1. Slide Number #1 Annie Stevenson Adjusted Income

2. 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

3. 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

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

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

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

7. Slide Number #7 Adjusted Income - Introduction  Form HUD-50058 Section 8 Calculation of adjusted income

8. Slide Number #8 HUD-50058 Section 8: Expected Income Per Year

9. Slide Number #9 HUD-50058 Section 8: Expected Income Per Year

10. Slide Number #10 HUD-50058 Section 8: Expected Income Per Year

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

12. 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)

13. Slide Number #13 Deductions and Allowances

14. 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

15. 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

16. 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

17. 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).

18. 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

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

20. 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

21. 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

22. 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

23. Slide Number #23 Learning Activity 1 Answers 14,621

24. Slide Number #24 Learning Activity 1 Answers

25. Slide Number #25 Learning Activity 1 Answers 3,120 4,560 1,440 480 3 10,061

26. 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.

27. 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

28. 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

29. 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?

30. 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

31. 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

32. Slide Number #32 Learning Activity 2 Answers 20,000

33. Slide Number #33 Learning Activity 2 Answers 600 9,000 0 4,000 4,600 4,000

34. Slide Number #34 Learning Activity 2 Answers 1 4,480 480 15,520

35. 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

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

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

38. 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)

39. 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

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

41. Slide Number #41 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

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

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

44. 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)

45. 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

46. 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

47. 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

48. Slide Number #48 Learning Activity 3 Answers 13,500

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

50. Slide Number #50 Learning Activity 3 Answers 400 11,560 1,940

51. 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-50058 walks you through calculation 2-104

52. 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

53. Slide Number #53 Disability/Medical Disability Expense$2,000 - 3% 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

54. 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

55. 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 - 500 Allowable for Both$ 800

56. 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

57. 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

58. 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

59. 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

60. 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

61. 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

62. 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

63. 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 2004-1

64. 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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66. Slide Number #66 NMA Lunch ‘n’ Learn Seminar