© copyright 2008 nan mckay & associates housing help sessions earned income disallowance –...
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© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 1
Annie Stevenson
Earned Income Disallowance
© Copyright 2008 Nan McKay & Associates
Housing Help SessionsEarned Income and Disallowance – January 16, 2009
NMA Host:Trainer Annie Stevenson
© Copyright 2008 Nan McKay & Associates
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 2
Welcome to Housing Help!
Upcoming topics for the occupancy series: 2/6/09: Income exclusions (HCV & PH) 3/6/09: Pets and service animals (PH) 3/20/09: Leasing process (HCV)
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 3
Welcome to Housing Help!
Today’s topics: EID qualification Calculating the exclusion Tracking EID eligibility HUD FAQs Questions and answers
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 4
Earned Income Disallowance
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 5
Earned Income Disallowance
HCV: 24 CFR 5.617
Effective date 4/20/01Technical
Amendments 2/13/02
PH: 24 CFR 960.255
Effective 10/01/99Final Rule
Effective date 4/28/00
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 6
For HCV: Effective 3/15/02, HUD revised the definition of “qualified family” Family no longer required to meet the
regulatory definition of disabled family
Earned Income Disallowance
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 7
PH and HCV earned income disallowance regulations are similar, except: Section 8 EID only applies to family
members with disabilities PH EID is not restricted to persons
with disabilities
Earned Income Disallowance
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 8
EID excludes increases in income attributable to new employment or increased earnings over income received by that family member prior to qualifying for the disallowance
Earned Income Disallowance
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 9
EID Qualifications
To qualify for the EID, a family must be receiving assistance under the HCV/PH program Applicant families are not eligible for
the EID
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 10
EID Qualifications
Family must experience an increase in annual income as a result of one of the following reasons . . .
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 11
1. Employment by a (HCV: disabled) family member who
Was “previously unemployed”* for one or more years prior to employment
* definition includes a person who has earned not more than could be earned working 10 hrs/week, 50 wks/year, at established minimum wage
Qualifications
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 12
2. Increased earnings by a (HCV: disabled) family member:
Whose increased earnings occurred during member’s participation in an:• economic self-sufficiency program• job-training program
Qualifications
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 13
HUD Definition of Economic Self-Sufficiency Program
Any program designed to encourage, assist, train or facilitate economic independence of assisted families or to provide work for such families
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 14
HUD Definition of Economic Self-Sufficiency Program
Economic self-sufficiency programs can include:• job training
• employment counseling
• work placement
• basic skills training
• education
• English proficiency
• workfare
• financial or household mgmt
• apprenticeship
• activity necessary for work
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 15
3. New employment or increased earnings by a (HCV: disabled) family member who has received TANF benefits or services within past 6 months
EID Qualifications
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 16
No minimum amount if TANF is received in form of monthly maintenance
If TANF is received in form of one-time payments, wage subsidies, or transportation assistance, total received over 6 month period must be at least $500
EID Qualifications
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 17
During initial 12 month exclusion period: Exclude the full amount of increase in
income attributable to employment or increased earnings
EID Initial 12-Month Exclusion
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 18
Initial full exclusion period begins on date qualified family member is:
• employed; or• first experiences increase in income due to employment
EID Initial 12-Month Exclusion
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 19
Initial full exclusion extends for a total of 12 cumulative months (don’t have to be consecutive months)
EID Initial 12-Month Exclusion
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 20
Determining the Incremental Increase
Determine the annual income of the EID-qualified person prior to the qualifying change (earned and/or unearned)
Calculate the annual income of the EID-qualified person after the qualifying change
The difference is the incremental increase
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 21
Example #1
Alice Brahm had $6000 in TANF benefits at the time she became employed. She is earning $13,600 at her new job, and her TANF benefits have stopped.
How much is the incremental increase?
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 22
Example 1: Think it Through
TANF $6000
Empl $ 0
Total $6000
TANF $ 0
Empl $13,600
Total $13,600
Did we exclude all of her earned income?
How much did we exclude?
Why didn’t we exclude the $13,600?
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 23
Example #2
Art Baker had no income at the time he became employed at $9800 per year.
How much is the incremental increase?
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 24
Example 2: Think it Through
Other Inc $0
Empl $0
Total $0
Other Inc $ 0
Empl $9800
Total $9800
Did we exclude all of his earned income?How much did we exclude?Why?
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 25
EID Initial 12-Month Exclusion
During initial 12 month exclusion period: Exclude the full amount of increase in
income attributable to employment or increased earnings
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 26
EID Initial 12-Month Exclusion Initial full exclusion period begins on date
qualified family member is: employed; or first experiences increase in income due
to employment Initial full exclusion extends for a total of 12
cumulative months (don’t have to be consecutive months)
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 27
EID Second 12-Month Exclusion and Phase-In
Exclusion is 50% of any increase attributable to employment or increased earnings
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 28
EID Second 12-Month Exclusion and Phase-In
Second 12-month exclusion period begins after qualified family member has received 12 cumulative months of full exclusion
Phase-in period extends for a total of 12 cumulative months (not needed to be consecutive months)
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 29
EID Maximum 4 Year Disallowance
4 year lifetime maximum disallowance period Starts at beginning of initial exclusion
period and ends exactly 48 months later
No exclusion may be given after this lifetime limit has been reached
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 30
EID Maximum 4 Year Disallowance
EID regulations call for a maximum of 12 cumulative months for each of the two exclusion periods Thus, an individual can “max out” after
receiving the EID for only two years• 12 consecutive full-exclusion months
followed by• 12 consecutive phase-in exclusion months
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 31
EID Issues
Remember, the disallowance does not apply for purposes of admission
To ensure that every participant who is eligible for EID receives it and is calculated properly, PHA must consider…
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 32
EID Issues
How will you document – what evidence will you provide: That the family is a “qualified family”? The income exclusion in the family’s file?
How will you track the number of months income has been excluded and when the exclusion must end?
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 33
In an Ideal World
1212 2424 3636 4848
100% of increase
100% of increase
50% of increase
50% of increase
Count all incomeCount all income
1212 2424
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 34
EID Issues
Tracking In reality, the exclusion may stop and
start more than once, making it a challenge to figure out how much to disallow when there is a break during an exclusion period
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 35
Reality may be….
9 months9 months 6 months6 months 9 months9 months
100%100%
100%100% 50%50%50%50%
It’s over…It’s over…
1212 2424 3636 4848
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 36
EID Issues
Tracking Or . . . The four-year maximum may
be reached before the full 12 months of phase-in (or even initial full exclusion) have been “used up”
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 37
Or…….Reality may be
9 months9 months 3 months3 months
100%100%100%100% 50%50%
It’s over…It’s over…
2 months2 months
1212 2424 3636 4848
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 38
EID Issues Complexity of the regulation
contributes to rent determination errors
• Per HUD’s PD&R report
• Difficulty in tracking exclusion periods
• PHA needs standardized system
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 39
EID Issues
Calculation of “incremental increase” May necessitate conducting interim
reexams throughout phase-in period
• Regardless of PHA’s interim policy To simplify matters, PHA may align
reexam date to coincide with the beginning of the phase-in period
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 40
EID Issues Best source for answers:
EID FAQs: www.hud.gov/offices/pih/phr/about/ao_faq.cfm
RHIIP FAQs: www.hud.gov/offices/pih/programs/ph/rhiip/faq.cfm
RHIIP Summit FAQs:• www.hud.gov/offices/pih/programs/ph/
rhiip/faq_ris.cfm
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 41
Selected Issues: FAQs
TANF qualifier: Family member must be on TANF grant
to qualify• Within 6 months of qualifying event
Change from previous guidance
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 42
Selected Issues: FAQs
EID & flat rent (PH only) See A & O FAQs 2 situations:
• EID family chooses flat rent–ALL clocks continue to run
• Flat rent family that could qualify for EID–Do not start any clock
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 43
Selected Issues: FAQs
Imputed welfare Imputed welfare is included in EID
baseline Example: prequalifying income
• Child support $1200• Imputed Welfare: $2400
Baseline = $3600
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 44
Selected Issues: FAQs
Child care deduction Allowable child care cost for employment
cannot exceed amount of earned income “included in annual income” (CFR 5.603(b))
When family member qualifies for EID, employment-related child care deduction cannot exceed earnings in column 7f of 50058• Allowable child care cost may be zero
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 45
Selected Issues: FAQs
Ineligible family members Ineligible non-citizens are not eligible for
EID Change from previous guidance
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 46
Selected Issues: FAQs Minors who turn 18 and are not
FT students 2 examples (see RHiiP FAQs)
• Employed minor turns 18 with no increase in earned income
– Does not qualify for EID• Employed minor turns 18 AND earned
income increases– May qualify if meets criteria
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 47
Selected Issues: FAQs
Unreported breaks in employment PHA must retroactively suspend exclusion
period when family fails to report job loss Example:
• Full exclusion period begins 6/1/03• Job ends 9/03, not reported until annual
reexam 6/04• Only 4 months of full exclusion used
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 48
Selected Issues: FAQs
PHA calculation errors Not enough income excluded
• PHA must recalculate & reimburse Too much income excluded
• PHA must correct prospectively• Families not responsible for overpayment
caused by PHA error
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 49
Challenges for PHA Management
Since EID is a statutory requirement and a major source of rent errors, management must take seriously the responsibility of ensuring that staff can apply the EID rules correctly
Rectifying a failure to provide this benefit when a family is entitled to it can be costly for a PHA. So can providing excess subsidy!
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 50
Challenges for PHA Staff Staff may be puzzled or confused by the
results of correctly applying the EID rules such as families with these circumstances: Family who has significant increase in
earned income without having any increase in rent
Family who has decreases in other income with no equivalent decreases in rent
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 51
Challenges for PHA Staff
Other confusing areas Explaining to families why their rent is
going up or down as a result of the EID rules
Difficulty tracking a family’s EID benefit as time passes and family circumstances change
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 52
Purpose of Effective Tracking System
Program participants must benefit only for the number of months for which they qualify
PHA may become liable for excess subsidy
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 53
Purpose of Effective Tracking System
Think about… How do you track exclusion periods?
What alerts staff members to start phase-in period?
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 54
EID Calculation Worksheet
Download from website in your Housing Help session e-mail:
Divides calculation into 3 parts:1. Calculate exclusion
2. Calculate non-excluded earnings
3. 50058 entries
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 55
EID Calculation Worksheet
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 56
EID Calculation Worksheet
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 57
EID Calculation Worksheet
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 58
EID Worksheet Example Mary Jones had $4,000 in TANF
benefits at the time she became employed. She is earning $12,400 at her new job, and her TANF benefits have stopped.
Baseline income is... $4,000
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 59
EID Worksheet Example
12,400
12,400
0
0
12,400
4,000
8,400
N/A
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 60
EID Worksheet Example
12,400
8,400
4,000
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 61
EID Worksheet Example
Mary W 12,400 8,400 4,000
4,000
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 62
Conclusion
Next…
© Copyright 2008 Nan McKay & Associates
Housing Help Sessions
Earned Income Disallowance – 1/16/2009
Slide 63
Conclusion
Thank You for Attending!