1. May 2003Chapter 9: Case Study 3-Champion1 HUD RHIIP Training – PH/HCV Case Study 3 – Champion Family (Housing Choice Voucher)

2. May 2003Chapter 9: Case Study 3-Champion2 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

3. May 2003Chapter 9: Case Study 3-Champion3 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

4. May 2003Chapter 9: Case Study 3-Champion4 Champion Case Study: Topics Adjusted Annual Income –Disability Assistance Expense –Medical Expense –Families who qualify for both Disability Assistance and Medical Expenses

5. May 2003Chapter 9: Case Study 3-Champion5 Assets

6. May 2003Chapter 9: Case Study 3-Champion6 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

7. May 2003Chapter 9: Case Study 3-Champion7 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?

8. May 2003Chapter 9: Case Study 3-Champion8 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

9. May 2003Chapter 9: Case Study 3-Champion9 Cash Value of Asset Certificate of Deposit –Market value $18,000 –10% early withdrawal penalty $1,800 –Cash value of asset $16,200

10. May 2003Chapter 9: Case Study 3-Champion10 Cash Value of Asset Home value $99,500 Mortgage balance $40,000 Broker fees $7,000 Cash value of property = $52,500 Expenses to convert

11. May 2003Chapter 9: Case Study 3-Champion11 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

12. May 2003Chapter 9: Case Study 3-Champion12 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

13. May 2003Chapter 9: Case Study 3-Champion13 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

14. May 2003Chapter 9: Case Study 3-Champion14 Assets Disposed of for Less than Market Value Home value$ 99,500 Mortgage balance - 40,000 Family-paid broker fees - 2,700 Amount received - 5,000 Cash value of asset (disposed) $ 51,800 Count $51,800 cash value of asset for 2 years

15. May 2003Chapter 9: Case Study 3-Champion15 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

16. May 2003Chapter 9: Case Study 3-Champion16 Assets and Asset Income We have talked about ASSETS... –But what about the income they produce?

17. May 2003Chapter 9: Case Study 3-Champion17 Actual Income from Assets Assets can generate income Income from assets is counted in determining annual income

18. May 2003Chapter 9: Case Study 3-Champion18 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)

19. May 2003Chapter 9: Case Study 3-Champion19 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

20. May 2003Chapter 9: Case Study 3-Champion20 Income from Assets Net cash value of asset –is used to determine imputed asset income

21. May 2003Chapter 9: Case Study 3-Champion21 Income from Assets When net cash value of all assets is $5000 or less, use the actual income from assets

22. May 2003Chapter 9: Case Study 3-Champion22 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

23. May 2003Chapter 9: Case Study 3-Champion23 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

24. May 2003Chapter 9: Case Study 3-Champion24 Annual Income

25. May 2003Chapter 9: Case Study 3-Champion25 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

26. May 2003Chapter 9: Case Study 3-Champion26 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

27. May 2003Chapter 9: Case Study 3-Champion27 Disability Assistance Expenses

28. May 2003Chapter 9: Case Study 3-Champion28 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

29. May 2003Chapter 9: Case Study 3-Champion29 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

30. May 2003Chapter 9: Case Study 3-Champion30 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

31. May 2003Chapter 9: Case Study 3-Champion31 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

32. May 2003Chapter 9: Case Study 3-Champion32 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

33. May 2003Chapter 9: Case Study 3-Champion33 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

34. May 2003Chapter 9: Case Study 3-Champion34 Disability Assistance Expense - Example Head’s earned income: $ 14,500 Spouse’s earned income: 12,700 Total Income: $ 27,200 Son’s attendant care expenses: $ 3,830 3% of Annual Income: $ 816

35. May 2003Chapter 9: Case Study 3-Champion35 Disability Assistance Expense – Example (cont.) Son’s attendant care expenses: $ 3,830 Minus 3% threshold- 816 Maximum allowable disability assistance expense: = $ 3,014 Which is less than the earned income of the person(s) enabled to work

36. May 2003Chapter 9: Case Study 3-Champion36 Medical Expenses

37. May 2003Chapter 9: Case Study 3-Champion37 Medical Expense Deduction Permitted only for elderly or disabled families –If family is eligible, unreimbursed medical expenses of all family members are allowed

38. May 2003Chapter 9: Case Study 3-Champion38 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

39. May 2003Chapter 9: Case Study 3-Champion39 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

40. May 2003Chapter 9: Case Study 3-Champion40 Medical Expense Deduction Live-in or periodic medical assistance –Nursing services –Costs for assistive animal and its care Long term care insurance premiums

41. May 2003Chapter 9: Case Study 3-Champion41 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

42. May 2003Chapter 9: Case Study 3-Champion42 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

43. May 2003Chapter 9: Case Study 3-Champion43 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

44. May 2003Chapter 9: Case Study 3-Champion44 Families Eligible for Both Disability Expense$2000 - 3% of Annual Income- 500 “Proposed” Expense$1500 Amount Earned $1000 Allowable Disability Expense$1000 All Medical Expense is added $ 300 Total Deduction $1300

45. May 2003Chapter 9: Case Study 3-Champion45 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

46. May 2003Chapter 9: Case Study 3-Champion46 Families Eligible for Both (Disability Expense Less than 3% of Annual Income) Disability Expense$ 400 Earnings$ 1000 Disability Expense$ 400 Medical Expense +$ 900 Total of Both Expenses $1300 Less 3% of Annual Income - 500 Allowable for Both$ 800

47. May 2003Chapter 9: Case Study 3-Champion47 Elderly/Disability Allowance Tip: If the family qualifies for medical expenses, they also qualify for the $400 Elderly/Disability Allowance.

48. May 2003Chapter 9: Case Study 3-Champion48 Champion Case Study: Topics Payment Standards Rent Calculation

49. May 2003Chapter 9: Case Study 3-Champion49 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

50. May 2003Chapter 9: Case Study 3-Champion50 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

51. May 2003Chapter 9: Case Study 3-Champion51 Payment Standard Used to calculate total subsidy for the family PHA’s Payment Standard is maximum subsidy amount

52. May 2003Chapter 9: Case Study 3-Champion52 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

53. May 2003Chapter 9: Case Study 3-Champion53 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

54. May 2003Chapter 9: Case Study 3-Champion54 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

55. May 2003Chapter 9: Case Study 3-Champion55 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

56. May 2003Chapter 9: Case Study 3-Champion56 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

57. May 2003Chapter 9: Case Study 3-Champion57 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

58. May 2003Chapter 9: Case Study 3-Champion58 What Payment Standard to Use The HUD monitor should examine the PHA’s most recent revision of Payment Standard schedule

59. May 2003Chapter 9: Case Study 3-Champion59 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)

60. May 2003Chapter 9: Case Study 3-Champion60 Example: PHA decreases PS Old payment standard…………900 New decreased PS…………………850 1 st regular reexam, use……………..900 At 2 nd regular reexam use…………. 850

61. May 2003Chapter 9: Case Study 3-Champion61 Example: PHA decreases, then increases Old payment standard…………900 New decreased PS…………………850 1 st regular reexam, use……………..900 PHA raises PS after 1 st reexam to…875 At 2 nd regular reexam use…………..875

62. May 2003Chapter 9: Case Study 3-Champion62 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

63. May 2003Chapter 9: Case Study 3-Champion63 Example: PHA Increases PS Old payment standard……………….900 New payment standard………………950 1 st regular reexam, use………………950

64. May 2003Chapter 9: Case Study 3-Champion64 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

65. May 2003Chapter 9: Case Study 3-Champion65 Monitoring Review

66. May 2003Chapter 9: Case Study 3-Champion66 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

67. May 2003Chapter 9: Case Study 3-Champion67 Champion Case Study: Process Overview Instructions for Part 1 1.Review PHA file data and complete Appendix C (Tenant file review worksheets)

68. May 2003Chapter 9: Case Study 3-Champion68 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)

69. May 2003Chapter 9: Case Study 3-Champion69 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 - Page 9-75

70. May 2003Chapter 9: Case Study 3-Champion70 Cash Value of Assets Answer

71. May 2003Chapter 9: Case Study 3-Champion71 Annual Income Answer

72. May 2003Chapter 9: Case Study 3-Champion72 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

73. May 2003Chapter 9: Case Study 3-Champion73 Adjusted Annual Income Answer

74. May 2003Chapter 9: Case Study 3-Champion74 Adjusted Annual Income Answer

75. May 2003Chapter 9: Case Study 3-Champion75 Adjusted Annual Income Answer

76. May 2003Chapter 9: Case Study 3-Champion76 Adjusted Annual Income Answer

77. May 2003Chapter 9: Case Study 3-Champion77 Adjusted Annual Income Answer

78. May 2003Chapter 9: Case Study 3-Champion78 Housing Assistance Payment (HAP) and Tenant Rent (HCV Only) Answer

79. May 2003Chapter 9: Case Study 3-Champion79 Housing Assistance Payment (HAP) and Tenant Rent Answer (HCV Only)

80. May 2003Chapter 9: Case Study 3-Champion80 Housing Assistance Payment (HAP) and Tenant Rent Answer (HCV Only)

81. May 2003Chapter 9: Case Study 3-Champion81 Housing Assistance Payment (HAP) and Tenant Rent Answer (HCV Only)

82. May 2003Chapter 9: Case Study 3-Champion82 Appendix A: Thinking Points Discussion

83. May 2003Chapter 9: Case Study 3-Champion83 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? 3 rd party documentation of balance? –Admin plan guidance on medical expenses for staff?

84. May 2003Chapter 9: Case Study 3-Champion84 Appendix A: Thinking Points Do verification forms determine if expenses are reimbursed from another source?

85. May 2003Chapter 9: Case Study 3-Champion85 HCV Calculation Prorated calculation for mixed families

86. May 2003Chapter 9: Case Study 3-Champion86 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

87. May 2003Chapter 9: Case Study 3-Champion87 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

88. May 2003Chapter 9: Case Study 3-Champion88 Prorated Rent Calculation (HCV) Step 5: Subtract Mixed Family Tenant Rent to Owner from Rent to Owner to get Prorated HAP to Owner

89. May 2003Chapter 9: Case Study 3-Champion89 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

90. May 2003Chapter 9: Case Study 3-Champion90 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

91. May 2003Chapter 9: Case Study 3-Champion91 Prorated Rent Calculation (HCV) 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

92. May 2003Chapter 9: Case Study 3-Champion92 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

93. May 2003Chapter 9: Case Study 3-Champion93 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

94. May 2003Chapter 9: Case Study 3-Champion94 Housing Assistance Payment (HAP) and Tenant Rent Answer (HCV Only)