Adjusted Income
Annie Stevenson
Slide Number #1
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 #2
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 #3
Adjusted Income - Background
 Previous sessions:
• Annual Income
 Inclusions
 Exclusions
 Income from assets
Slide Number #4
Adjusted Income - Background
 Formula:
• Gross Income
 Including asset income
• Minus exclusions
• Equals annual income
 First major building block in rent calculation
Slide Number #5
Adjusted Income - Introduction
 Today’s topic:
• ADJUSTED INCOME
 Second major building block in rent calculation
Slide Number #6
Adjusted Income - Introduction
 Form HUD-50058 Section 8
• Calculation of adjusted income
Slide Number #7
HUD-50058 Section 8:
Expected Income Per Year
Slide Number #8
HUD-50058 Section 8:
Expected Income Per Year
Slide Number #9
HUD-50058 Section 8:
Expected Income Per Year
Slide Number #10
Definitions
 Adjusted Income
 Elderly Family
 Disabled Family
 Dependent
 Household Vs. Family
Slide Number #11
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 #12
Deductions and Allowances
Slide Number #13
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 #14
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 #15
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 #16
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 #17
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 #18
Child Care Expenses
 Care enables a family
member to
• Work
• Actively seek work
• Attend school
Slide Number #19
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 #20
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 #21
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 #22
Learning Activity 1 Answers
14,621
Slide Number #23
Learning Activity 1 Answers
Slide Number #24
Learning Activity 1 Answers
3
480
1,440
3,120
4,560
10,061
Slide Number #25
Allowance for Disability
Assistance Expense
 Anticipated expenses for:
• Care attendants
• Auxiliary apparatus
 Wheelchairs, ramps, vehicle adaptations,
special equipment for the blind, etc.
Slide Number #26
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 #27
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 #28
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 #29
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 #30
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 #31
Learning Activity 2 Answers
20,000
Slide Number #32
Learning Activity 2 Answers
600
4,600
4,000
9,000
4,000
0
4,000
4,000
Slide Number #33
Learning Activity 2 Answers
1
480
480
4,480
15,520
Slide Number #34
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 #35
Example
•
•
•
•
•
Head disabled 50 years old
Son 16
Daughter 12
Daughter 1
Live-in attendant
 Whose anticipated medical expenses qualify?
Slide Number #36
Allowable Medical Expenses
 PHA policy determines allowable medical
expenses
• PHAs may use IRS Publication 502 as a tool
• Available at www.irs.gov
Slide Number #37
Typical Allowable Medical
Expenses
 Professional services
 Services of health care facilities
 Prescription/nonprescription medicines
 Medical insurance premiums/co-payments
(includes Medicare premiums)
Slide Number #38
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 #39
Typical Allowable Medical
Expenses
 Transportation for treatment
 Dental expenses
 Eyeglasses, hearing aids
 Monthly payment on accumulated medical
bills
Slide Number #40
Medicare Prescription Drug
Discounts and Assistance
 PIH 2005-37
• 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 #41
Medical Allowance
 Medical allowance
• portion of anticipated medical expenses that
exceed 3% of Annual Income
Slide Number #42
Learning Activity 3
 Family Name: Alden
 Head: 81
 Spouse: 80
 Annual Income: $13,500
Slide Number #43
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 #44
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 #45
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 #46
Learning Activity 3
 Total anticipated medical expenses:
•
•
•
•
•
Health Insurance premium Eyeglasses Doctor visits Prescriptions Medical bill -
 TOTAL
Slide Number #47
$ 660
$ 600
$ 80
$ 425
$ 180
$1945
Learning Activity 3 Answers
13,500
Slide Number #48
Learning Activity 3 Answers
405
1,945
1,945
1,540
Slide Number #49
Learning Activity 3 Answers
400
1,940
11,560
Slide Number #50
2-104
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-50058 walks you through calculation
Slide Number #51
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 #52
Disability/Medical
Disability Expense
- 3% of Annual Income
“Proposed” Expense
Amount Earned
Allowable Disability Expense
• All Medical Expense is added
• Total Deduction
Slide Number #53
$2,000
- 500
$1,500
$1,000
$1,000
$ 300
$1,300
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 #54
Disability/Medical
• Disability Expense
• 3% of Annual Income
• Amount Earned
Disability Expense
Plus Medical Expense
Total of Both Expenses
$ 400
$ 500
$ 1,000
$ 400
$
$ 1,300
Less 3% of Annual Income
• Allowable for Both
Slide Number #55
900
- 500
$
800
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 #56
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 #57
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 #58
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 #59
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 #60
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 #61
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 #62
Verifying Income Deductions
 HUD’s verification guidebook addresses
verification of deductions & allowances
• Q & As on verification requirements for each
deduction
• Notice PIH 2004-1
Slide Number #63
Verifying Income Deductions
 Generally, PHAs should review tenantprovided documents when 3rd-party
verification is not available
• Review “with scrutiny” so that expenses are
not counted twice and to ensure that ineligible
expenses are not counted
Slide Number #64
NMA Lunch ‘n’ Learn Seminar
NEXT TOPIC…
Slide Number #65
NMA Lunch ‘n’ Learn Seminar
Slide Number #66