May 2003Chapter 9: Case Study 3-Champion1 HUD RHIIP Training – PH/HCV Case Study 3 – Champion...

May 2003 Chapter 9: Case Study 3-Champion 1

HUD RHIIP Training – PH/HCV

Case Study 3 – Champion Family (Housing Choice Voucher)


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


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



• Adjusted Annual Income– Disability Assistance Expense– Medical Expense– Families who qualify for both Disability

Assistance and Medical Expenses


Assets


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


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?


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


Cash Value of Asset

• Certificate of Deposit– Market value $18,000– 10% early withdrawal penalty $1,800

– Cash value of asset $16,200


Cash Value of Asset

Home value $99,500Mortgage balance $40,000Broker fees $7,000

• Cash value of property = $52,500

Expenses to convert


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


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



$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



Home value $ 99,500Mortgage balance - 40,000Family-paid broker fees - 2,700Amount received - 5,000

Cash value of asset (disposed) $ 51,800

Count $51,800 cash value of asset for 2 years


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


Assets and Asset Income

• We have talked about ASSETS . . . – But what about the income they produce?


Actual Income from Assets

• Assets can generate income• Income from assets is counted in

determining annual income


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)


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


Income from Assets

• Net cash value of asset– is used to determine imputed asset income


Income from Assets

• When net cash value of all assets is $5000 or less, use the actual income from assets


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


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


Annual Income


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


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


Disability Assistance Expenses


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



• Expenses must be – Reasonable– Necessary to enable a family member to be

employed• This may or may not be the person with

disabilities



• 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



• 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



• 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



• 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


Disability Assistance Expense - Example

Head’s earned income: $ 14,500Spouse’s earned income: 12,700Total Income: $ 27,200

Son’s attendant care expenses: $ 3,830

3% of Annual Income: $ 816


Disability Assistance Expense – Example (cont.)

Son’s attendant care expenses: $ 3,830Minus 3% threshold - 816Maximum allowable disability

assistance expense: = $ 3,014

• Which is less than the earned income of the person(s) enabled to work


Medical Expenses


Medical Expense Deduction

• Permitted only for elderly or disabled families– If family is eligible, unreimbursed medical

expenses of all family members are allowed



• 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



• 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



• Live-in or periodic medical assistance – Nursing services– Costs for assistive animal and its care

• Long term care insurance premiums



• 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


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


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



Disability Expense $2000- 3% of Annual Income - 500“Proposed” Expense $1500

Amount Earned $1000Allowable Disability Expense $1000

All Medical Expense is added $ 300Total Deduction $1300



• 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


Families Eligible for Both (Disability Expense Less than 3% of Annual Income)

Disability Expense $ 400Earnings $ 1000

Disability Expense $ 400Medical Expense + $ 900Total of Both Expenses $1300

Less 3% of Annual Income - 500Allowable for Both $ 800


Elderly/Disability Allowance

• Tip: If the family qualifies for medical expenses, they also qualify for the $400 Elderly/Disability Allowance.



• Payment Standards• Rent Calculation


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


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


Payment Standard

• Used to calculate total subsidy for the family

• PHA’s Payment Standard is maximum subsidy amount


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


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


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


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


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



• 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



• The HUD monitor should examine the PHA’s most recent revision of Payment Standard schedule


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)


Example: PHA decreases PS

• Old payment standard…………900• New decreased PS …………………850• 1st regular reexam, use……………..900• At 2nd regular reexam use…………. 850


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


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


Example: PHA Increases PS

• Old payment standard……………….900• New payment standard………………950• 1st regular reexam, use………………950


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


Monitoring Review


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



Instructions for Part 11. Review PHA file data and complete

Appendix C (Tenant file review worksheets)



• 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)



Instructions for Part 21. Review PHA’s HUD 50058 (Handout)

2. Complete Appendix A, Tenant File Review Checklist to record discrepancies

- Page 9-75


Cash Value of Assets Answer


Annual IncomeAnswer


Dwelling Unit/ Utility AllowanceWorksheet

• What did you put for the Total Utility Allowance?– PHA indicated $56– Let’s look at the Admin Plan Utility

Allowance Schedule


Adjusted Annual Income Answer


Adjusted Annual IncomeAnswer


Housing Assistance Payment (HAP) and Tenant Rent (HCV Only) Answer


Housing Assistance Payment (HAP) and Tenant Rent Answer(HCV Only)


Housing Assistance Payment (HAP) and Tenant Rent Answer

(HCV Only)


Appendix A: Thinking Points

• Discussion



• 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?



• Do verification forms determine if expenses are reimbursed from another source?


HCV Calculation

• Prorated calculation for mixed families


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



• 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



• Step 5: Subtract Mixed Family Tenant Rent to Owner from Rent to Owner to get Prorated HAP to Owner


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



• 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



• Gross Rent $ 600• Minus Prorated Total HAP - 134• Equals Mixed Family Total Family

Contribution (TFC) = 466

• Mixed Family TFC $ 466• Minus Utility Allowance - 50• Equals Mixed Family Tenant Rent = 416



Rent to Owner $ 550Minus Family Tenant Rent - 416Equals 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



• 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

May 2003Chapter 9: Case Study 3-Champion1 HUD RHIIP Training – PH/HCV Case Study 3 – Champion...

Documents

Transcript of May 2003Chapter 9: Case Study 3-Champion1 HUD RHIIP Training – PH/HCV Case Study 3 – Champion...