOTAL$1945

Slide Number #48 Learning Activity 3 Answers 13,500

Slide Number #49 Learning Activity 3 Answers 405 1,945 1,540 1,945

Slide Number #50 Learning Activity 3 Answers ,560 1,940

Slide Number #51 Disability Assistance/ Medical Expense  Some families are eligible for both  Because disability expense is capped by amount earned by the person enabled to work, the disability assistance allowance is calculated before the medical allowance  HUD walks you through calculation 2-104

Slide Number #52 Disability Assistance/ Medical Expense  If disability assistance expense is equal to or more than 3% of annual income deduct 3% from disability assistance expense compare to earnings made possible by assistance add total medical expenses

Slide Number #53 Disability/Medical Disability Expense$2, % of Annual Income- 500 “Proposed” Expense$1,500 Amount Earned$1,000 Allowable Disability Expense $1,000 All Medical Expense is added$ 300 Total Deduction$1,300

Slide Number #54 Disability Assistance/ Medical Expense  If disability assistance expense is less than 3% of annual income Total disability expense is added to the medical expenses 3% threshold is subtracted from the total

Slide Number #55 Disability/Medical Disability Expense$ 400 3% of Annual Income$ 500 Amount Earned$ 1,000 Disability Expense$ 400 Plus Medical Expense$ 900 Total of Both Expenses$ 1,300 Less 3% of Annual Income Allowable for Both$ 800

Slide Number #56 Permissible Deductions: Public Housing Only  PHA may adopt additional deductions Must have written policy in ACOP The amounts may not already be deducted from annual income

Slide Number #57 Permissible Deductions: Public Housing Only  Two kinds of permissible deductions: Based on need  Example: medical deduction for families that do not meet elderly/disabled definition Self-sufficiency incentives  Example: Deduction for second wage earner

Slide Number #58 Permissible Deductions: Public Housing Only  PHA must be able to “afford” deductions No increase in operating subsidy PHA should estimate cost of deduction before implementing Must track actual rents AND rents that would have been paid without permissible deductions

Slide Number #59 Permissible Deductions: Public Housing Only  Examples of permissible deductions may include: Excessive travel expenses not to exceed $25 per family per week for travel related to employment, education or training

Slide Number #60 Permissible Deductions: Public Housing Only  Examples of permissible deductions may include: An amount of a family’s earned income, based on any of the following:  All the earned income of the family  The amount earned by particular family members

Slide Number #61 Permissible Deductions: Public Housing Only  An amount of a family’s earned income, based on any of the following:  The amount earned by families having certain characteristics  The amount earned by families, which could include payroll deductions such as social security taxes, income taxes, and medical insurance premiums

Slide Number #62 Verifying Income Deductions  HUD’s 2001 QC report found that 22% of assisted families paid too much rent  Generally, these families did not receive allowances & deductions to which they were entitled

Slide Number #63 Verifying Income Deductions  HUD’s verification guidebook addresses verification of deductions & allowances Q & As on verification requirements for each deduction Notice PIH

Slide Number #64 Verifying Income Deductions  Generally, PHAs should review tenant- provided documents when 3 rd -party verification is not available Review “with scrutiny” so that expenses are not counted twice and to ensure that ineligible expenses are not counted

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