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HUD RHIIP Training – PH/HCV

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

  5. Assets 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 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? 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 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 Chapter 9: Case Study 3-Champion

  10. 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 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 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 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 Chapter 9: Case Study 3-Champion

  14. 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 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 Chapter 9: Case Study 3-Champion

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

  17. Actual Income from Assets • Assets can generate income • Income from assets is counted in determining annual income 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) 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 Chapter 9: Case Study 3-Champion

  20. Income from Assets • Net cash value of asset • is used to determine imputed asset income 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 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 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 Chapter 9: Case Study 3-Champion

  24. Annual Income 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 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 Chapter 9: Case Study 3-Champion

  27. Disability Assistance Expenses 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 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 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 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 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 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 Chapter 9: Case Study 3-Champion

  34. 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 Chapter 9: Case Study 3-Champion

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

  36. Medical Expenses 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 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 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 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 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 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 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 Chapter 9: Case Study 3-Champion

  44. 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 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 Chapter 9: Case Study 3-Champion

  46. 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 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. Chapter 9: Case Study 3-Champion

  48. Champion Case Study: Topics • Payment Standards • Rent Calculation 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 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 Chapter 9: Case Study 3-Champion