Transcript – PH/HCV HUD RHIIP Training Case Study 3 – Champion Family

HUD RHIIP Training – PH/HCV
Case Study 3 – Champion Family
(Housing Choice Voucher)
May 2003
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Champion Case Study:
• Same process as Alexander and Bennett
– Topic presentation
– Students complete case study
• Using Appendix C, File Review Checklist
Worksheets
– Students review PHA’s HUD 50058
– Students complete Appendix A, Tenant File
Review Checklist
– Review correct checklist and HUD 50058
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Champion Case Study:
Topics
• Assets
• Actual and imputed asset income
• Assets disposed of (imputed assets)
• Annual Income: Periodic Payments
• Payment Standards
• Proration for mixed families
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Champion Case Study:
Topics
• Adjusted Annual Income
– Disability Assistance Expense
– Medical Expense
– Families who qualify for both Disability
Assistance and Medical Expenses
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Assets
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Assets
• Value of assets may affect family’s annual
income
• PHA must:
– Identify assets
– Verify market value of assets
– Know how to determine cash value of assets
– Calculate Asset Income
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Market vs. Cash Value
of Assets
• Market Value – what the asset is “worth”
on the market
• Cash Value – what you would actually get out of
the asset if you converted it to cash. (e.g. sold it)
(Market value minus expenses to sell or convert to
cash)
– What is the market value of a $4,000 savings
account?
– What is the cash value of the account?
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Valuing Assets
• When calculating cash value, PHA must
consider expenses involved in converting
assets to cash:
– Penalties for early withdrawal
– Broker and legal fees
– Closing costs for real estate
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Cash Value of Asset
• Certificate of Deposit
– Market value
– 10% early withdrawal penalty
$18,000
$1,800
– Cash value of asset
$16,200
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Cash Value of Asset
Home value
$99,500
Mortgage balance $40,000
Broker fees
$7,000
Expenses
to convert
• Cash value of property = $52,500
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Assets Include Some Assets
People DON’T Actually Have
• Assets disposed of within past two years for
less than fair market value
– This can also be referred to as an imputed
asset
• To determine cash value:
• Market value of the asset less the expenses
and the amount received in compensation
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Assets Disposed of for
Less than Market Value
• Applicant sold her home to her son for
$10,000
• The home value was $89,000 with no
mortgage balance
• Selling fees were $1,800
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Assets Disposed of for
Less than Market Value
$89,000 Market Value
- 1,800 Fees
$87,200
-10,000 Sales price to son
$77,200 Counted as an asset 2 years from
date of sale = Cash Value
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Assets Disposed of for
Less than Market Value
Home value
Mortgage balance
Family-paid broker fees
Amount received
$ 99,500
- 40,000
- 2,700
- 5,000
Cash value of asset (disposed)
$ 51,800
Count $51,800 cash value of asset for 2 years
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Assets Disposed of
• Generally NOT considered to include those
disposed of due to:
– divorce or separation
– bankruptcy
– foreclosure
• PHA should develop applicant certification
form for verification purposes
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Assets and Asset
Income
• We have talked about ASSETS . . .
– But what about the income they produce?
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Actual Income from
Assets
• Assets can generate income
• Income from assets is counted in
determining annual income
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Actual Income from
Assets
• Examples of income from assets
– Interest
– Dividends
– Net income from real or personal property
• Asset income of minors is counted as
income (Ex: interest on savings account)
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Anticipating Actual
Income from Assets
• Market value of asset is used to determine
actual anticipated income from asset
• Question: will the family have any income
coming from this asset if they don’t sell it?
– Formula to determine anticipated income
from interest bearing accounts:
• Market value x interest rate
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Income from Assets
• Net cash value of asset
– is used to determine imputed asset income
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Income from Assets
• When net cash value of all assets is $5000
or less, use the actual income from assets
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Assets
• If net cash value of assets exceeds $5,000
must use the greater of:
– actual income from assets
– imputed income from assets (HUD passbook
rate times net cash value of all assets)
• HUD Field Office has HUD passbook rate for
jurisdictions
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When Net Cash Value of
all Assets Exceed $5,000
• Add cash value of all assets
• Multiply by the local HUD passbook rate
• Compare result (imputed income from
assets) to actual income from assets
• Use whichever result is greater as Final
Asset Income in rent calculation
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Annual Income
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Periodic Payments
• Include in annual income the full amount of
periodic amounts received from
– Social Security
– Pensions and Annuities
– Retirement funds
– Disability or death benefits
– Insurance policies
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Periodic Payments
• Deductions
– If deductions (for example, Medicare) are taken
out of the gross benefit, use the gross amount
of the benefit
• Adjustments
– With Social Security, if benefits have been
reduced to offset a prior overpayment, use the
amount actually being received
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Disability Assistance Expenses
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Disability Assistance
Expense
• Deduction allowed for
– Unreimbursed, anticipated costs for
• Attendant care
• Auxiliary apparatus
– Paid on behalf of any family member who is
a person with disabilities
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Disability Assistance
Expense
• Expenses must be
– Reasonable
– Necessary to enable a family member to be
employed
• This may or may not be the person with
disabilities
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Disability Assistance
Expense
• Examples of qualifying expenses
– Payments made on a motorized wheelchair
for the adult son of the head of the family to
go to work each day on his own
– Payments to a care attendant to stay with a
disabled 16-year-old child to allow the child’s
mother to go to work each day
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Disability Assistance
Expense
• Cost of maintenance and upkeep of
auxiliary apparatus is included
– Veterinarian costs and food costs of a
service animal
– Cost of maintaining the equipment added to
a car but NOT the cost of maintaining the car
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Disability Assistance
Expense
• Attendant care includes reasonable
expenses for
– Home medical care
– Nursing services
– Housekeeping and errand services
– Interpreters for hearing-impaired
– Readers for persons with visual disabilities
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Disability Assistance
Expense
• Maximum disability assistance allowance is
that which exceeds 3% of the family’s annual
income
• The allowance is capped by the amount the
family is enabled to earn as a result of the
the disability assistance expenses
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Disability Assistance
Expense - Example
Head’s earned income:
Spouse’s earned income:
Total Income:
$ 14,500
12,700
$ 27,200
Son’s attendant care expenses:
$ 3,830
3% of Annual Income:
$ 816
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Disability Assistance
Expense – Example (cont.)
Son’s attendant care expenses:
Minus 3% threshold
Maximum allowable disability
assistance expense:
$ 3,830
- 816
= $ 3,014
• Which is less than the earned income of the
person(s) enabled to work
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Medical Expenses
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Medical Expense
Deduction
• Permitted only for elderly or disabled families
– If family is eligible, unreimbursed medical
expenses of all family members are allowed
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Medical Expense
Deduction
• Include all unreimbursed expenses the
family anticipates incurring during the 12
months following this certification
• PHA policy determines allowable medical
expenses
– PHAs may use IRS Publication 502 as a tool
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Medical Expense
Deduction
•
•
•
•
Services of doctors and health care professionals
Services of health care facilities
Medical insurance premiums
Prescription/non-prescription medicines (PHA
policy)
• Transportation to treatment
• Dental expenses, eyeglasses, hearing aids,
batteries
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Medical Expense
Deduction
• Live-in or periodic medical assistance
– Nursing services
– Costs for assistive animal and its care
• Long term care insurance premiums
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Medical Expense
Deduction
• Regular payments on a past one-time
medical expense
– Any one-time medical expense may be
counted only one time
– If full amount of a medical bill has been
allowed, it will not be allowed again, even if it
has not yet been paid
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Families Eligible for
Medical and Disability
Assistance Expenses
• 3% threshold applied only once
• Because deduction for disability assistance
expenses is limited by the amount earned by
the person enabled to work, it is calculated
before the medical deduction
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Families Eligible for
Both
• 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
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Families Eligible for
Both
Disability Expense
- 3% of Annual Income
“Proposed” Expense
$2000
- 500
$1500
Amount Earned
Allowable Disability Expense
$1000
$1000
All Medical Expense is added
Total Deduction
$ 300
$1300
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Families Eligible for
Both
• If disability assistance expense is less than
3% of annual income
– Earnings is compared to disability assistance
expense to get allowable disability
assistance
– Total disability expense is added to the
medical expenses
– 3% threshold is subtracted from the total
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Families Eligible for Both
(Disability Expense Less than
3% of Annual Income)
Disability Expense
Earnings
Disability Expense
Medical Expense
Total of Both Expenses
$ 400
$ 1000
$ 400
+ $ 900
$1300
Less 3% of Annual Income
Allowable for Both
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- 500
$ 800
46
Elderly/Disability
Allowance
• Tip: If the family qualifies for medical
expenses, they also qualify for the $400
Elderly/Disability Allowance.
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Champion Case Study:
Topics
• Payment Standards
• Rent Calculation
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Payment Standards Definitions
• Subsidy Standards: PHA established
standards to determine the number of
bedrooms and amount of subsidy for families
of different sizes and composition
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Payment Standards Definitions
• Family Unit Size: (voucher size) The
appropriate number of bedrooms for a family,
as determined by the PHA under the PHAs
subsidy standards
• Payment Standard: Established by PHA for
each FMR area in PHA jurisdiction by
bedroom size
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Payment Standard
• Used to calculate total subsidy for the
family
• PHA’s Payment Standard is maximum
subsidy amount
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Payment Standards
Schedule
• HUD publishes Fair Market Rents (FMRs)
annually
• PHA must adopt Payment Standards
schedule for each FMR area in jurisdiction
• PHA must establish Payment Standard for
each bedroom size
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Establishing PS
Amounts
• 90 to 110% of FMR is basic range
• HUD approval not needed for basic range
• HUD must approve Payment Standard
higher or lower than basic range
– HUD Field Office may approve up to 120%
– Higher than 120% takes HUD Headquarters
approval
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Establishing PS
Amounts
• PHA may establish separate PS within basic
range for designated part of FMR
• PHA must use exception PS for any unit
selected in exception PS area
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What Payment Standard
to Use
• PS to be used is lower of:
– PS for family unit size (Voucher size); or
– PS for size of unit selected
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Utility Allowance
• Tip: If a family selects a unit that is different
from the family unit size (voucher size),
which Utility Allowance do you use?
– Use the Utility Allowance for the size of the
dwelling unit actually leased by the family
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What Payment Standard
to Use
• During a HAP Contract, Payment Standard for a
family is:
– Payment Standard as determined at most
recent regular reexamination after beginning of
the HAP Contract unless the PHA has:
– decreased the Payment Standard amount on their
schedule
– increased the Payment Standard amount on their
schedule
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What Payment Standard
to Use
• The HUD monitor should examine the PHA’s
most recent revision of Payment Standard
schedule
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What Payment Standard
To Use
• If the PHA has decreased the Payment Standard:
– At the first regular reexam use higher of old or
new payment standard
• Gives the family a little protection
– At second regular reexam, use lower (new)
payment standard, (unless PHA has increased
the PS since last regular reexamination)
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Example: PHA
decreases PS
•
•
•
•
Old payment standard…………900
New decreased PS …………………850
1st regular reexam, use……………..900
At 2nd regular reexam use…………. 850
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Example: PHA
decreases, then
increases
•
•
•
•
•
Old payment standard…………900
New decreased PS …………………850
1st regular reexam, use……………..900
PHA raises PS after 1st reexam to…875
At 2nd regular reexam use…………..875
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What Payment Standard
To Use
• During a HAP Contract, if PHA has
increased the PS:
– Use the new, higher Payment Standard at
the first regular reexam after the Payment
Standard
• But not at any interim
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Example: PHA
Increases PS
• Old payment standard……………….900
• New payment standard………………950
• 1st regular reexam, use………………950
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Change in Family Size/
Composition
• Family qualifies for different size voucher
• At next regular reexamination use:
– The PS for the new family unit size,
regardless of any increase or decrease in
the PS schedule
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Monitoring Review
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Champion Case Study:
Process Overview
Ground Rules
– Objective: complete case study
– Time: Approximately 1 hour
– Work individually
– Trainer and trainer aides will assist if needed
– Please keep noise volume to a minimum
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Champion Case Study:
Process Overview
Instructions for Part 1
1. Review PHA file data and complete
Appendix C (Tenant file review
worksheets)
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Champion Case Study:
Process Overview
• Resources for case study
– Case information begins page 9-17
– Verifications (pg 9-27)
– Appendix C, Tenant File Review Checklist
Worksheets (You complete)
– Cubzide PHA Policies/Schedules (pg 6-5)
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Champion Case Study:
Process Overview
Instructions for Part 2
1. Review PHA’s HUD 50058 (Handout)
2. Complete Appendix A, Tenant File
Review Checklist to record
discrepancies
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Cash Value of Assets
Answer
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Annual Income
Answer
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Dwelling Unit/ Utility
Allowance
Worksheet
• What did you put for the Total Utility
Allowance?
– PHA indicated $56
– Let’s look at the Admin Plan Utility
Allowance Schedule
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Adjusted Annual Income
Answer
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Adjusted Annual Income
Answer
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Adjusted Annual Income
Answer
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Adjusted Annual Income
Answer
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Adjusted Annual Income
Answer
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Housing Assistance Payment
(HAP) and Tenant Rent
(HCV Only) Answer
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Housing Assistance Payment
(HAP) and Tenant Rent Answer
(HCV Only)
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Housing Assistance Payment
(HAP) and Tenant Rent Answer
(HCV Only)
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Housing Assistance Payment
(HAP) and Tenant Rent Answer
(HCV Only)
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Appendix A: Thinking
Points
• Discussion
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Appendix A: Thinking
Points
• Medical Expenses:
- Did PHA use same as last year?
- Any non-recurring?
- Balance of past-due bills reduced by last year’s
allowance? 3rd party documentation of balance?
– Admin plan guidance on medical expenses for
staff?
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Appendix A: Thinking
Points
• Do verification forms determine if expenses
are reimbursed from another source?
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HCV Calculation
• Prorated calculation for mixed families
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Prorated Rent
Calculation (HCV)
• Step 1: Divide number of eligible family
members by total number in family to arrive
at proration percentage
• Step 2: Multiply Total HAP (Total Subsidy)
by proration percentage to get prorated Total
HAP
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Prorated Rent
Calculation (HCV)
• Step 3: Subtract prorated Total HAP from
Gross Rent to get Mixed Family Total Family
Contribution
• Step 4: Subtract Utility Allowance from
Mixed Family Total Family Contribution to get
Mixed Family Tenant Rent to Owner or Utility
Reimbursement Payment
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Prorated Rent
Calculation (HCV)
• Step 5: Subtract Mixed Family Tenant Rent
to Owner from Rent to Owner to get
Prorated HAP to Owner
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Prorated Rent Calculation:
Example (HCV)
• Jones family has 6 members
–
–
–
–
–
–
4 are eligible citizens
2 are noncontending members
Family’s Total HAP is $200
Gross Rent is $600
Rent to Owner is $550
Utility Allowance is $50
• Calculate prorated HAP and Tenant Rent to Owner
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Prorated Rent
Calculation (HCV)
• Eligible family members divided by total
family members (4 divided by 6 = .67
proration percentage)
• Total HAP
$ 200
• Times proration percentage
x .67
• Equals prorated Total HAP
$ 134
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Prorated Rent
Calculation (HCV)
• Gross Rent
• Minus Prorated Total HAP
• Equals Mixed Family Total Family
Contribution (TFC)
• Mixed Family TFC
• Minus Utility Allowance
• Equals Mixed Family Tenant Rent =
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$ 600
- 134
= 466
$ 466
- 50
416
91
Prorated Rent
Calculation (HCV)
Rent to Owner
$ 550
Minus Family Tenant Rent
- 416
Equals Prorated HAP to Owner = $ 134
• The Jones family will pay $66 more in Tenant
Rent (416-350 – 350 is what the Tenant Rent
would have been if not prorated) and the PHA
will pay $66 less in HAP to Owner (200-134)
due to the presence of two ineligible members
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Prorated Rent Calculation
(HCV)
• Now we will assume that the Champion family had
an ineligible relative come to live with them
• The Champion family now has 4 people living in
the unit but only 3 are eligible under the
Noncitizens Rule
• Sections F. 1 – 12 of the RIM worksheet has been
completed for you…pg 9-105
• Complete Lines F. 18 - 23…page 9-107
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Housing Assistance Payment
(HAP) and Tenant Rent Answer
(HCV Only)
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