© Copyright 2008 Nan McKay & Associates Housing Help Sessions Earned Income Disallowance –...

© Copyright 2008 Nan McKay & Associates

Housing Help Sessions

Earned Income Disallowance – 1/16/2009

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Annie Stevenson

Earned Income Disallowance


Housing Help SessionsEarned Income and Disallowance – January 16, 2009

NMA Host:Trainer Annie Stevenson





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Welcome to Housing Help!

Upcoming topics for the occupancy series: 2/6/09: Income exclusions (HCV & PH) 3/6/09: Pets and service animals (PH) 3/20/09: Leasing process (HCV)




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Welcome to Housing Help!

Today’s topics: EID qualification Calculating the exclusion Tracking EID eligibility HUD FAQs Questions and answers




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HCV: 24 CFR 5.617

Effective date 4/20/01Technical

Amendments 2/13/02

PH: 24 CFR 960.255

Effective 10/01/99Final Rule

Effective date 4/28/00




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For HCV: Effective 3/15/02, HUD revised the definition of “qualified family” Family no longer required to meet the

regulatory definition of disabled family





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PH and HCV earned income disallowance regulations are similar, except: Section 8 EID only applies to family

members with disabilities PH EID is not restricted to persons

with disabilities





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EID excludes increases in income attributable to new employment or increased earnings over income received by that family member prior to qualifying for the disallowance





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EID Qualifications

To qualify for the EID, a family must be receiving assistance under the HCV/PH program Applicant families are not eligible for

the EID




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EID Qualifications

Family must experience an increase in annual income as a result of one of the following reasons . . .




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1. Employment by a (HCV: disabled) family member who

Was “previously unemployed”* for one or more years prior to employment

* definition includes a person who has earned not more than could be earned working 10 hrs/week, 50 wks/year, at established minimum wage

Qualifications




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2. Increased earnings by a (HCV: disabled) family member:

Whose increased earnings occurred during member’s participation in an:• economic self-sufficiency program• job-training program

Qualifications




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HUD Definition of Economic Self-Sufficiency Program

Any program designed to encourage, assist, train or facilitate economic independence of assisted families or to provide work for such families




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HUD Definition of Economic Self-Sufficiency Program

Economic self-sufficiency programs can include:• job training

• employment counseling

• work placement

• basic skills training

• education

• English proficiency

• workfare

• financial or household mgmt

• apprenticeship

• activity necessary for work




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3. New employment or increased earnings by a (HCV: disabled) family member who has received TANF benefits or services within past 6 months

EID Qualifications




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No minimum amount if TANF is received in form of monthly maintenance

If TANF is received in form of one-time payments, wage subsidies, or transportation assistance, total received over 6 month period must be at least $500

EID Qualifications




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During initial 12 month exclusion period: Exclude the full amount of increase in

income attributable to employment or increased earnings

EID Initial 12-Month Exclusion




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Initial full exclusion period begins on date qualified family member is:

• employed; or• first experiences increase in income due to employment





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Initial full exclusion extends for a total of 12 cumulative months (don’t have to be consecutive months)





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Determining the Incremental Increase

Determine the annual income of the EID-qualified person prior to the qualifying change (earned and/or unearned)

Calculate the annual income of the EID-qualified person after the qualifying change

The difference is the incremental increase




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Example #1

Alice Brahm had $6000 in TANF benefits at the time she became employed. She is earning $13,600 at her new job, and her TANF benefits have stopped.

How much is the incremental increase?




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Example 1: Think it Through

TANF $6000

Empl $ 0

Total $6000

TANF $ 0

Empl $13,600

Total $13,600

Did we exclude all of her earned income?

How much did we exclude?

Why didn’t we exclude the $13,600?




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Example #2

Art Baker had no income at the time he became employed at $9800 per year.

How much is the incremental increase?




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Example 2: Think it Through

Other Inc $0

Empl $0

Total $0

Other Inc $ 0

Empl $9800

Total $9800

Did we exclude all of his earned income?How much did we exclude?Why?




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During initial 12 month exclusion period: Exclude the full amount of increase in

income attributable to employment or increased earnings




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EID Initial 12-Month Exclusion Initial full exclusion period begins on date

qualified family member is: employed; or first experiences increase in income due

to employment Initial full exclusion extends for a total of 12

cumulative months (don’t have to be consecutive months)




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EID Second 12-Month Exclusion and Phase-In

Exclusion is 50% of any increase attributable to employment or increased earnings




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EID Second 12-Month Exclusion and Phase-In

Second 12-month exclusion period begins after qualified family member has received 12 cumulative months of full exclusion

Phase-in period extends for a total of 12 cumulative months (not needed to be consecutive months)




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EID Maximum 4 Year Disallowance

4 year lifetime maximum disallowance period Starts at beginning of initial exclusion

period and ends exactly 48 months later

No exclusion may be given after this lifetime limit has been reached




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EID Maximum 4 Year Disallowance

EID regulations call for a maximum of 12 cumulative months for each of the two exclusion periods Thus, an individual can “max out” after

receiving the EID for only two years• 12 consecutive full-exclusion months

followed by• 12 consecutive phase-in exclusion months




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EID Issues

Remember, the disallowance does not apply for purposes of admission

To ensure that every participant who is eligible for EID receives it and is calculated properly, PHA must consider…




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EID Issues

How will you document – what evidence will you provide: That the family is a “qualified family”? The income exclusion in the family’s file?

How will you track the number of months income has been excluded and when the exclusion must end?




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In an Ideal World

1212 2424 3636 4848

100% of increase

100% of increase

50% of increase

50% of increase

Count all incomeCount all income

1212 2424




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EID Issues

Tracking In reality, the exclusion may stop and

start more than once, making it a challenge to figure out how much to disallow when there is a break during an exclusion period




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Reality may be….

9 months9 months 6 months6 months 9 months9 months

100%100%

100%100% 50%50%50%50%

It’s over…It’s over…

1212 2424 3636 4848




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EID Issues

Tracking Or . . . The four-year maximum may

be reached before the full 12 months of phase-in (or even initial full exclusion) have been “used up”




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Or…….Reality may be

9 months9 months 3 months3 months

100%100%100%100% 50%50%

It’s over…It’s over…

2 months2 months

1212 2424 3636 4848




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EID Issues Complexity of the regulation

contributes to rent determination errors

• Per HUD’s PD&R report

• Difficulty in tracking exclusion periods

• PHA needs standardized system




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EID Issues

Calculation of “incremental increase” May necessitate conducting interim

reexams throughout phase-in period

• Regardless of PHA’s interim policy To simplify matters, PHA may align

reexam date to coincide with the beginning of the phase-in period




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EID Issues Best source for answers:

EID FAQs: www.hud.gov/offices/pih/phr/about/ao_faq.cfm

RHIIP FAQs: www.hud.gov/offices/pih/programs/ph/rhiip/faq.cfm

RHIIP Summit FAQs:• www.hud.gov/offices/pih/programs/ph/

rhiip/faq_ris.cfm




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Selected Issues: FAQs

TANF qualifier: Family member must be on TANF grant

to qualify• Within 6 months of qualifying event

Change from previous guidance




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EID & flat rent (PH only) See A & O FAQs 2 situations:

• EID family chooses flat rent–ALL clocks continue to run

• Flat rent family that could qualify for EID–Do not start any clock




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Imputed welfare Imputed welfare is included in EID

baseline Example: prequalifying income

• Child support $1200• Imputed Welfare: $2400

Baseline = $3600




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Child care deduction Allowable child care cost for employment

cannot exceed amount of earned income “included in annual income” (CFR 5.603(b))

When family member qualifies for EID, employment-related child care deduction cannot exceed earnings in column 7f of 50058• Allowable child care cost may be zero




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Ineligible family members Ineligible non-citizens are not eligible for

EID Change from previous guidance




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Selected Issues: FAQs Minors who turn 18 and are not

FT students 2 examples (see RHiiP FAQs)

• Employed minor turns 18 with no increase in earned income

– Does not qualify for EID• Employed minor turns 18 AND earned

income increases– May qualify if meets criteria




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Unreported breaks in employment PHA must retroactively suspend exclusion

period when family fails to report job loss Example:

• Full exclusion period begins 6/1/03• Job ends 9/03, not reported until annual

reexam 6/04• Only 4 months of full exclusion used




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PHA calculation errors Not enough income excluded

• PHA must recalculate & reimburse Too much income excluded

• PHA must correct prospectively• Families not responsible for overpayment

caused by PHA error




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Challenges for PHA Management

Since EID is a statutory requirement and a major source of rent errors, management must take seriously the responsibility of ensuring that staff can apply the EID rules correctly

Rectifying a failure to provide this benefit when a family is entitled to it can be costly for a PHA. So can providing excess subsidy!




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Challenges for PHA Staff Staff may be puzzled or confused by the

results of correctly applying the EID rules such as families with these circumstances: Family who has significant increase in

earned income without having any increase in rent

Family who has decreases in other income with no equivalent decreases in rent




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Challenges for PHA Staff

Other confusing areas Explaining to families why their rent is

going up or down as a result of the EID rules

Difficulty tracking a family’s EID benefit as time passes and family circumstances change




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Purpose of Effective Tracking System

Program participants must benefit only for the number of months for which they qualify

PHA may become liable for excess subsidy




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Purpose of Effective Tracking System

Think about… How do you track exclusion periods?

What alerts staff members to start phase-in period?




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EID Calculation Worksheet

Download from website in your Housing Help session e-mail:

Divides calculation into 3 parts:1. Calculate exclusion

2. Calculate non-excluded earnings

3. 50058 entries




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EID Worksheet Example Mary Jones had $4,000 in TANF

benefits at the time she became employed. She is earning $12,400 at her new job, and her TANF benefits have stopped.

Baseline income is... $4,000




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EID Worksheet Example

12,400

12,400

0

0

12,400

4,000

8,400

N/A




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12,400

8,400

4,000




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Mary W 12,400 8,400 4,000

4,000




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Conclusion

Next…




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Conclusion

Thank You for Attending!

© Copyright 2008 Nan McKay & Associates Housing Help Sessions Earned Income Disallowance –...

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Transcript of © Copyright 2008 Nan McKay & Associates Housing Help Sessions Earned Income Disallowance –...