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Transcript of Income Calculations for HUD Programs - LeadingAge … Calculations...Microsoft PowerPoint - Income...
3/8/2013
Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 1
Income Calculations for HUD Programs
Presented by Mary Ross
President, CEORoss Business Development, Inc.www.rbdnow.com
Introduction
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 2
Agenda10:00 AM Until 12:00 PM IntroVerification Income Income from AssetsDeductions
Basics
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Income Earned Income Unearned Income Income from Assets
Verification EIV Third-party Review of
Documents Notarized self-
certification
Verification
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 4
VerificationEIVThird-partyWrittenOralElectronic
Review documentsSelf-certification
Third-party – HH 4350.3 P 5-13 Written
Directly from source SSA/Employer Medical Professional
Oral
Electronic Internet (such as EIV or online banking) Fax Email
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EIV for Earned Income
Use EIV plus4 Current
Consecutive Pay Stubs
Use Traditional Verification
EIV For SS and Medicare
Electronic 3rd Party VerificationUse Unless No Data Resident Disputes Data is not complete
For HUD programs – no other printout is required – do not need award/benefit letter
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 6
Review of DocumentsUse When Third-party
verification is not possible or is not required
Third-party verification is delayed
Must document why you did not use 3rd party
Self Certification*An owner may accept a tenant’s
notarized statement or signed affidavit regarding the veracity of
information submitted if the information cannot be verified by another acceptable verification
method.
*unless prohibited by HUD
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Earned Income
Employment Income-General
Include for HOH, co-HOH or spouse
Include for all adultsExcept Dependents
Full-time StudentsDisabled
Except Live-in Aides
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 8
Employment Income -DependentsMinors – Do not count any
employment income unless HOH, co-HOH or spouse
Full-time students – only count $480
Disabled adult – count earned income
Unearned Income
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Several SourcesSocial SecurityVAPensionRetirementUnemploymentEtc.
Social SecurityRefer to HH
4350.3 R1, C3, P 5-6
Use Gross Amount x 12 months
Do not consider deductions for unpaid Child support Taxes Student loans Etc.
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Prior OverpaymentIf an agency is reducing a family's benefits to
adjust for a prior overpayment (e.g., social security, SSI, TANF, or unemployment benefits),
count the amount that is actually provided after the adjustment.
Gross – Repayment Amount x 12
Do not use net amount because it may include other deductions such as Medicare
Cents or No Cents
Cents If using an
award/benefit letter that indicates cents
Even if the cents are not paid
No Cents If using EIV or
another source that does not include cents
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 11
HUD Clarification 71. Question: When calculating SS income, owners/agents should use the gross amount. But, do owners/agents include the cents on SS payment amounts, although not received? For example, if the gross amount is $570.20, but the net is $570, do owners/agents calculate as $570.20 x 12?
Answer: When calculating Social Security income, use the gross amount shown on the third-party verification, including cents.
VA Disability
Section 8
Exclude Deferred Payments*
Count Periodic Monthly Amounts**
Non Section 8 236 PRAC PAC BMIR
Count Deferred Payments
Count Periodic Monthly Amounts
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Aid & Attendance HUD clarified that VA Aid and Attendance
income is included in the annual income calculation
New Bill has been introduced by Congressmen Joe Heck (NV), Jim Renacci (OH), Judy Biggert (IL), and Al Green (TX).
Bill proposes that A&A is excluded Bill passed the House Financial Services
Committee unanimously Bill passed the House by voice vote Bill has not passed Senate. Projection is 40% likelihood to pass.
Income from Assets
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Assets Any asset that can be converted to cash
Not personal use items
Fair Market Value = face value
Cash value = face value less any costs, expenses, penalties, taxes or liens that would be paid to sell the asset or would be paid when the asset was converted to cash
Checking/Savings
Checking Account
Average balance over six months
Savings Account/Direct Express Debit Cards
Current balance obtained within 120 days of certification
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Retirement Accounts
Balance in accounts is accessible
Cash value is the balance less penalties and taxes
Income is interest earned
Regular Periodic Payments
Some Assets/Retirement Accounts make regular periodic payments401KAnnuityNot ROTH
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Monthly or Quarterly Periodic Payment Standard Payment
Usually Monthly
Count payment as income
Do not count the cash value of the asset
Do not count interest income from the asset
Retirement Accounts with RMD RMD = Required Minimum Distributions
Difficult when withdrawn once a year
Count the one-time distribution as income
Do not count the asset
Do not count interest/dividend income from the asset
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Example Resident is currently receiving SSA in the amount of
$500/ month. $6000.00 per year IRA with a FMV of $300,000.00 cash value of
$150,000.00 earning $ $5000.00 per year We know resident will take distribution of $10,000.00
in December but we don’t know what the resident plans to do with the money
AR is created
SSA = $6000.00 Other Income = $10,000.00
AR Total Annual Income is $16,000.00
Home as Rental PropertyThe home would be counted as an
asset Determine the cash value of the asset
by deducting from the current fair market value:(a) any unpaid balance on any loans secured by the property and(b) reasonable costs that would be incurred selling the asset
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 17
Rent Received The rent received would be considered
income from the asset. Can count this as income from a business,
if the tenant can provide some form of documentation such as a business license a tax ID or a tax return
Lump Sum Payments
Deferred SSA/SSI
Insurance Settlements
Lottery Winnings
One-Time Monetary Gifts
Etc.
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Considerations If the asset is earning income, make sure
the amount earned along with other increases does not increase household income by $2400 or more
No IR required unless it does
Count as asset on next certification if resident still has possession
Assets Disposed
Any amounts in excess of $1000 given away in the last 2 years
Cash value of any assets sold or given away for less than current fair market value in last two years
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ConsiderationsDo not count assets surrendered
as a result of:
DivorceCourt SettlementForeclosureBankruptcy
The Medical Expense Deduction
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Whose Expense Counts
If Household is Elderly or Disabled
Count out-of-pocket medical expenses for
ALL family members regardless of Age
Do not count live-in aide’s out-of-pocket
medical expenses
Count the amount the resident pays the
live-in aide
Anticipated Medical Expenses
Anticipate Medical Expenses for the Next 12 months
Ask if a resident has any anticipated out-of-pocket medical expenses
Resident is supposed to tell you
Review certification history for any omissions
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Recurring Medical Expenses Prescription Drugs Regular Medical Appointment/Treatment Caregivers Payments for Medical Bills Insurance Premiums Long-term care (special) Etc.
See HH 4350.3 R1, C3, Exhibit 5-3
Recurring Medical ExpensesCurrent Prescriptions Or
Regular Medical Appointments
Usually, the resident has no way of knowing what the costs will be
Use receipts from the prior year to estimate the upcoming year’s medical expenses.
Payment history can be obtained through a pharmacy
Some pharmacies only provide copies to the resident
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Copyright 2013 Ross Business Development. Provided Exclusively for Leading Age New York 22
Recurring Medical ExpensesNew Prescriptions Or
Regular Medical Appointments
Need to get an estimate of the expense
See Handbook Questions and Answers
Question # 8787. Question: A tenant has provided a list of medications that he/she is prescribed to take. If the tenant has been buying some of the medications, but cannot afford to buy all of them, should the owner/agent allow the expense deductions for all of the medications on the list, if the cost can be verified by the pharmacy?
Is this a situation where only the medications for which the tenant has receipts can be counted?
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Answer # 87Answer: The owner/agent must include all medical expenses the family anticipates to incur during the 12 months following certification/recertification that are not reimbursed by an outside source.
If the tenant indicates that he/she will begin to purchase the medications during the next 12 months and the cost will not be covered by an outside source, the cost of the medications may be included in the deduction.
If the tenant does not plan to purchase the medications for the next 12 months, the tenant may request an interim recertification when he/she begins purchasing the prescriptions.
Paying Medical BillsAsk a resident about any medical
payments that will be made in the next 12 months
If a resident is paying down a bill you must include the amount the resident will pay in the next 12 months
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One-Time Non-Recurring
Not really “one-time”Dental TreatmentsHearing AidesGlassesUnexpected treatmentKidney infectionRespiratory/pulmonary treatmentSurgery
Non-RecurringAsk about any one-time non-recurring
expenses that were not anticipated on the last certification
Any out of pocket expenses that have been paid since the resident moved in, but not included on the 50059, should be included on the AR (or IR as appropriate).
Proof of payment is verification of the expense
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Making PaymentsWhen a family is making regular payments
over time on a bill for a past one-time medical expense, payments are included in anticipated medical expense
If a family has received a deduction for the full amount of a medical bill it is paying over time, the family cannot continue to count that bill even if the bill has not yet been paid
Mileage
Mileage to and from medical treatment is also included as part of the medical expense deduction
Current Medical Mileage Rate 2013
24 cents per mile driven for medical purposes
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Over-the-Counter
Includes: Aspirin Testing Strips Glycoside Certain Vitamins Etc.
Must be necessary to treat a specific medical condition
Not for General Good Health
Need must be verified by a medical practitioner licensed in the locality where practicing
Personal Use ItemsCount expense if item is used
primarily to prevent or alleviate a physical or mental defect or illness
Cost of a wig to improve the mental health of a patient who has lost all of his or her hair
Incontinence suppliesReading glasses
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Insurance Medical insurance
premiums or costs of an HMO are included as part of the medical expense deduction
Ask about deductible
Long term care premiums are included as part of the medical expense deduction
Special requirements
Long Term Care Insurance
The family member paying a long-term care insurance premium must sign a certification that states the insurance is Guaranteed renewable, Does not provide a cash surrender value, Will not cover expenses covered under
Medicare, and Restricts the use of refunds
See HH 4350.3 R1, C3, Exhibit 5-4 for Sample
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Life Line
Do not include cost of Life Line, cell phones or other devices used to
contact emergency support
See Handbook Questions and Answers
Question # 88
88. Question: Can the cost of Life Line or a cell phone recommended by a physician for a frail, elderly person to use in case of a medical emergency be counted as a medical expense?
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Answer # 88The cost of Life Line or a cell phone should not be considered as a medical expense.
An allowable medical expense is an item that treats or alleviates a medical condition. Life Line or a cell phone do not qualify as a medical expense since neither have an impact on the actual medical condition.
Assistance/Companion Animals
Costs associated with Assistance and Companion Animals is included in the medical expense deductionCost of the animalCare of the animalVet billsFood Grooming
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Question # 93
93. Question: Chapter 5, Paragraph 5-10 D.8.h refers to the upkeep of a service animal as a medical expense.
What are some of the things that HUD considers “upkeep” of the service animal?
Answer # 93Items considered a part of the “upkeep” of a service animal include dog food, veterinary bills, required shots, license fee, and the ID tattoo on the ear.
Owners must use their discretion when discerning what is considered “upkeep” items.
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Household Help
Cost of Household Help is generally excluded…..
But not always
See Handbook Questions and Answers
Question # 92
92. Question: If a tenant in a wheelchair pays $20 every two weeks to enable him/her to run errands, can the amount spent be considered a medical expense?
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Answer # 92Household help is not a medical expense.
As stated in the examples in Chapter 5, Exhibit 5-3 concerning "Household help" -it is counted as a medical expense only if it is a nursing-type service or certain maintenance, or personal care service provided for qualified long-term care
Resources
Handbook Q & A http://portal.hud.gov/huddoc/DOC_20476.pdf
IRS -http://www.irs.gov/publications/p502/ar02.html#en_US_2012_publink1000178851
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Verification of the Medical Expense
Must Have Process
What Expenses count? IRS Rule of Thumb
How to VerifyReceipts for 12 monthsReceipts for 1 quarterReceipts for 1 month
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Question # 8989. Question: Can the various options for calculating medical expenses be combined on one certification?
When calculating medical expenses, can owners/agents choose which method to use or should the owner/agent use the past twelve months, if anticipating a tenant’s medical expenses is not possible?
Must the same method be used consistently or on a case-by-case basis?
If using the previous twelve months and an ongoing expense stops or a new one starts, should an interim be conducted?
Answer # 89Answer: The owner/agent determines the procedure to be used to determine anticipated medical expenses based on the guidance in Chapter 5, Paragraph 5-10 D.
Since this amount is an estimate, the owner should use a methodology that will provide the most accurate estimate.
Whatever procedure is selected should be used consistently for all tenants.
It is possible that all options would be included in the owner’s procedure for determining medical expenses.