May 2003Chapter 9: Case Study 3-Champion1 HUD RHIIP Training – PH/HCV Case Study 3 – Champion...
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Transcript of 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)
May 2003 Chapter 9: Case Study 3-Champion 2
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
May 2003 Chapter 9: Case Study 3-Champion 3
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
May 2003 Chapter 9: Case Study 3-Champion 4
Champion Case Study: Topics
• Adjusted Annual Income– Disability Assistance Expense– Medical Expense– Families who qualify for both Disability
Assistance and Medical Expenses
May 2003 Chapter 9: Case Study 3-Champion 5
Assets
May 2003 Chapter 9: Case Study 3-Champion 6
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
May 2003 Chapter 9: Case Study 3-Champion 7
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?
May 2003 Chapter 9: Case Study 3-Champion 8
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
May 2003 Chapter 9: Case Study 3-Champion 9
Cash Value of Asset
• Certificate of Deposit– Market value $18,000– 10% early withdrawal penalty $1,800
– Cash value of asset $16,200
May 2003 Chapter 9: Case Study 3-Champion 10
Cash Value of Asset
Home value $99,500Mortgage balance $40,000Broker fees $7,000
• Cash value of property = $52,500
Expenses to convert
May 2003 Chapter 9: Case Study 3-Champion 11
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
May 2003 Chapter 9: Case Study 3-Champion 12
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
May 2003 Chapter 9: Case Study 3-Champion 13
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
May 2003 Chapter 9: Case Study 3-Champion 14
Assets Disposed of for Less than Market 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
May 2003 Chapter 9: Case Study 3-Champion 15
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
May 2003 Chapter 9: Case Study 3-Champion 16
Assets and Asset Income
• We have talked about ASSETS . . . – But what about the income they produce?
May 2003 Chapter 9: Case Study 3-Champion 17
Actual Income from Assets
• Assets can generate income• Income from assets is counted in
determining annual income
May 2003 Chapter 9: Case Study 3-Champion 18
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)
May 2003 Chapter 9: Case Study 3-Champion 19
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
May 2003 Chapter 9: Case Study 3-Champion 20
Income from Assets
• Net cash value of asset– is used to determine imputed asset income
May 2003 Chapter 9: Case Study 3-Champion 21
Income from Assets
• When net cash value of all assets is $5000 or less, use the actual income from assets
May 2003 Chapter 9: Case Study 3-Champion 22
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
May 2003 Chapter 9: Case Study 3-Champion 23
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
May 2003 Chapter 9: Case Study 3-Champion 24
Annual Income
May 2003 Chapter 9: Case Study 3-Champion 25
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
May 2003 Chapter 9: Case Study 3-Champion 26
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
May 2003 Chapter 9: Case Study 3-Champion 27
Disability Assistance Expenses
May 2003 Chapter 9: Case Study 3-Champion 28
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
May 2003 Chapter 9: Case Study 3-Champion 29
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
May 2003 Chapter 9: Case Study 3-Champion 30
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
May 2003 Chapter 9: Case Study 3-Champion 31
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
May 2003 Chapter 9: Case Study 3-Champion 32
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
May 2003 Chapter 9: Case Study 3-Champion 33
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
May 2003 Chapter 9: Case Study 3-Champion 34
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
May 2003 Chapter 9: Case Study 3-Champion 35
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
May 2003 Chapter 9: Case Study 3-Champion 36
Medical Expenses
May 2003 Chapter 9: Case Study 3-Champion 37
Medical Expense Deduction
• Permitted only for elderly or disabled families– If family is eligible, unreimbursed medical
expenses of all family members are allowed
May 2003 Chapter 9: Case Study 3-Champion 38
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
May 2003 Chapter 9: Case Study 3-Champion 39
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
May 2003 Chapter 9: Case Study 3-Champion 40
Medical Expense Deduction
• Live-in or periodic medical assistance – Nursing services– Costs for assistive animal and its care
• Long term care insurance premiums
May 2003 Chapter 9: Case Study 3-Champion 41
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
May 2003 Chapter 9: Case Study 3-Champion 42
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
May 2003 Chapter 9: Case Study 3-Champion 43
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
May 2003 Chapter 9: Case Study 3-Champion 44
Families Eligible for Both
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
May 2003 Chapter 9: Case Study 3-Champion 45
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
May 2003 Chapter 9: Case Study 3-Champion 46
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
May 2003 Chapter 9: Case Study 3-Champion 47
Elderly/Disability Allowance
• Tip: If the family qualifies for medical expenses, they also qualify for the $400 Elderly/Disability Allowance.
May 2003 Chapter 9: Case Study 3-Champion 48
Champion Case Study: Topics
• Payment Standards• Rent Calculation
May 2003 Chapter 9: Case Study 3-Champion 49
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
May 2003 Chapter 9: Case Study 3-Champion 50
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
May 2003 Chapter 9: Case Study 3-Champion 51
Payment Standard
• Used to calculate total subsidy for the family
• PHA’s Payment Standard is maximum subsidy amount
May 2003 Chapter 9: Case Study 3-Champion 52
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
May 2003 Chapter 9: Case Study 3-Champion 53
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
May 2003 Chapter 9: Case Study 3-Champion 54
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
May 2003 Chapter 9: Case Study 3-Champion 55
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
May 2003 Chapter 9: Case Study 3-Champion 56
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
May 2003 Chapter 9: Case Study 3-Champion 57
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
May 2003 Chapter 9: Case Study 3-Champion 58
What Payment Standard to Use
• The HUD monitor should examine the PHA’s most recent revision of Payment Standard schedule
May 2003 Chapter 9: Case Study 3-Champion 59
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)
May 2003 Chapter 9: Case Study 3-Champion 60
Example: PHA decreases PS
• Old payment standard…………900• New decreased PS …………………850• 1st regular reexam, use……………..900• At 2nd regular reexam use…………. 850
May 2003 Chapter 9: Case Study 3-Champion 61
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
May 2003 Chapter 9: Case Study 3-Champion 62
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
May 2003 Chapter 9: Case Study 3-Champion 63
Example: PHA Increases PS
• Old payment standard……………….900• New payment standard………………950• 1st regular reexam, use………………950
May 2003 Chapter 9: Case Study 3-Champion 64
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
May 2003 Chapter 9: Case Study 3-Champion 65
Monitoring Review
May 2003 Chapter 9: Case Study 3-Champion 66
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
May 2003 Chapter 9: Case Study 3-Champion 67
Champion Case Study:Process Overview
Instructions for Part 11. Review PHA file data and complete
Appendix C (Tenant file review worksheets)
May 2003 Chapter 9: Case Study 3-Champion 68
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)
May 2003 Chapter 9: Case Study 3-Champion 69
Champion Case Study:Process Overview
Instructions for Part 21. Review PHA’s HUD 50058 (Handout)
2. Complete Appendix A, Tenant File Review Checklist to record discrepancies
- Page 9-75
May 2003 Chapter 9: Case Study 3-Champion 70
Cash Value of Assets Answer
May 2003 Chapter 9: Case Study 3-Champion 71
Annual IncomeAnswer
May 2003 Chapter 9: Case Study 3-Champion 72
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
May 2003 Chapter 9: Case Study 3-Champion 73
Adjusted Annual Income Answer
May 2003 Chapter 9: Case Study 3-Champion 74
Adjusted Annual Income Answer
May 2003 Chapter 9: Case Study 3-Champion 75
Adjusted Annual IncomeAnswer
May 2003 Chapter 9: Case Study 3-Champion 76
Adjusted Annual IncomeAnswer
May 2003 Chapter 9: Case Study 3-Champion 77
Adjusted Annual Income Answer
May 2003 Chapter 9: Case Study 3-Champion 78
Housing Assistance Payment (HAP) and Tenant Rent (HCV Only) Answer
May 2003 Chapter 9: Case Study 3-Champion 79
Housing Assistance Payment (HAP) and Tenant Rent Answer(HCV Only)
May 2003 Chapter 9: Case Study 3-Champion 80
Housing Assistance Payment (HAP) and Tenant Rent Answer
(HCV Only)
May 2003 Chapter 9: Case Study 3-Champion 81
Housing Assistance Payment (HAP) and Tenant Rent Answer(HCV Only)
May 2003 Chapter 9: Case Study 3-Champion 82
Appendix A: Thinking Points
• Discussion
May 2003 Chapter 9: Case Study 3-Champion 83
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? 3rd party documentation of balance?– Admin plan guidance on medical expenses for
staff?
May 2003 Chapter 9: Case Study 3-Champion 84
Appendix A: Thinking Points
• Do verification forms determine if expenses are reimbursed from another source?
May 2003 Chapter 9: Case Study 3-Champion 85
HCV Calculation
• Prorated calculation for mixed families
May 2003 Chapter 9: Case Study 3-Champion 86
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
May 2003 Chapter 9: Case Study 3-Champion 87
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
May 2003 Chapter 9: Case Study 3-Champion 88
Prorated Rent Calculation (HCV)
• Step 5: Subtract Mixed Family Tenant Rent to Owner from Rent to Owner to get Prorated HAP to Owner
May 2003 Chapter 9: Case Study 3-Champion 89
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
May 2003 Chapter 9: Case Study 3-Champion 90
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
May 2003 Chapter 9: Case Study 3-Champion 91
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
May 2003 Chapter 9: Case Study 3-Champion 92
Prorated Rent Calculation (HCV)
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
May 2003 Chapter 9: Case Study 3-Champion 93
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
May 2003 Chapter 9: Case Study 3-Champion 94
Housing Assistance Payment (HAP) and Tenant Rent Answer(HCV Only)