1. Adjusted Income Annie Stevenson

2. Welcome to Lunch N Learn! • Today’s Topics: • Elderly/disabled allowances • Dependant and child care allowances • Medical and disability allowances • Verification of allowances

3. Welcome to Lunch N Learn! • Upcoming topics for the occupancy series: • 5/2/08: Verification Issues • 6/12/08: PH Rent Calculation • 6/13/08: HCV Rent Calculation

4. Adjusted Income - Background • Previous sessions: • Annual Income • Inclusions • Exclusions • Income from assets

5. Adjusted Income - Background • Formula: • Gross Income • Including asset income • Minus exclusions • Equals annual income • First major building block in rent calculation

6. Adjusted Income - Introduction • Today’s topic: • ADJUSTED INCOME • Second major building block in rent calculation

7. Adjusted Income - Introduction • Form HUD-50058 Section 8 • Calculation of adjusted income

8. HUD-50058 Section 8: Expected Income Per Year

9. HUD-50058 Section 8: Expected Income Per Year

10. HUD-50058 Section 8: Expected Income Per Year

11. Definitions • Adjusted Income • Elderly Family • Disabled Family • Dependent • Household Vs. Family

12. Definition of Adjusted Income • Total Annual Income minus allowances • Dependents • Elderly/disabled allowance • Child care • Medical expenses • Disability expenses • Permissible deductions (PH only)

13. Deductions and Allowances

14. Dependent Allowance • $480 for each family member: • Under 18 • Full-time student 18 or older • Person with a disability 18 or older • Head, spouse, co-head, foster child or foster adult, live-in aide are never a dependent

15. Elderly/Disability Allowance • $400 per family where the head or spouse is at least 62 or disabled • $400 is the maximum amount the family can receive, even if both head and spouse are elderly or disabled

16. Child Care Allowance • Includes reasonable child care expenses • PHA determines what is reasonable • Care provided for children under 13 years of age • including foster children

17. HUD Interpretation of Child Care Expenses • A PHA may not disallow a deduction for child care expenses because there is an unemployed adult family member who may be available to provide the care. • A PHA may not decide who will provide child care for an applicant’s or a participant’s child(ren).

18. HUD Interpretation of Child Care Expenses • A PHA may not decide the type of child care available for a participant’s child(ren). • Citation: Verification Guidebook

19. Child Care Expenses • Care enables a family member to • Work • Actively seek work • Attend school

20. Child Care Expenses • Costs may be higher in summer and during holidays • Applicant should certify whether any costs are being reimbursed • Child support payments don’t qualify

21. Child Care Expenses • Child care allowance for work cannot exceed the income that a family member earns • If more than one member working - which worker enabled by child care? • Member works and attends school • Prorate expense to compare with amount earned

22. Learning Activity 1 • Becky Walker’s annual income is $14,621 • All from employment • Becky has three children, all under 13 years of age. She is paying a total of $60 per week for child care while she works

23. Learning Activity 1 Answers 14,621

24. Learning Activity 1 Answers

25. Learning Activity 1 Answers 3 480 1,440 3,120 4,560 10,061

26. Allowance for Disability Assistance Expense • Anticipated expenses for: • Care attendants • Auxiliary apparatus • Wheelchairs, ramps, vehicle adaptations, special equipment for the blind, etc.

27. Allowance for Disability Assistance Expense • IF such expenses • Enable a family member (could be person with the disability) to WORK • Exceed 3% of annual income • Don’t exceed the earnings of person enabled to work

28. Disability Assistance Expense • If the disability assistance expense enables more than one person to be employed • PHA must combine the income of those persons to determine the cap

29. Allowance for Disability Assistance Expense • Question: • Must a family meet HUD’s definition of a Disabled Family in order to qualify for Disability Assistance Expenses?

30. Disability Assistance Expense • Disability assistance expense/child care • If both child care and disability assistance expense are needed to enable a person in the family to work, • the employment income used to justify the child care allowance may NOT also be used to justify disability assistance allowance

31. Learning Activity 2 • Family Name: Gilmore • Head: 38 Earned Income: $ 11,000 • Spouse: 32 Earned Income: $ 9,000 • Son: 14 (with a disability) • Disability assistance expense/year $ 4,600 • enables spouse to work

32. Learning Activity 2 Answers 20,000

33. Learning Activity 2 Answers 600 4,600 4,000 9,000 4,000 0 4,000 4,000

34. Learning Activity 2 Answers 1 480 480 4,480 15,520

35. Medical Expenses • Permitted ONLY for family where head, spouse or co-head is at least 62 or disabled • If family eligible, medical expenses deducted for all family members • Anticipate expenses to be incurred during 12 months following certification

36. Example • Head disabled 50 years old • Son 16 • Daughter 12 • Daughter 1 • Live-in attendant • Whose anticipated medical expenses qualify?

37. Allowable Medical Expenses • PHA policy determines allowable medical expenses • PHAs may use IRS Publication 502 as a tool • Available at www.irs.gov

38. Typical Allowable Medical Expenses • Professional services • Services of health care facilities • Prescription/nonprescription medicines • Medical insurance premiums/co-payments (includes Medicare premiums)

39. Typical Allowable Medical Expenses • Live-in or periodic medical assistance • Nursing services • Costs for assistive animal and its care • Long term care insurance premiums

40. Typical Allowable Medical Expenses • Transportation for treatment • Dental expenses • Eyeglasses, hearing aids • Monthly payment on accumulated medical bills

41. Medicare Prescription Drug Discounts and Assistance • PIH 2005-37 • Transitional assistance ended in May 2006 • Under MMA’s permanent plan, deduction is based on actual anticipated unreimbursed prescription costs • Include Medicare prescription drug plan premium, if paid by family • See chart at end of notice

42. Medical Allowance • Medical allowance • portion of anticipated medical expenses that exceed 3% of Annual Income

43. Learning Activity 3 • Family Name: Alden • Head: 81 • Spouse: 80 • Annual Income: $13,500

44. Learning Activity 3 • Anticipated medical expenses: • Health Insurance premium- $55 monthly • Eyeglasses $300 annually, each • Doctor visits 4 times a year at $20 each visit • Anticipated yearly prescription costs of $425 • Balance Due on a medical bill of $325 • (Will be paying it off at $15 a month)

45. Learning Activity 3 • Anticipated medical expenses: • Health Insurance premium - $55 monthly • $55 x 12 = $660 • Eyeglasses $300 annually, each • $300 x 2 = $600 • Doctor visits 4 times a year at $20 each visit • $20 x 4 = $80

46. Learning Activity 3 • Anticipated medical expenses: • Anticipated yearly prescription costs of $425 • $425 x 1 = $425 • Balance Due on a medical bill of $325 • (Will be paying it off at $15 a month) • $15 x 12 = $180

47. Learning Activity 3 • Total anticipated medical expenses: • Health Insurance premium - $ 660 • Eyeglasses - $ 600 • Doctor visits - $ 80 • Prescriptions - $ 425 • Medical bill - $ 180 • TOTAL $1945

48. Learning Activity 3 Answers 13,500

49. Learning Activity 3 Answers 405 1,945 1,945 1,540

50. Learning Activity 3 Answers 400 1,940 11,560