Presented by Rural Development Staff
MOCARH MFH TRAINING
April 2017
Agenda Topics
• Timeframes
• Tenant Certification
• Assets
• Income
• Deductions
• Medical Expenses
Regulations
RD Guidance:
• HB-2, Asset Management Handbook, Chapter 6
• Attachment 6-A, Annual Income Inclusions and Exclusions
• Attachment 6-B, Zero Income Verification Checklist
• Attachment 6-C, Allowable Deductions
• Attachment 6-D, Family Assets
• Attachment 6-I, Eligibility, Income and Deduction Checklist
Regulations
HUD Guidance:
• HUD Occupancy Handbook
• https://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/
Under Policies and Regulations, Handbooks, Housing Handbooks, 4350.3 (Occupancy
Requirements of Subsidized Multifamily Housing Program), Chapter 5, Determining Income
and Calculating Rent
• Exhibit 5-1, Income Inclusions and Exclusions
• Exhibit 5-2, Assets
• Exhibit 5-3, Examples of Medical Expenses That are Deductible and Nondeductible
Regulations
Other:
• IRS Mileage Rate for Medical Purposes – effective January 1, 2017, the rate is $0.17 cents per
mile (down $0.02 cents from last year)
• HUD Income Limits – can be found on RD’s website at: https://www.rd.usda.gov/programsservices/multi-family-housing-direct-loans/mo under Income Limits
Random Question #1
Category: Inventive Minds
Elisha Graves Otis invented the
safety hoist, also known as?
Random Question #1 – Answer
The (safety) elevator
Timeframes
Timeframes
Tenant Certification (TC) Timeframes
• All TCs are effective on the 1st of the month
• New move-ins: If they move in after the 1st, the TC will be effective the 1st of the next month
• Only exception are HUD voucher recipients when HUD completes the TC – they can be
effective the same month
• All TCs must be transmitted and accepted by the 10th of the month in which it is effective
• If TC is rejected, you should receive an email with an explanation why; make corrections and
re-transmit
• This is why you should start the process early – you don’t want overage fees charged!
Timeframes
• All households must be recertified at least annually, or if any of the following apply:
• Income changes by $100 or more per month, must recertify when change of income occurs
• Income changes by $50 or more, must recertify IF tenant requests
• Household size changes during the year
Timeframes
Recertification Process
• Two notification letters should be sent:
• 1st: 75-90 days prior to expiration date of current TC (expiration date can be found on the
Project Worksheet)
• 2nd: 30 days prior to expiration date of current TC if no response from household
• NOTE: a TC can be transmitted via MINC at any time during the 90 day period prior to the
expiration date
Timeframes
Expired/Late TC
• An expired or late TC is when it is not transmitted via MINC to Rural Development (RD) and
accepted by the 10th of the month in which the TC is effective
• Since TCs are used to document interest credit and Rental Assistance (RA) eligibility, the TC
process is the responsibility of the borrower
• If tenant does not provide required information to recertify:
• Household is no longer eligible to live in the complex
• Household must pay Note Rent (Overage) because RA is suspended
• Fee cannot be waived – include in any unpaid rent tenant owes when going through
termination process
• Lease termination should be initiated
Timeframes
• If tenant is evicted, send Eviction transaction via MINC ONLY IF THE REASON FOR THE
EVICTION INCLUDES FAILURE TO RECERTIFY
Timeframes
Expired/Late TC – Cont.
• If tenant provided information and borrower/management is at fault:
• Borrower/management must pay difference between the greater of the net tenant
contribution (NTC) or Basic Rent and the Note Rent (also known as Overage)
• Borrower/management must pay the overage amount from non-project funds until
recertification is complete
Timeframes
Case Study #1:
• TC was due 1/1 but not transmitted until 1/15
• Basic rent is $300
• NTC is $325
• Note Rent is $400
• How much would borrower be required to reimburse property?
• Where would the funds come from?
Timeframes
Case Study #1 – Answer:
• The borrower would owe the property $75
• The borrower would have to pay from non-project funds
• Evidence would be required to be submitted to our Agency
Random Question #2
Category: Palindromes
What do you call either a tiny child
or a small amount of liquor for a
Brit?
Random Question #2 – Answer
A tot
Tenant Certification (Handout 1)
1. The effective date of an initial or updated TC
form will always be the first day of the month. If
tenant’s move in date is after the 1st of the
month, the effective date will be the 1st of the
next month.
NOTE:
Check
box
indicating
type of
action.
Blocks 2-5: Make sure the information matches the Project
Worksheet.
Enter
appropriate
code here.
Blocks 7-12: SSN, Name, Sex, Date of Birth, Race and Ethnicity
of each person(s) living in complex. For Race and Ethnicity
codes, see box in lower left hand corner.
NOTE: If any HH member does not have a SSN but
is eligible for housing, complete field with all zeros
or use the Alien Registration Number. MINC will
assign a fictitious number. When transmitting a
recertification, the assigned MINC number must be
used.
Block 12a:
Race
Determination
Code – see
codes below.
NOTE: Foster
children are not
considered HH
members so
should not be
included.
Block 8a: Enter
number of foster
children who will
reside in the unit.
Copyright © 2015 Accenture All Rights Reserved.
Block next to 13:
Enter appropriate
code HH
member(s)
indicating either
minor (M), fulltime student (F)
or disabled (D).
Block 14: Enter
appropriate code next
to tenant or co-tenant
if they are elderly (E) or
disabled (D).
Block 15: Enter all net family
assets, even if less than $5,000
(see Chapter 6, Att. 6-D, Family
Assets).
Block 16:
Passbook
Savings Rate is
.06% (.0006).
Copyright © 2015 Accenture All Rights Reserved.
Block 17: Enter actual income
received from assets (see
Chapter 6, 6.10 on calculating
cash value of an asset).
Block 19a:
$480/minor,
full-time
student or
person
w/disability
who is not the
tenant or cotenant.
Block 18a: Enter total annual
income, not monthly amount.
Third party verification must
be obtained.
Block 18b: Make sure to
include percentage of annual
increase in calculations.
Block 18a-f:
See
Chapter 6,
Att 6-A,
Annual
Income
Inclusions
and
Exclusions.
Block 18g: Rural Development will not
accept a TC with zero income unless
all income is specifically exempted.
See Chapter 6, Att 6-A for exempted
income.
Block 19a-d:
See Chapter
6, Att 6-C,
Allowable
Deductions.
Copyright © 2015 Accenture All Rights Reserved.
Block 19b:
$400 per
elderly or
disabled
HH.
Block 19c: If medical
expenses are less than 3%
of annual income (Line 18f),
enter zero. If they exceed
3%, enter only the amount
over 3% (i.e., medical
expense is $5,000; 3% of
annual income is $2,000;
enter $3,000).
Block 23: Date
tenant
physically
moved into unit.
Both Tenant and Co-Tenant must sign and
date. Date must be on or before effective
date of TC.
Blocks 22 & 24: Based on Adjusted Income Limits
(posted to our website). Available codes: V = Very
Low; L = Low; M = Moderate and A = Above
Moderate.
Block 27: If this is applicable, it will be
the amount HH actually receives from
the Public Assistance Agency for
shelter. NOTE: Always 0 in MO.
Be sure to complete
this section.
Block 29: Enter approved Basic Rent from
the Project Worksheet.
NOTE: If utilities are
included in rent,
enter zero.
Part VIII: Mark
appropriate box.
Copyright © 2015 Accenture All Rights Reserved.
Block 30: Enter approved Note Rent from
the Project Worksheet.
Block 31: Be sure to complete this
section based on what box is
marked in Part VIII.
Block 32: From
Project
Worksheet.
Block 33: Block
31 minus Block
32.
NOTE: Tenant or
Co-Tenant must be
disabled or elderly
to live in an elderly
complex.
NOTE: If HH is income or occupancy
ineligible, a waiver from the Agency
must be obtained in most cases. NOTE:
waivers CANNOT be issued for age
ineligible tenants.
Copyright © 2015 Accenture All Rights Reserved.
Random Question #3
Category: Breakfast Cereals
What breakfast cereal “spokesman’s”
first and middle names are Horatio
Magellan?
Random Question #3 – Answer
Cap’n (Horatio Magellan) Crunch
Assets
Assets
What are considered assets?
• Assets are defined as property owned by a person or company having value that is expected to
yield a benefit in the future
• Cash on hand (savings, CDs, checking accounts, money in the pocket, etc.)
• Net cash value of life insurance policies
• IRAs, bonds, etc.
• Personal property minus debts against them, minus cost of converting such asset to cash
• Value of business or household assets disposed of by a member of that household for less
than fair market value (FMV) during the 2 years preceding effective date of
certification/recertification
Assets
Case Study #2:
• Borrower has a home and has indicated the following:
• FMV
$30,000
• Cost to convert to cash
$ 2,000
• Sold
$15,000
• What is the cash value of this asset?
Assets
Case Study #2 – Answer:
FMV
$30,000
Costs to convert to cash
($ 2,000)
Sold
($15,000)
Cash Value
$13,000
Equity they didn’t receive
$15,000 (because it was sold for less than value)
Asset Value
$28,000
Assets
The following are not included as an asset:
• Personal property such as furniture and automobiles (and debts against them)
• Assets of business if family member actively engages in the operation
• Value of trust fund (for minor or legally incompetent HH member) if trust is not revocable by or
under the control of any member of the HH
• Vehicle equipment for the handicap
• Face value of life insurance policies
• Prepaid funeral arrangements and expenses
• Retirement funds not accessible for withdrawal
Assets
Not included as assets – Cont.
• Assets legally owned but not accessible or that accrue income to someone else
• Example may be a trust that is set up with the tenant as an administrator but they can’t
touch it until a later time
• Savings accounts of dependent minors IF account is under dependent’s SSN
Assets
When to consider value of an asset:
• At time of initial certification and all re-certifications
• Must be verified in writing
• If unable to verify from 3rd party, can accept other forms of documentation (HB-2, Chapter 6,
Section 6.11 A)
• Verifications are valid for 90 days and may be valid for an additional 90 days with oral verification
• Cannot be longer than 180 days
• Must include assets of all HH members
• Refer to HB-2, Chapter 6, Attachment 6-D
Assets
Case Study #3:
• HH has reported the following:
• Checking account 6 month average balance – $500
• Savings account earning 1% interest – $2,000
• Life insurance policy with face value of $10,000
• Motor boat valued at $10,000
• Prepaid funeral arrangements valued at $20,000
• How much would you reflect on the TC?
Assets
Case Study #3 – Answer:
• Net Family Assets (Line 15 of TC) – total of checking and savings – $2,500
• Imputed Income from Assets (less than $5,000 – Line 16 of TC) – $0
• Income from Assets (Line 17 of TC) – $20 (1% x $2,000 savings)
• $20 will be carried forward to Part IV, 18 d of the TC
• Face value of insurance, motor boat and prepaid funeral expenses are not counted
Random Question #4
Category: Landmarks
What object weighs 2,080 pounds
and cost Pennsylvania about 100
pounds in 1752 (not including
shipping and insurance)?
Random Question #4 – Answer
The Liberty Bell
Assets
Case Study #4:
• HH has reported the following:
• Checking account 6 month average balance – $500
• Savings account earning 3% interest – $2,000
• Life insurance policy with cash value of $10,000
• Prepaid funeral arrangements valued at $20,000
• CD earning an interest rate of 4.5% – $10,000
• Withdrawal penalty is $200 and taxes are $2,000
• How much would you reflect on the TC?
Assets
Case Study #4 – Answer:
• Net Family Assets (Line 15 of TC) – total of checking, savings, cash value of life insurance policy
and CD = $20,300
• CD cash value is market value minus withdrawal penalty minus taxes: $10,000 – $200 –
$2,000 = $7,800
• Imputed Income from Assets (more than $5,000 – Line 16 of TC) – $20,300 x .06% = $12
• Income from Assets (Line 17 of TC) – $10,000 x 4.5% and $2,000 x 3% = $510
• $510 will be carried forward to Part IV, 18 d of the TC since it is greater than the imputed
income on Line 16
• Prepaid funeral expenses are not counted
Assets
Case Study #5:
• HH has reported the following:
• Checking account 6 month average balance – $500
• Savings account earning 3% interest – $2,000
• CD earning an interest rate of 4.5% – $20,000
• Withdrawal penalty is $200 and taxes are $2,000
• One year ago a house valued at $60,000 was sold for $30,000 (less than FMV)
• Closing costs were $2,000
• How much would you reflect on the TC?
Assets
Case Study #5 – Answer:
• Net Family Assets (Line 15 of TC) – total of checking, savings, CD and the cash value of the home
= $78,300
• CD cash value is market value minus withdrawal penalty minus taxes: $20,000 – $200 –
$2,000 = $17,800
• Count difference between the FMV of asset and cost to convert to cash:
• FMV
• Costs
• Cash Value
$ 60,000
($ 2,000)
$ 58,000
Assets
Case Study #5 – Answer cont.:
• Imputed Income from Assets (more than $5,000 – Line 16 of TC) – $78,300 x .06% = $47
• Income from Assets (Line 17 of TC) – $20,000 x 4.5% and $2,000 x 3% = $960
• $960 will be carried forward to Part IV, 18 d of the TC since it is greater than the imputed
income on Line 16
Assets
Case Study #6:
• HH has reported the following:
• Checking account 6 month average balance – $500
• Savings account earning 3% interest – $2,000
• IRA earning an interest rate of 5% – $60,000
• Withdrawal penalty is $1,000 and taxes are $2,000
• Three years ago, tenant sold a house, valued at $60,000, for $40,000
• Unpaid loan balance was $20,000; $6,000 closing costs
• How much would you reflect on the TC?
Assets
Case Study #6 – Answer:
• Net Family Assets (Line 15 of TC) – total of checking, savings and IRA = $59,500
• IRA cash value is market value minus withdrawal penalty minus taxes: $60,000 – $1,000 –
$2,000 = $57,000
• Sale of house is not included as it was over 2 years ago
• Imputed Income from Assets (more than $5,000 – Line 16 of TC) – $59,500 x .06% = $36
• Income from Assets (Line 17 of TC) – $60,000 x 5% and $2,000 x 3% = $3,060
• $3,060 will be carried forward to Part IV, 18 d of the TC since it is greater than the imputed
income on Line 16
Random Question #5
Category: Albums
What group had the number one hit
Hangin’ Tough in 1988 and returned
to The Block (and the #2 spot) in
2008?
Random Question #5 – Answer
New Kids on the Block (NKOTB)
Income
Income
What is included?
• Gross wages and salaries, overtime pay, commissions, fees, tips, bonuses, etc.
• Net income from business or profession if self employed
• Interest, dividends and other net income from property – also any withdrawal of cash or assets
from an investment
• Gross payments from Social Security, annuities, insurance policies, retirement funds, pensions,
disability or death benefits and other similar payments
• Unemployment and disability compensation, worker’s compensation and severance pay
Income
What is included – Cont.
• Alimony and child support
• Must have verification (court orders, statements from enforcement agencies, divorce
decree or other records to support payment)
• Must report what was paid in the last 12 months
• If not receiving child support payments, must provide documentation that they have
requested assistance from the state or local entity responsible for enforcement of
payment
• NOTE: If tenant/co-tenant is paying child support, this is not an allowable deduction
even if it is being garnished from their salary
Income
Case Study #7:
• Tenant has 2 children and is to receive child support payments of $500 per mo.
• Divorce decree supports this amount
• Tenant states she is not receiving these payments and provides a copy of last month’s bank
statement which reflects that no child support was deposited
• What would you count as income for the child support?
Income
Case Study #7 – Answer:
• Child support income is $6,000
• Tenant did not provide evidence of what was received for the last 12 months; AND
• Tenant had not pursued collection through State Agency or legal action
• If documentation is provided, you could report whatever is presented as income
Income
What is included – Cont.
• Regular contributions or gifts from others
• TANF assistance
• Regular pay, special pay and allowances of members of the Armed Forces (except those exposed
to hostile fire)
Income
What is NOT included:
• Income from children under age 18
• Foster payments
• Lump sum payments from inheritances, insurance payments, capital gains, etc.
• Reimbursement or cost of medical expenses paid on behalf of family member
• Income of live-in aide
• Amounts received for training
• Temporary, nonrecurring or sporadic income
Random Question #6
Category: Film
In what movie does Jack Skellington,
the Pumpkin King, deliver toys to
kids?
Random Question #6 – Answer
The Nightmare Before Christmas
Income
What is NOT included – Cont.
• Amounts received under a resident service stipend
• Modest amount not to exceed $200/month received by a resident for performing a service
for the owner on a part time basis that enhances the quality of life in the development,
including lawn maintenance, resident initiative coordination, etc.; limited to one stipend at a
time
• If resident service stipend exceeds $200/month, must include all income
• Deferred periodic payments from SSI and SS benefits received in lump sum amount or in
prospective monthly amounts
• DO count catch-up payments
Income
Zero/Minimal Income
• It is our Agency’s policy NOT to accept TCs for applicants or tenants with zero income unless the
income is exempt
• Procedure reference: HB-2, Chapter 6, 6.9 A 4
• Includes applicants/tenants with minimal income
• The basis for determining zero income must be documented in the file
• Use Attachment 6-B, Zero Income Verification Checklist or similar document
• Borrower/management must review the circumstances of the tenant quarterly to see if
circumstances have changed
• Must demonstrate financial capability to meet basic living expenses and pay rent
Zero/Minimal Income
Zero/Minimal Income – Cont.
• If the tenant/applicant experiences regular lay-off as part of employment, they will not be
certified as a zero income tenant
• Must be certified based on their annual income – including unemployment income
• Borrowers have the right to set a minimum income level for households who will not be receiving
RA
• Must be included in the Management Plan
Income
Case Study #8:
• Sue indicates she has no employment and her income is -0• She has 2 children living with her – ages 2 and 4
• What would you do in this situation?
Income
Case Study #8 – Answer:
• Require Sue to either fill out Attachment 6-B, Zero Income Verification Checklist, or some other
documentation to show how she can support herself, her 2 children, meet basic living expenses
and pay rent on zero income
• Ask her whether she is receiving child support or is attempting to collect
Income
Case Study #8 – Answer cont.:
• Sue completed Attachment 6-B and you see that she is receiving the following:
• $50/month from her parents to help buy groceries and her grandmother buys the kids
clothing from time to time valued at $600 annually
• She has a cell phone and cable television, which she pays, and her father pays $1,200 every 6
months for auto insurance
• A local charitable organization has awarded a grant in the amount of $300 per month to
assist with basic needs and utilities and she receives $100/month TANF
• She is also paid $150/month by management for picking up trash around the complex
• She is not receiving child support and has documentation showing she has attempted to
collect
• What additional income would be counted?
Income
Case Study #8 – Answer cont.:
• The following would be counted as income:
• Parent’s contribution of $50/month = $600 (since it is given in the form of cash) and TANF in
the amount of $100/month = $1,200 for a total of $1,800
• Auto insurance – $2,400
• Charitable contribution – $300/month = $3,600
• The following is NOT counted as income:
• Clothing of $600 because it is not a regular contribution
• Monthly stipend of $150 since it is under $200
Income
Income from a Business:
• Must count net income
• Net income is gross income less expenses
• If net income is a negative number, must use “0”
• Must request most recent tax return
• Compare figures tenant provided with tax return
Income
Case Study #9:
• Household has lawn care/snow removal business
• HH is reporting a loss of ($2,754)
• According to previous year’s tax return, the gross income was $20,000, the expenses and
depreciation were $10,000 and a net income was realized of $10,000
• Recertification period is October 1
• What would be counted as business income?
Income
Case Study #9 – Answer:
• Based on tax return the answer would be $10,000
• Because 10 months have passed, tenant could provide additional documentation to support
the negative figure of $2,754
• If documentation was acceptable, the answer would be “0”
Income
Annualizing Unemployment:
• Unemployment is counted as income
• If HH is receiving unemployment, must figure for entire 12 months (annualize) even if verification
reflects that unemployment is not available for the full year
• Would recertify at the end of the unemployment period
Income
Case Study #10:
• HH is receiving unemployment benefits for 12 weeks in the amount of $125
• What would their income be?
Income
Case Study #10 – Answer:
• Annualized – 52 weeks x $125 = $6,500
• Would need to recertify at the end of the 12 weeks since income will change
Income
Withdrawals from IRAs and 401k Accounts
• The full amount of periodic payments from IRAs, pensions, insurance policies, retirement funds,
etc., is counted as income
• Withdrawals from IRAs and retirement funds that are not routine would not count as income
• Still need 3rd party verification
• Yearend statements of mutual funds or 401k accounts can provide information about routine
annual income
Income
Case Study #11:
• Tenant has a 401k account and receives $400 per month
• Tenant is also cashing in one of their IRAs valued at $2,000 for a vacation
• What would be counted as income?
Income
Case Study #11 – Answer:
• The $400 per month is considered routine income and would be counted as such ($400 x 12 =
$4,800)
• Depending on how this 401k is established, it may or may not be counted as an asset – could
have imputed income if it is an asset
• The IRA of $2,000 would not be counted as income as it is not routine
• However, there could be some imputed income from the IRA since it is an asset
Income
Social Security
• Always use the gross income
• Each year, usually in October, it is announced if SS will be increasing for the following year
• Be sure to factor in the increase when figuring income for the tenant (i.e., TC due November
1 – figure old rate for 2 months (Nov. and Dec) and 10 months at the new rate)
• MINC has been updated to verify the .3% increase in SS has been reflected on the TC
• Transaction will reject if no change is shown
• Be sure to factor any adjustments for prior overpayment of SS benefits, if applicable
Income
Case Study #12:
• Tenant is receiving SS benefits as follows:
• Monthly amount (before deductions)
$720.20
• Amount deducted for Medicare
$78.20
• Reduction due to overpayment (6 mos)
$50.00
• What amount is shown on the TC?
Income
Case Study #12 – Answer:
• $670.20 ($720.20 - $50) x 6 mos.
$4,021.20
• $720.20 x 6 mos.
$4,321.20
• Total SS Income
$8,342.40
Random Question #7
Category: Presidential Wit
th
What 16 President said about a
lawyer, “He can compress the most
words into the smallest ideas of any
man I ever met”?
Random Question #7 – Answer
Abraham Lincoln
Deductions
Deductions
Allowable Deductions:
• Deductions are taken from Annual (Gross) Income to figure Adjusted Income (HB-2, Attachment
6-C – Handout):
• Dependent deduction – $480 x total # of dependents
• Under 18 years of age
• Does not include unborn child
• If joint custody, both parents cannot claim the deduction for the child if both parents
live in subsidized housing
• May be difficult to verify if both parents live in different complexes but do the best
you can
Deductions
• If dispute, the deduction is claimed by the parent shown in any legal documents or
receives the IRS deduction on tax form
• A person with disabilities who is over 18 and not the tenant or co-tenant
• A full-time student of any age
• Must have documentation from school
• Must still be living in HH
• Foster children are not eligible for the standard $480 deduction
Deductions
• Elderly household – $400 per elderly or disabled household
• Must be the tenant or co-tenant
• Only one deduction for the HH
• i.e., both tenant and co-tenant are over age 62 – only 1 $400 deduction can be
taken
• Must be 62 years of age or older or have a disability at any age
• Must have documentation to support $400 deduction if not given due to age
• Most common is disability
Deductions
Case Study #13:
• Tenant and co-tenant are not elderly or disabled
• There are 3 children and one on the way – ages are: 10, 18 & 19
• 18 year old is a full-time student, 19 year old is working but not a student
• The co-tenant’s 64 year old disabled mother is living with them
• What deductions are this family eligible for?
Deductions
Case Study #13 - Answer:
• $480 deduction for 2 children (ages 10 & 18)
• 18 year old is a full-time student
• No deduction for unborn child or the 19 year old since over age and not a full-time student
• NOTE: would need to count the income of the 19 year old
• $480 for the disabled mother
• Must have documentation of disability
• No elderly deduction because mother is not the tenant or co-tenant
• Total deduction = $1,440
Deductions
Case Study #14:
• Tenant is 35, co-tenant is 30 and disabled
• Tenant has a child who is 4 and is sharing joint custody with his ex-wife who also lives in another
RD complex
• The child lives with the ex-wife during the week but with the tenant every weekend and 6
weeks through the summer
• The tenant claims the child on his tax return
• What deductions are they eligible for?
Deductions
Case Study #14 – Answer:
• $400 because the co-tenant is disabled
• Documentation must be provided of disability
• $480 deduction for the 4 year old child
• Even though the child spends more time with the mother, the tenant provided a copy of the
divorce decree and tax return which allows him to claim the child as a dependent
• The mother could not claim a deduction for the child at the other RD complex
Deductions
• Disability assistance
• A deduction for unreimbursed, anticipated costs for attendant care and “auxiliary
apparatus” for each family member who is a person with disabilities
• Does not have to qualify as an elderly HH
• Must be reasonable and necessary to enable any family member 18 years or older to be
employed
• May or may not be the member who is a person with disabilities
• Must have documentation of disability and need for animal/apparatus, etc.
Deductions
• Disability assistance – cont.
• Allowable deduction is any cost over and above 3% of annual income
• Cannot exceed the earned income received by the family member(s) who are
enabled to work
Deductions
Case Study #15:
• Tenant and co-tenant are both 40 years old and have a 15 year old son who is disabled. It is
determined the son would be allowed a seeing eye horse (allergic to dogs)
• Tenant is away from the family for a short stint in the military and earns $10,000 per year; cotenant stays at home with the son but has found a job and will earn $6,000 per year
• The cost of the seeing eye horse is $5,000 – $2,000 of which is covered by a special grant from a
service organization
• Per year, vet costs will be $1,500; food will be $2,000 and supplies will be $500
• What would the disability assistance deduction be?
Deductions
Case Number #15 – Answer:
• Allowable disability assistance expenses - $7,000
• $3,000 for the seeing eye horse ($5,000 - $2,000 grant)
• $1,500 for vet visits
• $2,000 for food
• $500 for supplies
• HH’s annual income of $16,000 x 3% = $480
• Co-tenant is the one enabled to work and has an annual income but you use total HH income
to calculate 3% allowance
• Total available to claim would be $7,000 - $480 = $6,520
• Total amount allowed for disability assistance expense is $6,000
• Amount of co-tenant’s annual salary
Deductions
• Medical expenses:
• Permitted only for families in which the tenant or co-tenant is at least 62 or older or is a
person with disabilities at any age
Deductions
Medical Expense Deduction – Example of how it is calculated:
• Age of head of household – 64; age of spouse – 58
Annual income
Total medical expenses
$12,000
$1,500
Sample Calculation:
Annual income
3% of annual income
Total medical expenses
Allowable medical expenses
$12,000
x .03%
$ 360
$ 1,500
- $360
$ 1,140
Random Question #8
Category: Vocabulary
What interjection, used after
someone sneezes, means “health”
in German?
Random Question #8 – Answer
Gesundheit!
Deductions
• Medicaid Spend Down
• Section 1902(a)(17) of the Social Security Act permits incurred medical or remedial care
expenses paid by certain public programs to be applied toward the spend down amount
of the Medical Assistance applicant/recipient
• What does this mean?
• Some people have too much income (excess income) to qualify for Medicaid
• In order to qualify for Medicaid, some people can spend the excess income on medical
bills
• Who qualifies?
• Child under 21 years of age – can only count toward medical if tenant/co-tenant
qualifies for elderly deduction
• Adult over 65 years of age
• Disabled or blind
Deductions
• How Medicaid Spend Down Works
• Similar to a deductible for car insurance
• When they have accumulated medical bills (paid or unpaid) greater than their
excess income, they will get Medicaid for that month
• They are responsible for the bills up to the excess amount
• Medicaid will only pay those bills over the excess amount
• Tenants should be notified how much their spend down amount will be – method of
calculating the spend down amount is determined by each Social Security office
• Can count the amount of spend down toward their medical expenses because this is the
amount they must pay out of pocket
Deductions
• Medicaid Spend Down Example:
• Annual income is $8,000 and the Medicaid income limit is $6,800
• The Spend Down amount is $1,200 ($8,000 – $6,800) or $100 per month
• Would include the $1,200 Spend Down amount when figuring total medical expenses
Deductions
• Child care expenses
• For the care of children under age 13 (including foster children) may be deducted from
annual income if ALL of the following are true:
• The care is necessary to enable a family member to work, seek employment or
further his/her education (must identify HH member who can go to work or school)
• The family has determined there is no adult family member capable of providing
care during the hours care is needed
• Expenses are not paid to a family member living in the unit
• Hours must parallel the hours HH member works or goes to school, including travel
time
• Amount is reasonable
Deductions
• The family is not reimbursed by an agency or individual outside the family
• Expense incurred to permit a family member to work must not exceed the amount
earned by the family member; amount is not limited when the family member is at
school or looking for work
Deductions
Case Study #16:
• Tenant earns $18,000 and Co-tenant works part-time 4 hours per day, 5 days per week and earns
$4,000
• Co-tenant also attends school part-time 4 hours per day, 5 days per week
• Tenant identified that the Co-tenant would be able to work and go to school if child care were
provided
• They have 2 children, ages 11 and 13 and they pay $5 per hour for 8 hours, 5 days per week for
each child
• What would the child care deduction be?
Deductions
Case Study #16 – Answer:
• Child care expense for the time the Co-tenant is working is $4,000
• $5 x 4 hours = $20 per day x 5 days = $100 per week x 52 weeks = $5,200
• Can only claim $4,000 since income of Co-tenant is less than child care expense
• Cannot claim the expense for the 13 year old
• Child care expense for Co-tenant while going to school is $5,200
• $5 x 4 hours = $20 per day x 5 days = $100 per week x 52 weeks = $5,200
• Child care cost is not limited while attending school
• Total allowable child care deduction is $9,200 ($4,000 + $5,200)
Deductions
General Notes on Income:
• Third party verifications are required for many deductions
• Exhibit 6-3 in HB-2 is a good list to follow
• Our Agency can wage match tenants or applicants to verify income (salary and unemployment
benefits)
• Best advice is to DOCUMENT everything
Random Question #9
Category: Animals
What bird’s “baby bringing” legend
may arise from how lovingly it takes
care of its young?
Random Question #9 – Answer
Stork
Medical
Medical
Procedure References:
• 7 CFR 3560.153
• HUD regulations 24 CFR 5.611
• HB-2, Chapter 6, 6.9 C 5
• Elderly/Disabled households only
• If household qualifies for $400 deduction (62 or older; disabled at any age), medical
expenses can be claimed for the entire household
• Can allow for past medical event (i.e., unplanned surgery, injuries from accident, etc.) that is
not likely to occur again as long as it was not claimed previously
• The amount that can be claimed is anything over 3% of annual income (not adjusted)
Medical
Documentation:
• Reimbursed expenses cannot be claimed
• Tenant must provide documentation of medical expenses (can be based upon past history but
must be realistic)
• Can include actual invoices, pharmacy printouts, receipts, etc.
• If claiming over the counter items, must have a prescription from a licensed practitioner
Medical
Examples of allowable expenses:
• Services of recognized health care professionals
• Services of health care facilities, lab fees, x-rays and diagnostic tests
• Alcoholism and drug addiction treatment
• Medical insurance premiums, including Medicare Parts B and D
• Prescription medicines
• Non-prescription medicines but ONLY if prescribed by a physician or licensed practitioner for a
particular medical condition
Medical
Examples of allowable expenses – cont.
• Dental treatment, eyeglasses, contacts, hearing aids and batteries, diabetes supplies, etc.
• Attendant care or periodic medical care (nursing, assistance animal and its upkeep)
• Transportation to/from treatment and lodging
• Actual cost or if driving a car, a mileage rate based on IRS rules
• Does not include mileage driven to a pharmacy
• Supporting Documentation and Verification are required
Medical
Case Study #17:
• Elderly HH has SS income of $600 per mo.
•
•
•
•
TC is effective 1/1/17
Medicare premium is $100 per mo.
Supplemental health insurance policy is $200 per mo.
Pharmacy prescriptions reflect $2,000 in 2016
• Tenant is still taking the same prescriptions
• Hospital bill owed of $500 in which tenant is paying $100 per mo.
• OTC receipts reflect $200 (aspirin, Pepto Bismol, Ben Gay, Band-Aids, etc.) – no prescription
provided
Medical
Case Study #17 (cont.):
• Hearing aid purchased in 2016 for $2,000 and batteries of $100
• Supplemental insurance paid $1,500 for the hearing aid
• What medical deduction be?
Medical
Case Study #17 – Answer:
• Allowable medical deductions (Line 18 f, Income is $7,200):
•
•
•
•
•
$1,200 for Medicare ($100 x 12)
$2,400 for supplemental health insurance ($200 x 12)
$2,000 prescription medicines
$500 payment on hospital bill
$600 for hearing aid and batteries
• Allowed $500 for hearing aid since this was not claimed in 2016 and was not reimbursed
by insurance
Medical
Case Study #17 – Answer cont.:
• Not allowed – $1,700
• $200 OTC medicine since no prescriptions
• $1,500 hearing aid reimbursed by insurance
• Total medical expenses anticipated are $6,700
• Total deduction allowed – $6,484
• $7,200 x 3% = $216
• $6,700 - $216 = $6,484
Medical
For elderly HH’s that are eligible for BOTH medical and the disability deduction, they must
be calculated separately
• Must calculate disability assistance first
• Reminder: it cannot exceed the income of the person(s) enabled to work
• Then calculate allowable medical expenses
• When family has both disability and medical expenses, review both to make sure no expense
has been inadvertently included in both categories
• Add medical and disability assistance expenses and deduct from 3% of household annual income
Medical
Case Study #18:
• Elderly HH – Co-tenant is disabled
• Co-tenant needs a live-in aide in order to allow Tenant to work
• Tenant’s income is $20,000
• Live-in aide expense is $10,000 and the aide has other income of $5,000
• Co-tenant also needs auxiliary equipment (wheelchair) costing $5,000
• Other non-reimbursed medical expenses of $3,000
• What would the disability assistance be?
• What would the medical deduction be?
Medical
Case Study #18 – Answer:
• Disability expense
$15,000
• Live-in aide $10,000
• Auxiliary equipment $5,000
• Medical expense
$ 3,000
• Total disability and medical expense
$18,000
• Less 3% of HH annual income
( $600)
• $20,000 x 3%
• Total allowable deduction
• NOTE: Live-in aide’s income is excluded
$17,400
Random Question #10
Category: Shakespeare’s Women
What title character’s last spoken
words are “What’s done cannot be
undone: to bed, to bed, to bed”?
Random Question #10 – Answer
Lady Macbeth
Tenant Certification Practice
Complete a Tenant Certification – Handout 2:
• Tenant Certification Practice
• 3560-8 Tenant Certification
If questions, please contact your
local Area Specialist
Rural Development
https://www.rd.usda.gov/mo
USDA is an equal opportunity
provider and employer