MSHDA - Office of Housing Voucher Programs Policy and Procedures Manual

Chapter IV: Income – Allowances, Assets, Expenses, Verifications and Calculations

Effective: September 2009

Introduction

Improving the integrity of income verification is vital for HUD and MSHDA. A recent analysis by HUD determined that only 29% of assisted households were paying the correct rent amount. Incorrect rents being charged to the participants result in inaccurate Housing Assistance Payments (HAP) being paid by MSHDA.

To prevent fraud and abuse in HUD programs, the United States Code (USC) and Code of Federal Regulations (CFR) allow HUD and PHA’s to obtain information about applicants and participants to determine their eligibility or level of benefits. Most importantly, the USC authorizes computer-matching agreements of income information known as Up-front Income Verification (UIV).

Below is a summary of laws and regulations that govern the use of UIV:

• 24 CFR 5.234 (Requests for Information from SWICAs and Federal Agencies; Restrictions on Use) indicates that income information will generally be obtained through computer matching agreements between HUD and a SWICA or Federal Agency, or between a PHA and a SWICA.
• 42 USC 3544©(2)(A) (Preventing Fraud and Abuse in Housing and Urban Development Programs) provides the legal basis for preventing fraud and abuse in HUD programs. The law allows HUD to require that applicants and participants sign a consent form to request the following: current or previous wages and salaries from employers, wage information and unemployment compensation from the State agency charged with the administration of the State unemployment law, and income information from the Commissioner of Social Security and the Secretary of the Treasury.

UIV replaces, to a large extent, the more time consuming and less accurate TPV process of contacting individual employers identified by the family or reviewing outdated income verification documents. If a UIV method is not available, an attempt to obtain written TPV must be made.

Compliance with the third party verification (TPV)process and calculating correct participant rent amounts directly affect MSHDA’s SEMAP performance on Indicators 3 (Determination of Adjusted Income) and 10 (Correct Tenant Rent Calculations).

Section A: Income Verification Requirements

1. Gather Applicant/Participant Information for Income Verification

When the income verification process is initiated at the time of initial contract or annual re-examination, the following forms are required to be completed by the Head of Household and every other household member age 18 and over:

• Household, Income, Asset, and Expense Declaration (MSHDA 1890);
• Authorization for Release of Information/Privacy Act Notice (HUD 9886);

2. Third Party Verification (TPV) Process

MSHDA HA’s must obtain TPV or document in the file why TPV was not available for the following factors:

• Reported family annual income;
• The value of assets;
• Expenses related to deductions from annual income;
• Other factors that affect the determination of adjusted income.

Federal Regulations require disclosure of income information and verification from all family members age 18 and over for all earned and unearned income for the household. HAs will verify the accuracy of the information and adjust the family’s household income, which affects the participant’s rent payment.

Each item marked “yes” on the MSHDA 1890 involving income, assets, or deductions must be verified using the TPV process. When reviewing the 1890 and discrepancies are noted between what is reported by the applicant/participant and what is verified through the TPV process, the correct information should be placed on the 1890 in a different colored ink with the date of the change and initials of the person making the correction. This includes adding information when questions on the 1890 were left blank and information needs to be added to the form upon receipt of TPV, or due to information obtained subsequently form the applicant/participant or another source.

HUD requires that income, assets, and deductions be verified through a third party such as an employer, financial institution, DHS caseworker, etc. A participant cannot hand carry documents to or from the verification source.

Verification documents for income, assets, and deductions must be dated within:

• 60 days prior to the Voucher issuance date; and
• 120 days prior to the effective date of the transaction (except SS information which must be dated within 60 days for all cases if the SS/SSI benefits cannot be verified for current participants and household members using EIV).

Note: TPV process and time limits do not apply to information that does not require re-verification (proof of age, Social Security cards, etc.) or information regarding the disposal of assets.

Third-Party Verification Hierarchy

HUD has identified a hierarchy of TPV verification. The five levels of verification, in order of acceptance to HUD, are identified below:

1. Up-front income verification (UIV)
2. Third party verification, written
3. Third party verification, oral
4. Review of original documents (tenant supplied documents)
5. Family certification (MSHDA 488 or notarized statement)

See Appendix, Third Party Verification Resources.

3. Up-Front Income Verification (UIV) System

Up-Front income verification (UIV) is the verification of income through an independent source that systematically and uniformly maintains income information in computerized form for a large number of individuals. It is the preferred method of income verification to be used.

Current UIV resources include the following:

1. Enterprise Income Verification (EIV) System

   The EIV System is intended to provide a single-source of income related data to a PHA for use in verifying the income reported by participants who are being assisted under the various housing programs administered by HUD. The EIV System is required by HUD to be used as the first step in verifying income. The EIV System assists in the verification of income by comparing participant income data obtained from the HUD 50058 form, from data captured in the Public Housing Information Center (PIC), wage and unemployment information from State Wage Information Collection Agencies (SWICA) and Social Security and Supplemental Security Income from the Social Security Administration. The System is only to be used to verify a participant’s eligibility for participation in a HUD rental assistance program and/or determine the level of assistance the participant is entitled to receive. As a condition of receiving the EIV data, safeguards will be required to prevent unauthorized use of the information and to protect the confidentiality of that information.

   Reports which are generated through the HUD EIV system for use by MSHDA staff and housing agents which can be used for the comparison of data include:

   • Identity Verification status confirms tenant personal identifiers with Social Security administration.
   • The Tenant Income Data (TID) Reports which enable the user (HA) to compare current information provided by participant families to the most current state reported wage and unemployment benefit information data available on the EIV system.
   • New Hires report identifies tenants who have started a new job within the last six months.
   • Exceeds Threshold Reports (ETR) which compare PIC data with EIV data and generates a list of families with discrepancies exceeding a percentage selected by the user. This report will be generated and used primarily by the MSHDA EIV Discrepancy Coordinator.
   • Deceased tenant report identifies tenants who are deceased.
   • Multiple subsidy report identifies tenants and family members who may already be receiving rental assistance.

   The HUD EIV system is accessed via the Internet. It is a secure system and requires the use of a PIC ID and password to gain access. The PIC ID and password information is assigned to designated staff and HA’s by MSHDA’s WASS Coordinator.

   Note: When utilizing the EIV system avoid using the search and print functions “By Reexamination Month.” This function will generate verifications for all MSHDA’s residents, which is unnecessary for a HA to generate and will waste resources due to the excessive amount of data produced.

   Federal SSA and SSI: Use EIV as primary TPV. If no EIV, then follow the steps outlined in the TPV hierarchy beginning with the written step of TPV.

   All PHAs are required to use EIV to verify SS/SSI benefits of current participants and househould members. If benefit information is not available in the EIV system, the HA should request a current SSA benefit verification letter from each househould member that receives Social Security benefits. If the participant and/or household members are unable to provide the requested document(s), ask the participant/household member to call SSA at 1-800-772-1213 to request a benefit verification letter. The rquest for a benefit verification letter can also be made at the SSA Internet Website at www.ssa.gov. There is no cost for this verification letter to the participant. Follow the instructions on the page to complete the request for a benefit verification letter. Upon receipt, the participant/household member should provide the PHA with the original benefit verification letter. The PHA should make a photocopy of the original benefit verification letter, return the original benefit verification letter to the participant/household member, and maintain the photocopy of the benefit letter in the tenant file. In the event that third party verification is not available, the HA must document the tenant file as to why third party verification was not available on the Third Party Verification (TPV) Monitoring Form (MSHDA 78).

   A copy of the EIV form must be in every file and submitted with every annual re-examination, move, interim re-examination, and income change submission of paperwork.

2. Private Sector Databases (e.g. The Work Number)

   You may use the website www.theworknumber.com to obtain UIV employment verification. See Appendix for instructions on accessing the website.

   The Work Number - Employment may be verified via “The Work Number,” an Internet source available to obtain TPV from registered employers. Once the HA accesses and registers with www.theworknumber.com, it is possible to obtain verifications via FAX in approximately five business days. Refer to Appendix, HUD Verification Requirements, for instructions on accessing the website.

   After completing the one-time registration, the HA can order verifications at any time by accessing the website and entering their FAX number, employer code number, and employee (tenant) Social Security number. All information provided is current as of the most recent pay period. There is no cost for the service. The HA must have incoming FAX capability and register as a “Social Services User” with an Agency Type identifier of “Housing Authority.” The Registration Agreement requires confidentiality with regard to any information obtained.

3. Data Share between MSHDA and Michigan Department of Human Services (DHS).

   The Data Share is now available for receiving UIV information. This information is provided by using the Third Party Verification via Michigan Department of Human Services Database (MSHDA 1795) form. Information available on the MSHDA 1795 includes amounts for State Disability Allowance (SDA), Federal TANF and Federal TANF Sanction amounts, State Assistance Program, Refugee Assistance Program, Childcare paid to the provider; and Childcare paid to the DHS client. It also provides only a yes/no answer for wages reported to DHS, unearned income reported to DHS, Food Assistance Program, and Medicaid Program. Note: The DHS data share link is through the secure Citrix Log-in account.

   Follow these guidelines for using the Data Share:

   1. State Disability Allowance (SDA) – Use the MSHDA 1795 as primary TPV. If the 1795 is not available, then follow the steps outlined in the TPV hierarchy in Income Verification policy beginning with the written step of TPV. Note: If someone receives Federal SSI, check to see if they are receiving State SDA. If no State SDA, note why on the MSHDA 78.
   2. Federal TANF, Federal TANF Sanctions, and Cash Assistance Grant Amounts – Use the MSHDA 1795 as primary TPV. If the number of household members and the flat grant amounts matches the information on the MSHDA 1795, then a MSHDA 107 will not be required. If the information doesn’t match, then determine why. Document your findings on a MSHDA 77 and obtain TPV using the MSHDA 107. If a family member is receiving SSI and is not on TANF, and the SSI amount received matches the flat grant amount received (verify using Appendix Flat Grant Chart), then a MSHDA 107 is not required. If none of the amounts match, a MSHDA 107 is required. If the 1795 is not available, then follow the steps outlined in the TPV hierarchy in Income Verification policy beginning with the written step of TPV.
   3. Childcare paid to provider by DHS – Use the MSHDA 1795 as primary TPV. The MSHDA 1795 will provide the amount paid, effective date, number of children in care, and number of providers. If the data matches the MSHDA 1890, no MSHDA 107 is required. Refer to Chapter IV Expenses. . If the MSHDA 1795 is not available, then follow the steps outlined in the TPV hierarchy in Income Verification policy beginning with the written step of TPV.
   4. Childcare paid to client by DHS – Use MSHDA 1795 as primary TPV. The MSHDA 1795 will provide the amount paid, effective date, number of children in care, and number of providers. If data matches the MSHDA 1890, no MSHDA 107 is required. Refer to Chapter IV. Expenses. If the MSHDA 1795 is not available, then follow the steps outlined in the TPV hierarchy in Income Verification policy beginning with the written step of TPV.
   5. Food Assistance Program – Yes/No answer. This is for information only and cannot be used as a form of TPV. If the MSHDA 1795 is populated with a Yes, then notate on the MSHDA 78 that UIV is not available; and, written TPV using the MSHDA 107 is not permitted per DHS policy based on federal statute that the information cannot be provided. Follow the steps outlined in the TPV hierarchy beginning with tenant supplied documents.
   6. Medicaid Program, Wages reported to DHS and Unearned Income reported to DHS – Yes/No answer. These areas on the form are for information only and cannot be used as a form of TPV. If populated with a Yes on the MSHDA 1795, then make sure the participant has reported the Food Assistance Program, Medicaid information, or wages or unearned income on the MSHDA 1890. Follow the steps outlined in the TPV hierarchy beginning with the written step of TPV. Note the reason for no EIV on the Third Party Verification (TPV) Monitoring form (MSHDA 78).
   7. Child Support Rebates – Child Support Rebate information is no longer available on the datashare. When child support rebates are reported, follow the steps outlined in the TPV hierarchy in Income Verification policy beginning with the written step of TPV. Use of the MSHDA 107 will be required.
   8. DHS Refugee Assistance Program – Use MSHDA 1795 as primary TPV. If the MSHDA 1795 is not available, then follow the steps outlined in the TPV hierarchy in Income Verification policy beginning with the written step of TPV.

Guidelines for Projecting Annual Income When UIV Data is Available

When using a UIV system for verifying income, tenant supplied income documents are compared to the information received through the UIV system.

HUD has established the criteria for what constitutes a substantial difference in cases where UIV income data differs from tenant-provided and/or other verified income information.

• HUD defines a substantial difference as one that has a gross income difference of $200 or more per month ($2400 per year).
• Calculate the income from UIV and tenant-provided documentation into monthly amounts in order to compare the two. Show your calculations on the income forms.

In cases where UIV Income Data is Not Substantially Different than Tenant-Provided Income Information follow the guidelines below:

• If UIV income data is less than current participant-provided documentation, MSHDA will use tenant-provided documents to calculate anticipated annual income.
• If UIV income data is more than current tenant-provided documentation, MSHDA will use UIV income data to calculate anticipated annual income unless the tenant provides the HA with documentation of a change in circumstances (i.e. change in employment, reduction in hours, etc.). Upon receipt of acceptable participant-provided documentation of a change in circumstances, the HA will use tenant-provided documents to calculate anticipated annual income.
• UIV will alleviate the need for TPV when there is not a substantial difference between UIV and participant-reported income.

In cases where UIV Income Data is Substantially Different than Tenant-Provided Income Information follow the guidelines below:

• Request written TPV from the discrepant income source. If unable to obtain written TPV, try to obtain oral TPV. Refer to Section 4, Third Party Verification –Written and Section 5, Third Party Verification – Oral.
• Review historical income data for patterns of employment, paid benefits, and/or receipt of other income, when the PHA cannot readily anticipate income, such as in cases of seasonal employment, unstable working hours, and suspected fraud.
• Analyze all data (UIV data, TPV and other documents/information provided by the family) and attempt to resolve the income discrepancy.
• Use the most current verified income data (and historical income data if appropriate) to calculate anticipated annual income.
• In rare exceptions, TPV may not be available. When this occurs, the tenant must supply adequate documentation (in addition to the income documents already supplied from tenant) to explain the substantial difference between the UIV data and tenant-supplied data. If tenant is unable to provide adequate documentation, then the HA will use the UIV income data to calculate anticipated annual income.

Note: If the tenant disagrees with the UIV information, it is incumbent upon the tenant to disprove the UIV information.

See theAppendix of the PPM for examples of EIV verification and calculation.

Historical Data on EIV

In addition to projecting tenant income, the HA must review the historical data on the EIV form for unreported and under-reported income.

HA must pursue the verification of all unreported income that is discovered through UIV methods. If participant did withhold information at their last annual re-examination or failed to report additional income, the participant will be required to enter into a Repayment Agreement. Refer to Chapter XXVIII Processing Tenant Repayment Agreements.

If UIV shows a previously undisclosed income source or underreported income, HA will request documentation from the tenant (MSHDA 53) as well as obtain TPV.

If $10,000 or more of unreported household income in a one-year period is discovered and subsequently verified, the HA must contact the MSHDA Compliance Enforcement Coordinator (CEC) to determine an appropriate course of action.

If less than $10,000 of unreported household income in a one-year period is discovered and subsequently verified, the HA will pursue a Repayment Agreement. Failure to execute a Repayment Agreement by the family will result in termination. See Chapter XXVIII. Processing Tenant Repayment Agreements and/or Chapter XXVI. Mediations and Informal Hearings as needed.

If a UIV method is not available, or if there is an income discrepancy involving UIV, an attempt to obtain written TPV must be made.

4. Third Party Verification – Written

If a UIV is not available, or if there is an income discrepancy involving UIV, TPV must be used to verify information directly from the source. Written TPV can be requested from the source by first class mail, E-mail, FAX, or drop off at source, etc. Submit the first request for written TPV directly to each source. If the first request for written TPV is not received from the source within 14 days, a second request for written TPV directly to the source is made. Allow the source 7 days to respond to the second request for written TPV, for a total of 21 days.

Obtain applicant/participant release signatures at the top of the applicable verification forms, or attach a copy of the Authorization for Release of Information/Privacy Act Statement (HUD-9886) with the words “see attached authorization form” written on the signature line of the applicable verification form prior to sending to the source. Multiple forms may be needed to accommodate several sources, such as the need for a separate Verification of Resources (MSHDA 48) if the applicant/participant has three savings accounts at three different financial institutions. The signed verification forms (or a blank form with a copy of signed HUD-9886) are submitted directly to the verification source who then returns the document(s) directly back to the HA.

Requests for written TPV for income/assets/deductions must be made whether or not a MSHDA verification form exists.

If written TPV cannot be obtained (i.e. employer is out of business) then the HA will make the decision as to how best to obtain the required information. However, the TPV hierarchy must be followed, and written documentation must be recorded on the MSHDA 77 or 78 which “tells the story” of attempts at verification and answers received.

The applicant/participant CANNOT hand carry any verification documents to or from the source.

In order to be considered written TPV, the verification must come directly from the source, all required data is present, and the following:

• Mailed verifications – When possible include the envelope as proof that the verification was received from the TPV source. If more than one verification was received in the envelope, the HAs should notate, date, and sign on each verification form that it was received with other verifications from the source.
• FAXed verifications must identify the source’s name encoded on the FAX documents, or the cover sheet showing the source’s name must be stapled to the document.
• E-mail verifications must identify the source’s name or notate, date and sign on the form that the verification came from source via E-mail.
• Other verifications – for example, the HA stopped by a source’s place of business and picked up verification directly from source. HAs must notate on the form that the verification was picked up directly from the source by the HA, date and sign.

If the TPV received has an appearance that revisions have been made or has been tampered with in some way, then the verification is not acceptable. (Tampering of documents could be white outs, cross outs, different inks, different handwriting, suspicious letterhead or forms, suspicious information, etc.) If applicant/participant fraud is believed to have occurred, please discuss possible termination with your RS.

The TPV 21 day process clock begins on the day that the first attempt for written TPV is made to each source. Note: The TPV clock does not start with the request for required documents (MSHDA 53) to the applicant/participant.

Medical/Pharmacy Release of Information Exceptions: Due to HIPAA confidentiality reporting laws, it may be necessary to use verification/release of information forms provided by the source (i.e. Wal-Mart and K-Mart) instead of MSHDA forms, which the applicant/participant must sign requesting that the information be sent to MSHDA from the source. A Verification of Medical Expenses (MSHDA 100) should be sent to the source along with their forms.

Refer to the Exceptions noted in Section 8 Exceptions below for acceptable reasons for skipping either the first and/or second written attempts.

If UIV is not available and attempts to obtain written TPV were unsuccessful; the HA must originate oral TPV.

5. Third Party Verification – Oral

If UIV and written TPV is not obtained, HA must initiate contact with the source identified on the MSHDA 1890, (i.e. supervisor, personnel department, etc.) to obtain the necessary verification. The individual source’s name, the date/time contacted, HA signature, and all required data must be noted on the following verification document:

• If a MSHDA verification form exists for the item(s) being verified, the entire form must be completed based on the conversation. (Note: The verification form does not require applicant/participant signature since this is oral TPV.)
• If no MSHDA verification form exists for the item(s) being verified, document the required information on a Supplemental Information Form (MSHDA 77).

Refer to Section H. Exceptions noted below for acceptable reasons for skipping TPV oral attempt. In the event that attempts for oral TPV from the independent source have failed, the HA must pursue original documents provided by the family.

If UIV is not available and attempts to obtain written and oral TPV were unsuccessful; the HA must utilize documents provided by the family if the documents contain complete information.

6. Original Documents Provided by Family in Lieu of TPV

If UIV, written, and oral TPV is not obtained, the HA reviews the original documents provided by the family as verification of income/assets/deductions. If original documents have not been provided for review, a Request for Required Documents (MSHDA 53) must be sent requesting that the applicant/participant submit necessary original documents dated within the previous 60 days.

• HAs may obtain the documents from the applicant/participant via mail or a personal visit.
• Original letterhead documents must be used/viewed because photocopies may be more easily altered.
• HAs must photocopy the original document and notate “viewed original document” and sign the copy of the applicant/participant-provided document.
• Refer to Appendix for acceptable tenant-provided documents.

To be acceptable for this method of verification, documents must be original and authentic, (e.g. not FAXes or photocopies). HA must photocopy the original document. Notate “viewed original document” and sign and date the copy of the tenant-provided document.

Refer to Appendix (obtained from HUD Guidebook) for acceptable tenant-provided documents.

Internal Revenue Service (IRS) Letter 1722: An IRS letter 1722, also known as a tax account listing, shows the applicant/participant’s filing status, exemptions claimed, adjusted gross income, taxable income, taxes paid, etc. This is an acceptable form of TPV provided by a family. Individuals can obtain an IRS Letter 1722 by calling 1-800-829-1040.

Note: Financial institution statements that reflect direct deposit amounts are not acceptable verification until 28 days have passed and the third party did not respond. Since direct deposit financial documents do not identify gross amounts or deductions, specific information must still be obtained from the source for Medicare deductions, gross wages, etc.

Under no circumstances can a copy of a U.S. Treasury issued check be in a tenant file as documentation. See Appendix

In the event information cannot be verified by a review of documents, families will be required to submit family certification.

7. Family Certification (Notarized Statement)

If UIV is not available and attempts to obtain written and oral TPV were unsuccessful, and the family cannot provide original documents, then family certification is required. Family certification is a notarized statement signed under penalty of perjury in the presence of a witness. HA may accept a notarized statement or affidavit from the family that declares the family’s total monthly or annual income/assets/deduction verification. A completed and signed Household Living Expenses Questionnaire (MSHDA 488) would satisfy the certification requirement if the family has zero income.

This method should be used as a last resort when no other verification method is possible. If this method is used, there must be documentation in the tenant file as to why TPV was not available.

8. Exceptions to TPV

TPV Written: There are occasions when the HA may not be able to attempt written TPV. In those instances, the HA must explain on the MSHDA 78 (and/or MSHDA 77 if necessary) why they skipped this step in the hierarchy. For example, if an applicant/participant is unable to provide and the HA cannot obtain a mailing address for the source that can be used for written attempts for TPV, this step may be skipped and the HA would immediately go to the TPV oral step. The reason this was skipped must be thoroughly explained on the MSHDA 78 or 77.

TPV Oral: There are occasions when the HA may not be able to attempt oral TPV. In those instances, the HA must explain on the MSHDA 78 (and/or MSHDA 77 if necessary) why they skipped this step in the hierarchy. For example, if the applicant/participant is unable to provide and the HA cannot obtain a phone number for the source that can be used for oral TPV, the reason this was skipped must be thoroughly explained on the MSHDA 78 or 77.

Original Documents Provided by Family in Lieu of TPV: There are occasions when an applicant/participant may not be able to provide original documents. In those instances, the HA must explain on the MSHDA 78 (and/or MSHDA 77 if necessary) why they skipped this step in the hierarchy. For example, an applicant/participant is unable to provide documents to verify income/assets/ deductions. The reason that this was skipped must be thoroughly explained on the MSHDA 78 or 77. Note: skipping this step is rare.

Fee Requests from TPV Source:

• MSHDA does not require the HA nor applicant/participants to pay a fee for verifications to the TPV source. If a service request fee is charged by the TPV source to complete a verification form, keep a copy of the fee request document or an e-mail from the source identifying the source name, address, phone number, and fee amount. Place a copy of the fee request/E-mail in the file. Note on the MSHDA 78 or 77 that MSHDA will not pay fees for such requested information. Go to the next level of TPV hierarchy.
• A copy of the letter requesting a fee needs to be forwarded to the Policy Specialist for consideration as an acceptable exception letter.

Letters of Refusal to Provide Verification from TPV Source:

When a TPV source refuses to provide requested information and states the reason for refusal on a permanent basis, the letter of refusal must be forwarded to the Policy Specialist within the Office of Housing Voucher Programs for consideration of an acceptable exception letter. The Policy Specialist will determine if the refusal letter is sufficient to discontinue written or oral TPV for the cited applicant/participant (one time transaction) or for all applicant/participants in that area. All approved exception letters will be provided to the affected HA and must be retained for future use.

When skipping written and/or oral TPV, the approved exception letter must be included with each affected applicant/participant file. Document on the MSHDA 78 under written and oral TPV Remarks column “refer to attached approved exception letter.”

9. Third Party Verification (TPV) Monitoring, MSHDA 78

In order to monitor the TPV process and improve our TPV quality, the MSHDA 78 is required for all TPV. A well-documented MSHDA 78 verifies the TPV process. It does not excuse inadequate verification(s).

• Refer to the MSHDA 1890 for the verification number. Write this number in after the A, B, C or D. Enter different account types on separate lines. Example: B-1 Checking; B-1 Savings. Write the family member name. You may record more than one family member’s name on the form.
• Additional information can be made on a MSHDA 77 if necessary to further document attempts.
• HA Initials Column – Agent and MSHDA office staff may use their initials.
• If you skip a method, you must document the reason on the MSHDA 78. Example: Skipping UIV and Written TPV and using Oral TPV.
• All applicable source information must be completed on the MSHDA 1890. Example: If the MSHDA 78 indicates a FAX was sent, then a FAX phone number must be on the MSHDA 1890.
• All “yes” answers on the MSHDA 1890 that involve income, assets, or deductions must be documented on the MSHDA 78.
• In the case of joint bank accounts, both names may appear on the same line of the MSHDA 78.
• If there is more than one source for any one item on the MSHDA 1890, complete as separate entries on the MSHDA 78. Example A-2.1, A-2.2.
• Unearned income of minors must be listed separately on the MSHDA 78; e.g. Social Security, SSI.
• Federal and State SSI must be entered on separate lines.
• Medicare premiums are generally verified on the Social Security verification and do not require a separate entry.
• Line 6 must be completed to show date applicant/participant meets eligibility.

Zero Income households with no assets and no deductions do not require the completion of the MSHDA 78.

Calculations should be notated on the applicable verification form and not in the remarks column on the MSHDA 78.

Method 1: UIV

UIV Date/Method column:

If UIV is received, write the date it is received and appropriate UIV method used by selecting a code from the appropriate key to complete the box.

• NA is used when there is no UIV method for that particular type of verification.
• DNR is used when you did not receive UIV from an available UIV source.
• If using “O”you must write what other UIV source was used.

UIV – UIV Codes column:

• Circle the appropriate codes using the UIV key at the bottom of the form. One code must be selected for each half of the column.

Method 2: Written TPV

Written TPV – Written Request Sent column:

• Write date of initial request to Third Party source.
• Use Written TPV Key for method. If using “O” explain in this box what method was used, i.e. dropped off form.

Written TPV – Follow–up Sent column:

• Write date of second request to Third Party source. This should be at least 14 days from date of first TPV attempt.
• Use Written TPV Key for method. If using “O”, explain in this box what method was used, i.e. dropped off form.

Written TPV – Received column:

• If received by third party source, write date and method of receipt. For example, if TPV is received in the mail, you enter “M”.
• If no response, write NR and explain in Remarks section.

Written TPV – Remarks column:

• Enter the date you are writing remark. This must be at least 21 days from first TPV written attempt.
• Write explanation. If using a MSHDA 77, write “see MSHDA 77.”

Method 3: Oral TPV

Oral TPV column:

• Write the date, time and person’s name that was contacted or attempted to contact and explain in the Remarks section or use the MSHDA 77.
• Leave blank if unable to attempt the contact and explain in the Remarks section or use MSHDA 77.

Remarks column:

• If an Oral TPV was completed, write, “see MSHDA 77” or “see MSHDA 49”, for example.
• If an Oral TPV was not competed, write an explanation.

Method 4: Document Review

Document Review column:

• Write the date that the tenant-supplied document was reviewed.
• Applicant/participant supplied documents dated within 60 days of the effective date are acceptable.

Method 5: Tenant Declaration

Tenant Declaration column:

• Write the date that the tenant affidavit or notarized statement was received.

Note: Once verification is received, no further notations are needed for that item. Notations must be present for each method taken. Example: If the verification came from the review of a Applicant/participant-supplied document (Column #4, Document Review) each column up to and including #4 would have notations, and column #5 would be blank.

Examples of acceptable notations to be written in the remarks column:

• “NR (no response) from either attempt at written TPV resulted in the attempt of oral TPV” and date.
• “See attached MSHDA 77.” (Attach MSHDA 77 that was used to provide more clarification to the MSHDA 78)
• “See attached approved exception letter.” (Attach exception letter to MSHDA 78)
• “Source (write source name) refused to give info over the phone, which resulted in the use of applicant/participant supplied verification.”
• On Oral TPV in the Remark sections write – “See MSHDA 49” (use whatever applicable MSHDA form).

10. Calculating Annual Income

Annual income is determined by calculating a household’s anticipated total or gross income minus allowable deductions.

Use the family’s current income and expenses to predict the family’s expected annual income for the next year. Sporadically received income, or income where the amount received is not consistent must be treated as irregular income, and the procedures described below for annualizing irregular income must be used to anticipate annual income for the next year.

Use averages and estimated amounts when necessary.

Use gross income: include holiday pay in determining gross income. Do not deduct taxes or other payroll deductions from gross income.

Include all tips, bonuses, scheduled pay increases or other additional amounts. If TPV, indicate an expected change in income (i.e. pay increase), include the change in calculations to obtain the closest possible estimate. Multiple entries in Elite may be required. Example: a participant starts a new job and the employer indicates an anticipated increase after six months. Calculate and enter six months at one wage and six months at the increased wage to get the best estimate of the next twelve month’s earnings.

• Compare Flat Grant information to the charts found in the Appendix of the PPM. Investigate and document any discrepancies to discover unreported income and/or unreported family member changes.

If verifications provided are not clear, the HA must obtain additional information before determining the tenant rent portion. HUD stresses the importance of avoiding errors made in calculating the tenant’s portion of the rent. Consistent errors of this type may cause problems in future audits by HUD.

Convert all income (and allowable expenses) to an annual figure by multiplying the pay rate by the frequency of payment.

• Multiply hourly wages by the number of hours worked per year. Full-time employment (40 hours a week and no overtime) is 2,080 hours (40 hrs X 52 weeks = 2080 hours). (10 hours a week X 52 weeks = 520 hrs per year).
• Multiply weekly wages by 52.
• Multiply bi-weekly wages by 26.
• Multiply semi-monthly wages by 24.
• Multiply monthly wages by 12.
• Multiply daily wages by 260 (full time/no overtime).
• To convert monthly amount to weekly, divide by 4.3.
• Round up to the nearest dollar at .50 and above (except SS payments, which are always rounded down).

Note: Federal and State wage laws require employers to pay time and a half in excess of 40 hours for most occupations. If earnings verification shows more than 40 hours worked but does not indicate overtime paid, verify with the employer if overtime is paid or not. Document this on MSHDA 77.

11. Verifying Student Eligibility and Income

A final rule published by HUD (FR-5036-F-01) entitled, “Eligibility of Students for Assisted Housing under Section 8 of the U.S. Housing Act of 1937” became effective on January 30, 2006. It states that if a student is enrolled at an institution of higher education is under the age of 24, is not a veteran, is unmarried and does not have a dependent child, is individually ineligible for Housing Choice Voucher assistance, or the student’s parents are, individually or jointly, ineligible for assistance, no HCV assistance can be provided to the student. See Link to FR-5036-F-01: edocket.access.gpo.gov/2005/pdf/05-24672.pdf

HUD issued Supplementary Guidance on April 10, 2006 to ensure that HCV assistance is provided to those truly in need and eligible for assistance. Here is a link to the HUD Supplemental Guidance which is in a question and answer format: edocket.access.gpo.gov/2006/pdf/06-3365.pdf

Further, HUD developed a Question/Answer chart regarding Eligibility of Students for Assisted Housing under Section 8 of the U.S. Housing Act of 1937. Here is the link to this HUD Questions and Answer Document: www.hud.gov/offices/pih/publications/studentruleqa.pdf

Following the documents and guidance above, the eligibility of a student seeking HCV assistance will be examined along with the income eligibility of the student’s parents. The new rules do not apply to students residing with their parents in an HCV assisted unit or who reside with parents who are applying to receive HCV assistance. The law and rules focus on students that are under the age of 24, are not veterans, are unmarried, or are without children who seek or receive HCV assistance separate from their parents.

Students residing with their parent(s)/guardian(s): Follow HCV income guidelines when verifying income for a family that includes a full-time high school or college student, 18-years of age or older, that lives with his/her parent/guardian(s). Verify relationship to head of household and dependent status. Verify student enrollment at high school or an institution of higher education using MSHDA School Verification Form (MSHDA 55). Verify the student is claimed as a dependent by the parent/guardian(s) and eligibility for the HCV program is based on the income of the parent/guardian(s) and all other adult members of the family. Verify family income, assets, expenses and allowances. See also Chapter IV. Income Allowances, Dependent Allowances; and Chapter IV. Income Includes.

Single and/or Head of Household Students (under the age of 24) enrolled at an institution of higher education: The HA must carefully screen/interview students who are single, or head of household students enrolled at an institution of higher education to verify they meet required eligibility criteria. See MSHDA PPM, Chapter II Waiting List. Verify student enrollment at an institution of higher education using the MSHDA 55. Verify family income, assets, expenses and allowances. It is suggested the HA conduct a detailed interview at admission and at annual or interim re-examinations about sources of income. Students who are not eligible must be terminated from the program or denied assistance. When verifying student eligibility criteria, it is suggested the following questions be asked:

1. What are all of your sources of income?
2. What type of scholarships, grants, Pell Grants, Loans do you receive for school?
3. Do your parents claim you as a dependent when they file their annual Income Tax Return with IRS? Request a copy or copies to establish independence.
4. Do you anticipate receiving any money or support from your parents/guardians for food, shelter, clothing, or personal items?
5. Do you expect to receive regular contributions (i.e., steady or monthly assistance with bills, rent, car payments) or gifts from your parents/guardians?
6. How do you pay for food, rent, clothes, utilities, entertainment?

The Household Living Expenses Questionnaire (MSHDA 488) generally used for gathering information on income sources for zero income households may also be used.

HA must also verify the Single, Head of Household Student is:

1. Is of legal age or an emancipated minor under state law. Obtain proof of age such as a valid driver’s license, identification card issued by a federal, state, or local agency, identification issued by a medical insurance company, or birth certificate.
2. Is income eligible for admission to the HCV program. Verify via independent third-party verification all sources of reported family income anticipated to be received during the 12-month period following admission and the effective date of the annual reexamination.
3. Has established a household separate from his/her parent(s) or legal guardian(s) for at least one year prior to applying to the HCV program. Gather evidence of separate households by reviewing/verifying the address information that predates the student’s application by a minimum of one year.
4. Is not claimed as a dependent by the parent(s) or legal guardian(s) on their Internal Revenue Services (IRS) tax return. This may be achieved by requesting a copy of the college student’s Form 1040EZ, 1040A, or 1040 tax returns for the prior year. Check the box that asks whether the student’s parents (or someone else) can claim him/her on their tax return (See box “5” for Form 1040EZ and box “6a” for Forms 1040A and 1040). The HA may also, if practicable, review the college student’s parents’ or guardians’ tax return. The college student must supply any information that MSHDA or HUD determines is necessary to verify this information.
5. Does or does not anticipate receiving financial support from the student’s parent(s) or guardian(s) and the amount of that support by obtaining a written/signed certification from the student.

Independent Student: (As defined in the HUD Supplementary Guidance of April 10, 2006): To be an independent student, the student must meet one or more of the following criteria:

1. be at least 24 years old by December 31 of the award year for which aid is sought;
2. be an orphan or a ward of the court through the age of 18;
3. be a veteran of the U.S. Armed Forces;
4. have legal dependents other than a spouse; for example, dependent children or an elderly dependent parent
5. be a graduate or professional student; or
6. be married.

Follow stated HCV income guidelines when verifying income for independent college or post-secondary students (full or part-time) that are the single, head of household. Verify all family income, asset, expenses and allowances. Verify student status and enrollment at the institution of higher education using MSHDA 55.

Full-Time College Students with an Athletic Scholarship: In accordance with the FY 2005 Appropriations Act, it is required that the portion of any athletic scholarship assistance available for housing costs be verified with the third party income source by MSHDA and included in the determination of family adjusted income. MSHDA will deny housing assistance to those full-time college students receiving athletic scholarship assistance with $5,000 or more annually available for housing costs. Scholarship amounts must be verified.

12. Irregular Income

Irregular income is defined as income received in an unpredictable or sporadic manner, such as income from seasonal employment, temporary work agencies, child support, or alimony. If the family has a history of irregular income, you may use the family’s past income history to determine how to project such income forward.

When determining such income, use the most recent verification providing the required information available. Divide the year-to-date (YTD) total provided on the verification by the amount of actual weeks the total covers to receive an average weekly income. Multiply the weekly income amount by 52 (weeks).

Types of TPV vary, and it is often difficult to determine annual income based on the information provided. When such cases occur, it is necessary to contact the source of the income (i.e. employer for wages) to clarify information provided, then document the information received on a MSHDA 78 or MSHDA 77 as appropriate.

Convert the following irregular income to an annual figure to complete rent calculations as follows:

• School Employment – Most schools are in session 37 weeks a year: calculate at 37 weeks worked and 15 weeks off unless verification documents specifically note otherwise. School employees usually have a choice of being paid their yearly salary spread out over 37 weeks or 52 weeks. Once an annual income figure is determined using either 37 weeks or 52 weeks as the basis of calculation, interim revisions for “zero income” during summer months are not an option. If not using 37 weeks worked and 15 not worked, write an explanation for using a different time period on the verification.
• Unemployment Benefits – Multiply the gross weekly benefit by 52 weeks, regardless of the number of weeks they remain eligible to receive benefits. When the family reports the benefits have ceased, complete an Interim Re-examination to adjust annual income.
• Irregular Wages – Use the most recent verification available. Divide the YTD amount by the number of actual weeks to receive an average weekly amount. Multiply the average weekly amount by 52 weeks.
• Child Support – Annualize actual child support/alimony income received, rather than the court-ordered amount owed a client when payments are in arrears. The HA should directly ask the applicant/participant if there is an arrearage, and explain that calculations must be based on actual income received, rather than the court-ordered amount. The applicant/participant should provide the required year-to-date total needed to annualize income, since it is to the client’s benefit to provide accurate information in such cases.

  Additional child support information is located in Chap IV, Sec B3 of the PPM.

  If the HA determines and can appropriately verify that the tenant will receive a payment(s) within the next twelve months, the amount should be included in annual income. If the HA can verify through the tenant or agency making the payments that the tenant will not receive such payment(s) the following year, then this amount should not be included when calculating annual income.

Example:

Child Support check stub dated June 1, 2001 (22 weeks)

Total received (YTD total):$814.00

YTD divided by 22 weeks equals weekly average: 814/22 = $37.00

Weekly average x 52 weeks equals Annual average: 37 X 52 = $ 1924.00

(Round off to whole dollar amount)

13. Zero HAP

If initial calculations result in a Zero HAP (TTP equals or exceeds the Gross Rent or PS, whichever is applicable), a HAP Contract cannot be executed.

When Annual Re-examination calculations result in a Zero HAP, the family remains eligible for the program for six months. The HA must maintain a tickler file to contact the family to re-verify status and cancel the contract at the end of the six-month grace period if the family is still at Zero HAP. NOTE: This cancellation could occur before the end of the HAP Contract. Refer to Chapter VIII: Annual Re-Examinations regarding Zero HAP procedures.

If the family’s income subsequently decreases during the allowable time frame (six months), process an interim re-examination in accordance with Chapter IX: Interim Re-Examinations.

14. Zero Income

A Zero Income household is one in which an entire household claims no earned nor unearned income. A household with benefits or non-earned income (i.e. Social Security, child support, DHS, etc.) to minors (family members age 17 and under) is not considered a Zero Income household.

Upon completion of the Household Income, Asset, and Expense Declaration (MSHDA 1890) by all adult family members and it is noted that the entire household claims no income, the HA must then conduct a personal interview (either face-to-face or by telephone) with the head of household and complete a Household Living Expenses Questionnaire (MSHDA 488).

If it becomes apparent after review of the MSHDA 488 or during the interview that income exists, and/or if the family’s expenses exceed their known income, the HA must inquire as to the nature of the family’s accessible resources, contributions, and gifts. HA must have the family complete the Verification of Income from Contributions (MSHDA 486) to verify regular contributions to household income. The amount of regular contributions must then be converted to an annual income amount. Refer to Chapter IV. Income Includes.

If after completion of the MSHDA 488 it is determined there is no income, the head of household must sign the MSHDA 488 certifying lack of household income and a Verification of No Household Income (MSHDA 148) Form. A date for re-examination (three-month check-back date) must be inserted on the MSHDA 148 for check-back purposes. The MSHDA 1890 will suffice as verification of no income for all other adults in a Zero Income household.

Zero Income households with no assets and no deductions do not require the completion of the Third Party Verification Monitoring (MSHDA 78) form.

Any reported changes must be processed as an interim re-examination. Process all increases in income for Zero Income households, regardless of the amount.

If unreported income is discovered for a Zero Income household at any time the participant is receiving HAP, the participant must sign a Repayment Agreement (MSHDA 103) to pay back the inaccurate rent subsidy paid due to unreported income.

Check-Back Period

The household must check back with their HA three months from the effective date of the new/move/interim/annual re-examination, which resulted in zero-income for the entire household. (Example: for a 10/01/09 Initial, the check-back date is 01/01/10.) Although the participant is responsible to report back on the specified date, the HA must develop a tickler (i.e. follow-up) system to ensure compliance and to contact the participant by the fifth day of the check-back month if the participant has not contacted them. The Tenant Zero Income Report can be utilized to show tenants on zero income.

Check-Back Procedures

The MSHDA 148 requires the household to contact the HA on the applicable date. If the HA has not been contacted by the participant by the fifth day of the check back month, the HA should send a MSHDA 1890 and request completion within 14 days. For example, if the check-back month is August 2009 (and the participant has not initiated the contact), the forms must be forwarded by August 5, 2009.

• Participants should be given a 14-day response deadline for form completion and notify them that failure to complete the form is a program violation.
• If the form is not returned within the 14-day deadline, the HA must notify the participant of noncompliance with a program requirement and be canceled from the program.
• The HA reviews the returned MSHDA 1890 to determine which TPV sources to contact when new or loss of income sources are reported.
• If the entire household continues to have no income as verified by the newly submitted MSHDA 1890, the Head of Household should then complete a new MSHDA 488 with the HA if they claim no income again. Follow procedures as stated previously.
• HA must submit an interim re-examination for proof of zero income documentation with each checkbox even if the tenant remains zero income. TPV of income must include current EIV report with interim re-examination paperwork. The interim re-examination will document continued zero income or an income change.
• The HA forwards one copy of the MSHDA 148 form to the participant to notify them of the new three-month check back/interim re-examination date and forwards another copy to MSHDA for inclusion in the official MSHDA file.

15. Minimum Total Tenant Payment (TTP)

The minimum TTP for each household in the HCV Program administered by MSHDA is $0. A TTP is defined as the highest of the following amounts:

• 30% of the family’s monthly adjusted income
• 10% of the family’s monthly gross income
• Minimum TTP ($0)

A family’s TTP will only become $0 when both 30% and 10% amounts are zero. If all the amounts are not zero, then the minimum TTP will become the highest of the 30% or 10% items listed above.

Example A

• 30% of the family’s monthly adjusted income equals $35
• 10% of the family’s gross income equals $15
• Minimum TTP equals $0
• The family’s new TTP equals $35 (30% is the highest)

Example B

• 30% of the family’s monthly adjusted income equals $0
• 10% of the family’s gross income equals $10
• Minimum TTP equals $0
• The family’s new TTP equals $10 (10% is the highest)

Example C

• 30% of the family’s monthly adjusted income equals $0
• 10% of the family’s gross income equals $0
• Minimum TTP equals $0
• The familys new TTP equals $0 (10% and 30% are both $0)

Notification to applicants and/or participants

Applicants for the HCV program should be notified of the minimum monthly TTP requirement during their initial briefing session.

Participants in the HCV program must be notified of the change to their minimum monthly TTP requirement when 30% of the family’s monthly adjusted income or 10% of the family’s monthly gross income falls to $0 using an Adjustment Notification (MSHDA 34).

Section B: Income Includes

Annual income includes, but is not limited to, the full amount received (before taxes or other deductions), of wages and salaries, overtime pay, commission, fees, tips, and bonuses, and other compensation for personal services, which are

• Received by, or paid on behalf of, the family head of household, co-head, or spouse (even if temporarily absent), or to any other family member over 18 years of age,
• Acquired through assets owned by dependent family members; and/or anticipated to be
• Received from a source outside the family during the 12-month period following admission or re-examination; and/or
• Derived during the 12-month period from accessible assets; and
• Not specifically excluded by HUD.

Income includes the following:

1. Adoption Assistance Payments - Include only the first $480 per year for each adopted child.

2. Annuities - A written contract establishing a right to receive specified, periodic payments for life or for a term of years. If one lump sum is received, the payment is considered an asset, not income.

3. Bonuses - Include the full amount of the bonus (even if a lump sum), before any payroll deductions.

4. Business and Property Income - Include net income (gross income less allowable expenses) from the operation of a business or profession (including self-employment) or from rental, real, or personal property.

• Allowable expenses include interest payments on loans, straight-line depreciation of assets (as allowed by the IRS), etc.
• Costs for business expansion or improvements are not allowable expenses.
• Withdrawal of cash or assets from the operation of a business or profession is included as income except when the withdrawal is for reimburse­ment of amounts the family invested in the business.

5. Child Support and Alimony - Child support and alimony generally qualify, as “irregular income” because large arrearages in payments owed to HCV recipients is common. Unless the HA can verify that payments are made at the full court-awarded amount on a regular basis, calculations of child support and alimony received must be handled as “irregular income ” calculations. The HA should directly ask the applicant/participant if there is an arrearage and explain that calculations must be based on actual income received. Failure to calculate child support and alimony in this manner often penalizes the tenant for income not received (when the court-awarded amount is higher than actual payments received).

• It is imperative that the HA obtain as much information as possible from the list of acceptable verifications shown below before calculating such income. The HA must watch for court-imposed fees added to the amount of child support/alimony collected by Friend of the Court. Do not include these fees in income calculations.
  
• The tenant always has the right to request an interim revision if an income change occurs during the course of a re-examination period. If child support/alimony income is calculated inaccurately due to an arrearage not taken into account, or an arrearage develops subsequent to an annual re-examination, the HA will process an interim revision upon request of the tenant. If a year-to-date total of child support/alimony is shown on the verification provided, the income must be annualized. HA may use Verification of Child Support Income (MSHDA 482).

6. Commissions - Include full amount.

7. Death Benefits - See Item entitled "Retirement Funds, Pensions, Periodic Payments, Disability or Death Benefits, and Veterans Payment" and item entitled "Social Security, SSI, and Other SSA benefits".

8. Dependent Income - The following income must be included:

• Unearned income of minors, such as Social Security or SSI benefits;
• Income from assets owned by minors;
• For each full-time student age 18 or older, count earned income up to a maximum of $480 per year. If the student is the head of household, co-head, or spouse, count all income. Students must provide School Verification (MSHDA 55) and Verification of Earnings (MSHDA 49).
• Refer to the section on Chapter IV. Income Excludes, Earned Income Disregard for procedures to follow when a dependent with disabilities has earned income.

9. Educational Assistance (Students) -

• Any financial assistance under the Higher Education Act of 1965 (e.g. Pell Grants, federal work study program, Federal Supplement Educational Opportunity Grants, Academic Achievement Incentive Scholarships, State Assistance under the Leveraging Educational Assistance Partnership Program); from private sources (non-governmental sources of assistance) such as a trust, or a corporation, or an individual (parent, guardian, or other family member whether residing within the family in the HCV assisted unit or not, and/or from other persons not residing in the unit); or, from an institution of higher education as deined by the Higher Education Act of 1965 in 20 U.S.C. 1001 and 1002; that an individual (full or part-time student) receives in excess of amounts received for tuition shall be considered income to that individual.

For persons over the age of 23 with dependent children, the financial assistance described above is not considered annual income.

For full-time dependent students (age 18 and older) living with their parents where the parent(s) are the voucher holder and individually or jointly meet eligibility criteria, see dependent income above.

Financial assistance does not include loan proceeds.

Athletic Scholarship: In accordance with the FY 2005 Appropriations Act, it is required that the portion of any athletic scholarship assistance available for housing costs be verified by MSHDA with the third party income source and included in the determination of family adjusted income. MSHDA will deny housing assistance to those college students receiving athletic scholarship assistance with $5,000 or more annually available for housing costs.

10. Fees - Include full amount before any payroll deductions.

11. Gifts and Contributions - Any gift or contribution received on a regular and on-going basis is considered income.

• The amounts are considered income even if not monetary (food, vehicle payments, rent or utility payments, etc.).
• If the family’s expenses exceed its known income, HA will inquire about gifts and contributions. HA may have tenant complete and return the Verification of Income from Contributions (MSHDA 486) to verify contributions.
• Do not include sporadic gifts or casual contributions.

12. Insurance Policies - Include payments received on a regular basis as a result of an insurance claim as income. If one lump sum is received, the payment is considered an asset, not income.

13. Interest and Dividends from Family Assets - Include withdrawal of cash or assets from an investment as income except when the withdrawal is reimbursement for cash or assets invested by the family.

Calculating Interest and Dividends from Family Assets:

• Include the actual income from assets as income when family assets are $5,000 or less.
• When family assets are more than $5,000, use the greater of:
  • Actual income from assets, or
  • Imputed income from assets based upon passbook rate determined by HUD. (To calculate imputed income, multiply total cash value of assets by current HUD approved passbook rate.)

14. Military Pay - The following income must be included:

• Any military pay including Coast Guard, National Guard, and Reserve pay.
• Veterans Affairs (VA) and GI payments, which are generally received after separation of service.
• Full amount of military pay and allowances of head of household, spouse or co-head, whether or not living in the dwelling unit.
• Full amount for any family member who is identified on the Lease Agreement, Family Composition form, and any subsequent documents and who is temporarily (less than 90 calendar days) away from the home.
• HA may use Verification of Military Pay (MSHDA 485) for TPV.
• Enlistment bonuses must be included in annual income. (A lump sum enlistment bonus is not specifically excluded by 24 CFR 5.609(c)(3) so therefore must be counted.)

15. Retirement Funds, Pensions, Periodic Payments, Disability or Death Benefits, and Veteran’s Payments

• On-going income from these sources is included in income calculations.
• The definition of disability used by the agencies issuing these types of benefits does not match the definition used by HUD. Therefore, receipt of any of these types of benefits is NOT automatic verification of disability for purposes of granting the $400 Elderly/Disabled (ED) allowance. To qualify for the ED allowance, a recipient of these types of benefits must have a Verification of Disability and/or Special Needs form (MSHDA 16) that has been completed by a licensed health care professional on file. The MSHDA 16 needs to be “permanent” or completed annually.
• HA may use Verification of Pension or other Income (MSHDA 483) and/or Verification of Veterans Benefits (MSHDA 484) for TPV.

16. Self-Employment - Only the net income – Adjusted Gross Income (AGI) less expenses from a business is included in annual income.

When Federal Income Taxes have been or will be filed:

• Obtain a photocopy of a signed U.S. Individual Income Tax Return (Form 1040) filed by the applicant/participant for the previous year.
• Review all appropriate schedules (Schedule C, Profit or Loss from Business; Schedule E, Rental Property Income; Schedule F, Farm Income; Form 4562 Depreciation and Amortization etc.).
• Add any unallowable expenses back into the AGI. See non-eligible deductions below.

When Federal Income Taxes have not or will not be filed:

• If monthly statements are maintained, a minimum of the four most recent monthly statements is required. The statements must identify profits, losses, and net income, and be signed and dated by the applicant/participant.
• If monthly statements are not maintained, a notarized self-employment certification/statement is required. It must cover at least a four month period and be signed and dated by the applicant/participant.
• Calculate AGI by deducting verified allowable expenses from gross income identified from the self-employment statement.

If the applicant/participant is operating the business from the assisted unit, and an amount is indicated on Schedule C, the following deductions must be added back into the AGI:

• Rent on business property
• Utilities (telephone, electric, gas, etc)
• Expenses for business use of home.
• If the applicant/participant is operating the business from a separate office/business space, expenses for rent or ownership are eligible tax deductions (as allowed and defined by the IRS).

Non-eligible deductions

The following are non-eligible HCV program deductions and need to be added back into the AGI. They are eligible IRS deductions and will appear on Schedule C or other appropriate schedules:

• Depreciation, as identified on Schedule C, in Part II. Depreciation is allowed by the IRS, but is not an out-of-pocket expense; this must be considered as income.
• Payments on loans, including principal and interest.
• Expenses/outlays for business expansion and capital improvements, including interest on business indebtedness.
• Self-employed health insurance deduction on Federal 1040. If the family qualifies for medical expense deductions, add this amount to the medical expenses.
• A few minor costs identified on Schedule C, such as legal and professional services, etc.

17. Severance Pay – Include payments received.

18. Social Security (SS), Supplemental Security Income (SSI), and Other Social Security Administration (SSA) Benefits

In an effort to eliminate the time consuming manual requests for benefit verifications from public housing authorities across the nation, SSA provides HUD with benefit information on all current participants and household members who have disclosed a valid social security number. HUD makes this information available to public housing authorities administering the HCV program through the HUD EIV system. The HUD EIV system assists in the verification of SSA benefits by comparing data from the HUD 50058 form to data reported by the SSA. Therefore, this informtion is not available for applicants or participants who just started receiving payments. Verify SSA benefits for participants undergoing re-examination using the HUD EIV system.

If the SS information is not available through the EIV method, the HA should request a current SSA benefit verification letter (dated within 60 days of voucher issuance) from each household member that receives SSA benefits so the HA and MSHDA do not incur the cost of a TPV of SSA/SSI benefits. If the participant and/or household members are unable to provide the requested document(s), the applicant/participant/household member should be instructed to call the SSA at 1-800-772-1213 (available 24 hours/7 days a week) to request a benefit verification letter OR, make the request for a benefit verification letter via the SSA internet website at www.ssa.gov. There is no cost for this verification letter to the applicant/participant/household member. From the front page of the Social Security online website, go to the left hand side of the page and under the column "Things You Can Do Online", click on Get a Proof of Income Letter. Upon receipt of the letter, applicant/participant/household member should provide the HA with the original benefit verification letter. The HA should make a copy of the original benefit verification letter, return the original letter to the applicant/participant/household member, and maintain the photocopy of the benefit letter in the tenant file with the date noted as to when the original copy of the benefit letter was viewed.

19. Stipends - A periodic stipend received by a family member from a non-profit organization for a volunteer service would be included as income unless it is specifically excluded under 24 CFR 5.609(c)(17). Obtain information from the non-profit organization about the source of its funding to determine whether or not the stipend should be included as income. For example, if funding for the stipend is provided under the Domestic Volunteer Services Act of 1973 or the Older Americans Act of 1985, you must exclude it.

20. Temporary Assistance to Needy Families (TANF) – TANF is commonly known as “Welfare,” “Aid for Dependent Children,” or “ Family Independence Program (FIP)” grant, and is received through DHS. Grants include cash, payments, vouchers, and other forms of benefits designed to meet a family’s ongoing basic needs (i.e. food, clothing, shelter, utilities, and household goods). Benefits also include payments made on behalf of DHS or as a condition of employment or community service and may include child care, transportation assistance, and other supportive services.

Acceptable verification includes:

• DHS caseworker provides completed MSHDA 107,
• A DHS computer printout, or
• Verbal verification (which must be documented on a MSHDA 77). If verbal information is received, the name and title of the individual providing information is required to be documented. Information obtained must be documented on a MSHDA 77.
• Compare grant information to the charts found in the Appendix, Flat Grants. Investigate and document any discrepancies to discover unreported income and/or unreported family member changes.

Note: Applicants/participants are not required to apply for welfare benefits.

21. Tips - Include full amount before any payroll deductions.

22. Unemployment Benefits

• Include lump sum payments caused by a delay in processing (including benefits for an “exempt” job);
• Multiply gross weekly benefit by 52 weeks, regardless of the number benefit weeks remaining; and
• When the family reports the benefits have ceased, complete an Interim Revision to adjust annual income. Refer to PPM, Chapter IX.

23. Wages/Salary - Anticipated gross amounts prior to payroll deductions or garnishments, including:

• Overtime;
• Commissions;
• Bonuses;
• Tips or other compensation for personal services;
• Projected pay increases/raises;
• For any exempt earned income, refer to the section of this chapter on Income Excludes.
• See PPM chapter on Income Excludes - Earned Income Disregard for information on when not to include wages earned by disabled family members.
• For calculation of School Employment, see PPM chapter on Income Verifications - Irregular Income.

24. Worker’s Compensation - Lump sum Worker’s Compensation payments are not added to income; but should be included as an asset. This includes benefits for an “exempt” job.

25. Veterans Administration Benefits - Benefits received under the VA’s Incentive Therapy (IT) and Compensated Work Therapy (CWT) programs are included in the calculation of annual income.

Veterans payments: Ongoing, periodic amounts are included in annual income. A lump-sum payment or prospective monthly amounts for the delayed start of a periodic payment must be included in annual income.

Section C: Income Excludes

The following items should be excluded from annual income. All income exclusions need to be verified using TPV but do not need to be entered in Elite except for earned income disregard.

1. Adoption Assistance Payments in excess of $480 per adopted child. Include only the first $480 received per year as annual income.

2. Census Takers Earned Income - Term of employment is temporary (cannot exceed 180 days) and does not culminate in permanent employment.

3. Dependent Income - Exclude all earned income of dependent family members under age 18. See Earned Income Disregard below for details on when to disregard adult dependent (disabled individual’s) income.

4. Earned Income Disregard (EID) For Persons With Disabilities (CFR 5.617) - Effective April 20, 2001, HUD implemented a policy that disregards or provides a disallowance of increases in earned income for family members with disabilities. The disregard applies only to participants in the HCV Program. The disregard does NOT apply to participants in the Moderate Rehabilitation Program or participants living in SRO developments.

All household income is included for purposes of admission to the program (i.e. determining income eligibility, 40% affordability, income targeting.)

This disregard only applies to the family members with disabilities who have an increase in earned income after their initial HCV participation date, not the entire household. A disabled family is a family whose head, spouse or sole member is a person with disabilities.

If the family member’s disability is not verified by current receipt of SSI or a permanent Verification of Disability and/or Special Medical Needs (MSHDA 16), the disability must be re-verified annually.

5. Educational Assistance

• Wages and other earned income in excess of $480 for full-time students who are 18 years or older (except the head of household, spouse or co-head). Include the first $480 as income. (Note: These full-time students are generally living in an assisted household with his or her parent(s) and the parent(s) are the head of household. Student is considered a dependent.)
• The full amount of financial aid and scholarships funded under Title IV of the Higher Education Act of 1965, Federal Work Study programs, Bureau of Indian Affairs Student Assistance, Education entitlements, Grants, and all other amounts received for student financial assistance IF the full or part-time student is living in an assisted household with his or her parent(s) and the parent(s) are the head of household. (Note: student is considered a dependent.)
• Financial assistance to a student in excess of tuition will not be included in annual income in determining the student’s eligibility when the student is over the age of 23 years with dependent children.
• Student loans and loan proceeds.

6. Foster Children and Foster Adult(s) Care Payments - Foster adults are usually unrelated individuals with disabilities who are unable to live alone. Payments received for the care of foster children and foster adults are not considered income.

7. Holocaust Reparations - Payments made by a foreign government to persons who were persecuted during the Nazi era.

8. Home Care Payments - Amounts paid by a State agency (i.e. Michigan’s Family Support Subsidy Program) to families who have a developmentally disabled family member(s), adult or child, living at home. Possible uses of the subsidy include, but are not limited to:

• Family counseling
• Home remodeling and purchase of special equipment to accommodate the needs of the impaired child or adult (ramps, wider doors, shower chair, etc)
• In-home specialized care
• Respite (baby-sitting) care
• Special diets
• Unique transportation costs

9. Income specifically excluded by Federal statute. Examples include, but are not limited to

1. Agent Orange Settlements - Payments received after January 1, 1989 from the Agent Orange Settlement Fund or any other fund established in the “In Re Agent Orange” product liability litigation.
2. Child Care and Development Block Grant Act of 1990 - the value of any child care provided or arranged (or reimbursement for costs incurred) under this Act.
3. Crime Victim Compensation - Any amount of compensation under the Victim of Crime Act.
4. Domestic Volunteer Services Act of 1973 - Payments under this Act include programs for seniors, national volunteer antipoverty programs, and small business administration programs such as:
   • Active Corps of Executives (ACE)
   • Foster Grandparents
   • National Volunteer Program to Assist Small Business and Promote Volunteer Services to Persons with Business Experience
   • Older American Committee Service Program
   • Peace Corps
   • RSVP - Retired Senior Volunteer Program
   • Senior Companions Programs
   • Service Corps of Retired Executives (SCORE)
   • Service Learning Program
   • Special Volunteer Programs
   • VISTA - Volunteers in Service to America
5. Earned Income Tax Credit - The Internal Revenue Service (IRS) provides the Earned Income Tax Credit to low-income workers with children. Low-income workers must apply for the credit and will receive it in advance, in their regular paycheck, or in a single lump sum when filing their income tax return.
6. Food Stamps – Exclude the value of the allotment provided to an eligible household under the Food Stamp Act of 1977.

Note: Food contributions provided occasionally to the household from organizations or persons would be excluded from annual income because they fall into the category of “temporary, nonrecurring or sporadic income”. However, food contributions provided on a regular, ongoing basis—for example weekly or monthly, would be classified as “regular contributions or gifts received from organizations or from persons not residing in the dwelling” and would be included in annual income.

7. Heating Assistance - Payments or allowances made under the Department of Health and Human Services Low-Income Home Energy Assistance Program (LIHEAP).
8. Indian Settlements/Trusts:
   • Payments received under the Maine Indian Claims Settlement Act of 1980.
   • Payments received under the Alaska Native Claim Settlement Act.
   • Income derived from certain sub marginal land of the US held in trust for particular Indian Tribes.
   • Income derived from the disposition of funds of the Grand River Band of Ottawa Indians.
   • Payments by the Indian Claims Commission to the Confederated Tribes and Bands of Yakima Indian Nation or the Apache Tribe of Mescalero Reservation.
   • The first $2,000 of per capita shares received from judgment funds awarded by the Indian Claims Commission or the US Claims Court, the interests of individual Indians in trust or restricted lands, including the first $2000 per year of income received by individual Indians from funds derived from interests held in such trust or restricted lands.
9. Title IV of the Higher Education Act of 1965 – The full amount of financial aid and scholarships funded under Title IV of the Higher Education Act of 1965 including awards under the Federal Work Study Program, Bureau of Indian Affairs Student Assistance, Education entitlements, Grants, and all other amounts received for student financial assistance except as provided for the housing portion of athletic scholarships and the additional provisions of the ineligible student provisions.
10. Title V of the Older American’s Act of 1965: Payments received from programs funded under Title V, including the Senior Community Service in Employment Program (SCSEP) funded through the Department of Labor. The program provides grants to organizations who fund part-time employment of persons 55 years of age or older with limited income. Examples include, but are not limited to:
    • AARP - American Association of Retired Persons
    • Green Thumb
    • National Association for the Spanish Elderly
    • National Council of Senior Citizens (a.k.a. Senior Aides)
    • National Urban League
    • NCBA - National Caucus for Black Aged
    • NCOA - National Council on Aging
    • Senior Community Services Employment Program (CSEP)
11. Spina Bifida – Any allowance paid under the provision of 38 U.S.C. 1805 to a child suffering from Spina Bifida who is the child of a Vietnam veteran.
12. Allowances, earnings and payments to Americorps participants under the National and Community Services Act of 1990.
13. Allowances, earnings and payments to individuals participating in programs underthe Workforce Investment Act of 1998.
14. Medicare incentive reimbursements for discount cards.

10. Kin-GAP Payments - Subsidies to children leaving the juvenile family court system to live with a relative or legal guardian. These subsidies are paid by states and serve as an alternative to foster care placements.

11. Live-in Aide (full-time) Income - The provider is not considered a member of the household and only resides in the unit to provide services.

12. Lump Sum Additions to Family Assets – If the payment is expected to be received on a regular ongoing basis, it is not a ‘lump sum’ and therefore is counted as income. All types of lump sum additions excluded from annual income are included as an asset unless otherwise exempt by HUD.

13. Medical Reimbursements - Amounts received specifically for reimbursement of the cost of medical expenses for any family member.

14. Medicare Prescription Drug Benefit Subsidy – Exclude the low-income subsidy received by beneficiaries enrolled in the Medicare Prescription Drug Plan Part D effective January 1, 2006. More information about Medicare Prescription Drug Benefit subsidy is available at 1-800-633-4227 or www.medicare.gov.

15. Military Pay - The following income must be excluded:

• Full amount of military pay of any family member (except head of household, co-head or spouse) who is permanently (more than 90 days) away from home in the military (including Coast Guard, National Guard, and Reserve Units) is excluded. Note: The member must be removed from the Lease and the Family Composition (MSHDA 51a).
• Special "hostile fire/imminent danger pay for serving an area in direct support of military operations in a designated combat zone" is payment received by a person serving in the Armed Forces who is exposed to hostile fire and is always excluded income. Generally, hostile fire/imminent danger pay is not included on W-2 Forms for persons who do qualify for the exclusion and is included on W-2 forms for persons who do not qualify for the exclusion.
• Income of a guardian who is temporarily living in a unit solely for the purpose of caring for dependents that a military person leaves in the unit is not to be counted in determining family income and the amount of rent the family pays based on family income.
• Other military pay specifically excluded by law.

16. Reimbursement from Other Publicly Assisted Programs for related or out-of-pocket expenses are excluded when made solely to allow participation in the program. Examples include 1) child care, transportation and other work related expenses when a welfare recipient, as a condition of continued benefits, works in a nonprofit agency to acquire job skills; and 2) payments received by a volunteer fire fighter for transportation reimbursement.

17. Resident Service Stipend - Amounts received by a resident of a development for performing a service, on a part-time basis, which enhances the quality of life in the development, for the PHA, or the owner, subject to the following:

• Not to exceed $200/month - If the resident is paid more than $200/month, the entire stipend (including the $200) is included as income.
• Such services may include, but are not limited to: fire patrol, hall monitoring, lawn maintenance, or resident Initiatives coordination.

18. Scholarships and Grants – see Educational Assistance

19. State or Local Tax Credits, Refunds and Rebates

• Includes rebates for property taxes paid on a dwelling unit, i.e. Homestead Property Tax Refund.
• Income tax refund checks are not income, nor assets.

20. Social Security and SSI Lump Sum/Deferred Periodic Payments - Include lump sum payments as an asset, not income.

21. TANF Child-Only Grants or TANF Non-Needy Grants - FSS families that receive Temporary Assistance for Needy Families (TANF) Child-Only Grants or TANF Non-Needy Grants that are made to a dependent child or to a caretaker on the child's behalf solely on the basis of the child's need and not on the need of the child's current non-parental caretaker do not qualify as welfare assistance because these grants are not designed to meet the “family’s ongoing basic needs”.

22. Temporary, Nonrecurring or Sporadic Income - Includes gifts and cash contributions received less than every three months and/or are less than $1,200 a year.

23. Training Programs - HUD excludes earnings and benefits from employment training programs funded by HUD and incremental increases in income resulting from participation in a qualifying state or local employment-training program, including those not affiliated with a local government. Incremental refers to the increase between the total amount of earnings and public assistance of a family member prior to enrollment in the training program, and the earnings and public assistance of the family member after enrollment in the training program. The exclusion applies only for the period during which the family member participates in the employment-training program. All other amounts, increases and decreases, are treated in the usual manner in determining annual income.

HUD defines a “Training Program” as a program which:

• Has clearly defined goals and objectives,
• Has a variety of components,
• Takes place in a series of sessions over a period of time,
• Is designed to lead to a higher level of proficiency,
• Enhances the individual’s ability to obtain employment; and
• Has a performance standard to measure proficiency.

Training may include, but is not limited to:

• Classroom training in a specific occupational skill,
• On-the-job training with wages subsidized by the program,
• Basic education.

Income derived from the following specific training programs is excluded for purposes of determining eligibility and benefits:

• Workforce Investment Act of 1998, formally known as the Job Training Partnership Act (JTPA) or the AmeriCorps Living Allowance under the National and Community Service Act of 1990.
• All amounts received under any training program funded by HUD, including the Comprehensive Improvement Assistance Program (CIAP). Tenant trainees receive allowances to cover costs associated with participation in the program (day care, transportation, clothing, etc.). Upon completion of the training, if the trainee obtains new employment, these allowances are considered income.
• Plan for Achieving Self Support (PASS): Disregard monies issued to a disabled person exclusively set aside for use under PASS, which provides support for certain aged, blind, and disabled individuals and is encouraged by the SSI program.

24. Visitor’s Income – Visitor’s income is not included if they have been in the unit less than 14 consecutive days, or for less than 30 total days in a 12 month period. If the visitor is a caretaker for children, in the absence of their guardian, the caretaker can remain in the unit as a visitor until a determination of custody is made.

Section D: Assets

If any family member indicates on the Household, Income, Asset, and Expense Declaration (MSHDA 1890) that they have assets (including savings, checking, CD’s, IRA accounts, life insurance policies, etc.) obtain third party verification. Verify and include all assets owned by all family members, including those owned by family members under the age of 18.

Checking ‘No’ and signing the Checklist is sufficient verification that an adult member does not have assets and further verification is not required.

The latest financial institution statements (i.e. checking accounts or other statements only provided on a quarterly basis) can be accepted as long as a six-month period is covered.

If the total cash value of the family assets are:

Less than or equal to $5,000, use the actual income earned from assets (i.e., interest and dividends); or

Greater than $5,000, use the greater of:

• Actual income earned from assets, or
• Imputed income from assets based upon passbook rate approved by HUD.

Imputed Income is HUD’s approved passbook rate multiplied by the total cash value of assets

Note: Elite automatically totals all household assets and adds HUD’s approved passbook rate interest if the total assets are greater than $5,000. This imputed asset income appears in the income totals of the printed worksheet and may affect the family’s TTP.

Include withdrawal of cash or assets from an investment as income, except when the withdrawal is reimbursement for cash or assets invested by the family.

When valuing assets, deduct the expenses involved in converting assets to cash, such as:

• Penalties for premature withdrawal; and
• Brokerage and legal fees; and
• Settlement costs for real estate transactions.

1. Assets Include:

a. Assets Disposed of for Less Than Fair Market Value

If an asset worth more than $5,000 is sold for less than fair market value (FMV), include the difference between fair market value and the actual payment received as an imputed asset. Applies to assets disposed of during the two years preceding admittance or re-examination.

Does not apply to assets disposed of as a result of a divorce or separation, foreclosure, or bankruptcy (vehicles, furniture, clothing, etc.).

If the Cash Value is less than $5,000, the asset automatically falls below MSHDA’s minimum threshold and further verification is not required. Document using the Supplemental Information form (MSHDA 77).

Imputed assets over $5,000 are subject to the minimum HUD approved passbook rate for 2 years from the date of disposal.

Tickler for 2 years after the date of disposal of the asset. At the end of the 2 years, an Interim re-examination must be processed to remove the imputed income.

If a balance remains on the asset (mortgage) which requires payoff, subtract the balance as an expense to determine cash value.

Acceptable verifications of the disposition of assets for less than FMV include:

• Receipts
• Appraisals
• Purchase agreements, etc.
• A notarized tenant certification
• Tax Statement

Use State Equalized Value (SEV) times 2 (two) to determine FMV or appraisal.

Example of Calculating an Imputed Asset:

Applicant sold home to daughter on 3/1/03 for $5,000 and paid broker’s fees/settlement costs of $1,700. The FMV is $19,500, and there were no secured loans.

Date Disposed of: 3/1/02

Fair Market Value $ 19,500

Less Expenses:

Broker Fee (7%) $ 1,365

Legal Fee 0

Settlement Costs $ 335

Less Mortgage Balance 0

Less Total Expenses 1,700 $ (1,700)

Actual Payment Received $ (5,000)

Imputed Asset (cash value) * $ 12,800

The amount to be included as family assets is $12,800. It is subject to a minimum HUD approved passbook rate of interest until 03/01/05, or two years from date of disposal. If this tenant’s re-examination is 6/1/03, the asset is counted until 2/28/05 (2 years from date of disposal), then asset must be removed.

b. Bank Accounts:

• Savings Account: Use Verification of Resources (MSHDA 48) as the preferred method of third party verification. If no response is received from the financial institution after 28 days, use the most current statement provided by the applicant. If the use of a tenant provided statement is necessary, document on a MSHDA 77 that the original statement was viewed and the date.
• Checking Account: Third party completion of the MSHDA 48 is the preferred method of verification. If no response from the financial institution is received after 28 days, use an average of the most recent six months of original statements provided by the applicant/tenant if the current balance and any applicable interest rate is evident. If the use of statements is necessary, document on a MSHDA 77 that the original documents were viewed and the date. Physically reviewing a checkbook is not considered adequate verification.
Example: Tenant just opened checking account three months ago so financial institution can only provide a three month average. Documentation on the MSHDA 77 must have notation explaining it is a new account and additional information is unavailable.
• Certificate Of Deposit (CD): Use MSHDA 48 to verify. In EHS, enter the cash value of CD and the interest rate. EHS determines actual income by multiplying the current cash value of the CD by the designated interest rate. Determine the cash value by subtracting any penalty for early withdrawal or termination from the total value of the CD.

CD amount – penalty = Cash Value

CD’s Cash Value X interest rate = Actual Income

c. Franchises:

A franchise that an individual owns (or is making payments on) is an asset.

To determine the value of the franchise:

• Obtain a local appraisal of the franchise, as provided and paid for by the applicant/participant (a.k.a. the franchisee); or
• The value of a franchise is usually 75% of gross income as identified on Federal Tax Schedule C.

d. IRA, 401K, KEOGH, and Similar Retirement Accounts:

The value of each retirement plan equals the amount of money the person can currently withdraw from the plan minus penalties for early withdrawal. Deduct any early withdrawal penalty, but not the amount of any taxes due.

Do not consider funds available if the person must quit or retire from their job to withdraw any money.

e. Life Insurance (Cash Value Of Whole Life Insurance)

Consider a life insurance policy as an asset if it generates a ‘cash surrender value’ (CSV). CSV identifies the payment the policy owner receives by canceling the policy before it matures or before the insured dies. The value may be entitled ‘benefits/ cash surrender value’ or Cash Value of the policy.

Include the CSV as an asset, minus any penalties or fees for early withdrawal.

Do not include Term Insurance as an asset if it does not generate a CSV.

Require a letter or statement from the life insurance company/agent to verify the policy, current cash value, and any penalties or fees for termination or early withdrawal.

f. Lump Sum Additions

Lump Sum payments are an asset. Interest accrued on lump sums is income. If the payment is received on a recurring basis, it is not a lump sum and is therefore considered income.

Examples of lump sums that are considered assets:

• Inheritances
• Insurance payments
• Health and accident insurance or malpractice suits
• Workman’s Compensation
• Social Security and SSI lump sum payments
• Capital gains
• Settlement for personal or property losses
• Lottery winnings
• Other claims (use actual amount received)

Deduct legal fees when an attorney assists in the recovery of lump sum compensation.

g. Personal Property Held as an Investment

Personal property held as an investment, such as gems, jewelry, coin or stamp collections, antique cars, etc, are considered assets.

Require a letter/documentation from a reliable source regarding the current cash value of the investment.

h. Real Estate, Property Ownership, Land Contracts

Acceptable verifications of ownership include (but are not limited to):

• Deed
• Title Policy
• Closing statement
• Tax bill
• Divorce agreement
• Partnership agreement
• Property tax statements

1. Real Estate Ownership

   The Cash Value of the property is the current market value less the indebtedness (outstanding loans) and any reasonable costs (i.e. broker fees, closing costs, etc.) necessary to sell the asset.

   Use the State Equalized Value (SEV) vs. ‘assessed value’ of property listed on the tax bill. The SEV multiplied by two equals the value of the property.

   If the property was purchased within the last 12 months, use the actual purchase price as documented by the family.

   Verify the indebtedness and fees necessary to sell the asset (i.e. amortization schedule).

   Example of how to calculate cash value of property:

   SEV = $50,000

   SEV x 2 (equals actual market value of property) $ 100,000

   Less: HUD Asset Expenses:

   Broker Fee (7%) ($ 7,000)

   Legal Fee ($ 0)

   Settlement Costs ($ 1,000)

   Mortgage Balance* ($ 20,000)

   Total Asset Expense Deduction 28,000 ($ 28,000)

   Equals: Cash Value of Asset $ 72,000

   *Mortgage Balance as of effective date of re-examination

2. Joint Ownership of Property

   Include the percentage actually owned by the household as an asset.

   Obtain one of the documents identified as an acceptable verification of ownership and verify percentage of ownership using one of the following methods:

   • If one name is on documentation, assume 100% as an asset
   • If two names are on documentation, assume 50% as an asset
   • If three names are on documentation, assume 33.33%
   • If unable to determine joint ownership, assume 100% ownership.
3. Land Contracts

   The sale of property on a land contract is considered an asset (i.e., principal payments) since the interest paid by the buyer on the sale is considered income to the seller. The balance of the payment (i.e. principal, taxes, insurance) is considered liquidation of an asset and is not counted as income.

   If no changes have occurred, re-verification on an annual basis is not required.

   Acceptable verifications of interest paid (income of seller) on land contract sale:

   • Documentation from the seller’s accountant, attorney, real estate broker, or financial institution, verifying the interest due for the next 12 months.
   • A copy of the check paid by the buyer that shows a breakdown of amounts paid for principal and interest.
   • An amortization schedule identifying interest for the next 12 months following the effective date of the (re) examination.

   The value of the asset includes the current principal balance less any outstanding indebtedness owed on the property. Acceptable verification of a land contract sale:

   • Copy of land contract.
   • Copy of amortization schedule identifying present balance owed to the family.
   • Letter, document, or form substantiating the indebtedness. A financial institution could provide documentation or the seller must provide a notarized Personal Note or Land Contract as verification.
4. Rental Property Owned by Family

   The net income received from rental property, adjusted for changes expected during the next 12 months, is included as Asset income. All relevant expenses (utilities, taxes, maintenance, insurance, principal and interest payments, etc.) paid by the family must be verified and deducted from gross rental income.

   The following documentations are acceptable to verify rent and expenses:

   • Gross Rent
   • Copy of the Lease Agreement
   • Lessee’s notarized statement identifying monthly payments
   • Copy of three months of canceled checks or money orders, rent receipts, etc.

   Utilities

   • Copy of Schedule E of Federal 1040 tax return from the most recent year.
   • Third party verification from utility company
   • Estimated monthly expense calculated from the MSHDA utility chart
   • Actual utility bills for a one-year period (compute monthly average).

   Insurance

   • Copy of insurance statement
   • Schedule E of Federal 1040 tax return from the most recent year.
   • Escrow statement

   Maintenance/Other Expenses

   • Paid receipts
   • Schedule E of Federal 1040 tax return from the most current year.

   Taxes

   • Copy of tax receipt from governing municipality
   • Canceled check verifying same
   • Bank statement evidencing payment of taxes
   • Schedule E of Federal 1040 tax return from the most recent year.

   Principal and interest payments

   • Copy of financial institution statement evidencing payment history
   • Amortization schedule identifying outstanding debt and monthly principal and interest payments

   Value of the Asset – (See example at beginning of this section to determine Cash Value of Property.)

   • Letter or documents from a financial institution, broker, etc.
   • Written quote from a licensed real estate agent or certified property appraiser, estimating the net market value (sales price less broker’s fees, settlement costs, etc.) of the property.
   • Real estate tax statements that identify the SEV. Multiply the SEV by 2 to determine the property’s value.
   • Family’s notarized statements or signed affidavits verifying the value of the property.

   Example of Actual Income from Rental Property:

   Gross Rent from Rental Property (annual) $ 7,200

   Utilities $ 1,000

   Insurance $ 500

   Taxes $ 2,000

   Maintenance/Other Expenses $ 300

   Less: Total Expense Deduction 3,800 ($3,800)

   Equals: Actual Income from Rental Property $3,400

5. Equity In Real Property Or Other Capital Investments

   Equity equals the estimated current market value of the asset less the unpaid balance on all loans secured by the assets and all reasonable costs (such as brokerage fees) that would be incurred in selling the asset.

i. Retirement/Pension Funds

Include any benefits received through periodic payments, including Veterans Affairs (VA) and GI payments.

Before retirement - Include only those amounts the family can withdraw without retiring or terminating employment.

After retirement - Include as an asset any monies the applicant/participant elects to receive as a lump sum after retirement or termination of employment.

j. Stocks, Bonds, Mutual Funds, etc.:

1. Stocks – Determine the actual income by using ending balances on statements; multiply the number of shares by the current dividend rate. Note: If dividends are reinvested, actual income equals zero.

   The cash value equals the amount the asset currently sells for, less brokerage charges and any fees/penalties if the asset was sold immediately.

   Document stock ownership (i.e. current statement).

   Determine the current value of the stock(s) by checking a newspaper or other source, such as the Internet. Record the source of the stock values on a MSHDA 77.

   Determine brokerage charges by contacting a broker or obtain a statement from the broker.

   Determine the cash value by using ending balances on statements; multiply the number of stocks by the current value of the stocks minus brokerage charges/penalties if stock was sold immediately.

   Determine the actual income by using ending balances on statements; multiply the number of shares by the current dividend rate.

   Note: If dividends are reinvested, actual income equals zero.

2. Mutual Funds – Determine actual income by using ending balances on statements; multiply the number of shares by the current dividend rate. Note: If dividends are reinvested, actual income equals zero.

   The cash value equals the amount the asset currently sells for, less brokerage charges and any fees/penalties if the asset was sold immediately.

   Document mutual fund balance (i.e. current original quarterly/monthly statement).

   Determine the Cash Value using ending balances on statements. Determine the Share Balance by multiplying the number of shares by the current value of the share (minus any penalty/fees if funds were sold immediately).

   Determine Actual Income by using ending balances on statements; multiply the number of shares by the current dividend rate.

   Note: If dividends are reinvested, actual income will equal zero.

3. U.S. Savings Bonds – Actual income always equals zero. The Cash Value of Bonds is added to household assets.

   The U.S. Treasury Department issues Savings Bonds. They are registered (owned exclusively by the person(s) named on them) and non-marketable (may not be sold).

   I-Bonds are sold at face value.

   Series EE Savings Bonds are sold at half the face value (mature after 30 years). Interest is earned (accrued) monthly; interest is compounded semi-annually. Earnings are paid out when the bonds are redeemed.

   Series HH Savings Bonds earn and payout interest semiannually. The face value of Series HH Bonds is paid when redeemed.

   The money placed in savings bonds is available after six months; if redeemed earlier than five years from the issue date, the penalty is equal to three months of earned interest.

   Actual income always equals zero. The Cash Value of Bonds is added to household assets.

   The Cash Value (or current value) of a U.S. Savings Bond equals the amount the owner could get if the bond were cashed today. If the bond has not reached maturity, Cash Value is always less than the face value on the bond.

   U.S. Treasury has a website at www.savingsbonds.gov where detailed information on U.S. Savings bonds and their current value (Savings Bond Calculator) is available.

   The current value of a bond may also be determined by contacting a Financial Institution and requesting the day value of the bond. Document the contact and the current value of the bond on a MSHDA 77.

4. Securities bought on Margin

   If a security was not paid in full at the time of purchase (bought on margin), the securities firm made a loan to the buyer. Deduct the balance owed from the current price if brokerage account statement verifies the margin balance.

5. Money Market Funds:

   These funds are similar to a passbook savings account, except the interest rate on the money market funds usually exceeds the passbook rate. Include the Cash Value of the money market fund as an asset.

k. Trusts – Include funds received from the trust as income.

The cash value of trusts that are available to, and may be withdrawn by, the household. Include funds received from the trust as income. Do not include irrevocable trusts.

2. Assets Exclude:

• Necessary personal property and day-to-day living needs, such as clothing, furniture and automobiles
• Vehicles and other specially equipped items for the disabled.
• Business or farming operation assets.
• Note: Consider rental properties as personal assets held for an investment rather than business assets, unless real estate is the applicant/participant’s primary occupation.
• Assets not accessible to the family or which provide no income for the family.
• Equity in owner-occupied cooperatives and manufactured homes in which the family resides and equity accounts in HUD homeownership programs.
• Interest in Indian Trust lands.

Section E: Allowances

Allowances are part of the annual income calculation and deducted from the total gross income. Do not allow deductions and/or allowances unless the household is eligible for the allowance at the time of the calculation or HAP Contract begin date. Example: If the contract begin-date is 6/1/03 and a family member does not turn 18 until 6/2/03, the member is still eligible for the dependent allowance. The allowance must be removed at the next action processed after the family member turns 18.

1. Dependent Allowance

Anyone under the age of 18 (except the head of household) is a dependent until their 18th birthday. Each dependent household member is awarded a $480 dependent allowance. An Interim is processed to remove the dependent allowance and add applicable income immediately following their 18^th birthday.

A dependent household member is any person:

• Who is less than 18 years of age, or
• Who is disabled (except head, spouse/co-head), or
• Who is an eligible full-time student (except head, spouse/co-head), or
• A spouse or co-head under 18 years of age.

Adopted Minor Children: Include adopted minor children (but not foster children) as dependents. Allow the dependent allowance for each adopted minor child in the household.

An unborn child does not receive the dependent allowance. An Interim Re-examination is processed after the child is born. The unborn child is considered when determining voucher eligibility (bedroom) size if the mother is a single person living alone. A MSHDA 16 is required to verify the pregnancy. Refer to Chapter III, Section I, Voucher Issuance for additional details.

Never include the head, co-head, or spouse as a dependent unless under the age of 18.

• If a head or co-head is under 18, use a relationship code as “other youth under 18” in Elite. Earned income is excluded. Verify family status (via check back) when co-head turns 18 and change relationship code in Elite to “co-head” at that time.
• If spouse is under 18, use a relationship code as an “other youth under 18” in Elite. Earned income is excluded. Verify family status (via check back) when spouse turns 18 and change relationship code in Elite to “spouse” at that time.
• At check back time, refer to Chapter IX, Interim Re-examinations for processing instructions.

Never include a foster child, foster adult, or live-in aide as a dependent. Children of live-in aides are considered a live-in aide and do not qualify as a dependent. Do consider foster children/adults and live-in aides when determining the voucher eligibility size.

Dependent Full-time student : Verify the status of all dependent full-time high school and college students 18 years and older via the MSHDA 55. The verification must confirm full time (not part time) student status to qualify for the dependent allowance. If verification of full-time high school status is needed during the summer months, the allowance may be given until the status can be verified in the fall (tickler) when school opens. For home-schooled students, family certification is acceptable. For a full-time student, use a relationship code of “full-time student 18+” (student is not head/spouse/co-head) in Elite (also on HUD 50058).

2. Disability and/or Elderly Allowance

A $400 per household (not per person) allowance is granted when the head, co-head, or spouse is elderly or disabled. The head, co-head or spouse must be age 62 or over, currently receive federal Supplemental Security Income (SSI) or Social Security Disability Income (SSDI) payments, or have a valid Verification of Disability and/or Special Medical Needs (MSHDA 16), completed by a licensed health care provider (see below), to receive the allowance. Only one allowance is granted per family, even if both the head and spouse are disabled.

Receipt of monthly federal SSI or SSDI is sufficient verification of disability for the recipient in determining eligibility for the Disability Allowance, provided the recipient is under age 62. A MSHDA 16 is not required. Code the disabled family as “handicapped/disabled” in Elite if anyone is disabled and receiving SSI or SSDI. In addition to receipt of SSI/SSDI, acceptable verification of disability includes a HUD EIV Report that shows income information from SSI/SSDI and the disability box is checked as disabled. If the HUD EIV Report disabiity box is not checked disabled, the individual may be receiving SSA survivor's benefits and/or may not be disabled; and would not be eligible for the disability allowance.

A $480 per person dependent allowance is granted for every disabled adult member (other than the head, co-head, or spouse) who resides in the unit.

A person who is elderly (over 62) automatically receives the elderly allowance. Do not code as disabled in Elite unless they receive SSI or SSDI or have a valid MSHDA 16 on file.

If any adult members indicate they are disabled on the Household, Income, Asset, and Expense Declaration Form (MSHDA 1890), the disability must be verified.

Unacceptable verification of disability includes receipt of Social Security, RSDI or other SSA benefits other than SSI/SSDI; a letter or statement from a doctor that does not include the disability language/definition contained in the MSHDA 16; and family self-certification.

3. State Disability Allowance (SDA)

• SDA provides for single people or married couples who have an independent living arrangement (i.e. Housing Choice Voucher), and provides for single people or married couples who live in some type of custodial environment (i.e. adult foster care, nursing home). MSHDA does not provide assistance in custodial environments.
• The definition of disability used by the State to determine eligibility for SDA benefits does not match the definition used by HUD. Therefore, receipt of SDA benefits is NOT automatic verification of disability for purposes of granting the ED allowance. To qualify for the ED allowance, an SDA recipient must provide a MSHDA 16 that has been completed by a licensed health care provider.
• Allowance charts for qualified persons living independently can be found in the Flat Grants section of the Appendix.

4. Verification of Disability and/or Special Medical Needs (MSHDA 16)

Disabilities, medical expenses, and other special needs are verified by having a Health Care Professional (HCP) complete a Verification of Disability and/or Special Medical Needs (MSHDA 16) for the participating family. Note: The Verification of Medical Expenses (MSHDA 100) is valid as a verification of disability if it is dated prior to July 2002.

A MSHDA 16 is required if a member does not receive SSI or SSDI. If the HCP completing the form indicates the disability is permanent, the form is retained in the permanent non-purge section of the file for the duration of the tenant’s participation on the program and no further verification is necessary.

If the HCP indicates the disability is not permanent, the tenant is granted the allowance for this contract period only. The disability must be re-verified annually.

If the MSHDA 16 form indicates the tenant is not disabled, the allowance cannot be granted.

Only the following licensed medical HCP’s may sign a MSHDA 16:

• Doctor of Osteopathy (DO)
• Medical Doctor (MD)
• Psychiatrist (MD, DPM)

It is recommended, but not required, that a MSHDA 16 be obtained for elderly/disabled households. Similarly, if no adult is disabled, but a child under the age of 18 is listed as disabled and does not receive SSI, a MSHDA16 should be requested. The minor is granted the dependent allowance for being under 18 years of age. Refer to the Elite User Guide for correct coding.

If the HA is unable to obtain the requested MSHDA 16 for the tenant/family member, it should be noted on a MSHDA 78 that the attempt was made, and the tenant/family member did not provide the requested documents; therefore, the househould member was not eligible for the allowance due to information not being provided.

5. Applicable Forms List

Section F: Expenses

1. Medical Expenses

If the head of household, spouse, or co-head is elderly or disabled, all household medical expenses in excess of 3% of the annual household income are deductible. Allow medical expenses, including Medicare Spend-downs, for all family members, including non-Elderly/Disabled members. Refer to Chapter IV, Allowances, Disability and/or Elderly Allowance for disability verification requirements.

Allowable medical expenses are anticipated to occur during the 12 months following re-examination and are not covered or reimbursed by an outside source, such as insurance. Allowable medical expenses include, but are not limited to:

• Services of doctors, health care professionals (HCP) and facilities
• Medicare and any other medical insurance premiums
• Prescriptions and HCP recommended non-prescription medications
• Transportation to treatments
• Dental visits and procedures
• Eyeglasses, hearing aids, batteries, etc.
• Payments to live-in or periodic home care and medical assistance
• Monthly payments on accumulated medical expenses
• Medical care of a permanently institutionalized family member if their income is included in annual income
• One time only medical costs verified by a HCP (for the upcoming re-exam period only)
• Air conditioning installation and maintenance (utility) costs if third party medical verification confirms the tenant requires air conditioning for health reasons (i.e. extreme allergies).

Expenses related to an animal that is specifically trained and used to assist a person with a disability.

• Medical expenses do not include wheelchairs or ramps, which may be eligible disabled/handicap expenses. See Disability Assistance Expenses.
• If a family has both medical and disability expenses, a special calculation is required. See Disability Assistance Expenses.
• Medical expenses must project all increases/decreases for the upcoming 12 months whether using a MSHDA 100 or actual statements. These projected costs must be verified and notated on the verification.

2. Equipment Maintenance

Costs related to ongoing maintenance of special equipment are eligible medical expenses. Examples include medical alert, hearing aid batteries, TDD, etc.

A MSHDA 100 or other written HCP documentation verifies the need. Actual verification of the expense (receipts) is also required, using three months of receipts to get an average.

3. Medical Bills/Payment Plans

Previous medical bills for which the applicant/participant is making regular payments are an eligible expense provided the anticipated payments will continue during the upcoming period.

Determine when the payment plan will be satisfied (e.g. paid off). Multiply the monthly payment amount by the number of months remaining on the payment plan, or by 12 months, whichever is appropriate. Do not exceed the amount owed or the 12-month period.

a. Medicare Premiums/Other Health Insurance

If the Medicare or other health insurance premium is paid by the family and the household qualifies as ED (i.e. eligible for $400 allowance), the amount must be included as income and subsequently deducted as a medical expense.

b. Medicare Premiums

The family does not pay the Medicare premium:

• The SSA pays Medicare premiums on behalf of qualified recipients;
• The Medicare premium is identified on printout with a code of "230”; "yes" under third party payer; or $0.00 listed as amount paid; and
• The gross payment will equal the net payment (unless SSA is recouping overage previously paid to recipient).

The family does pay the Medicare premium:

• If the household is ED (which qualifies it for medical deductions), include the gross premium as income and deduct the gross premium as a medical expense.
• If the household is not ED (and, therefore, does not qualify for medical deductions) include the gross payment as income and disregard the Medicaid expense.
• The net payment plus the Medicaid premium should equal the gross payment received.
• Convert the monthly premium to an annual figure; do not round the monthly Medicare amounts.
• Other health insurance premiums must be documented. Third party verification of the premiums is required.

c. Non-Prescription Expenses

Non-prescription expenses are over-the-counter medical expenses (aspirin, arthritis cream, Depends, etc). The expenses are allowed if the need is documented in writing by a qualified HCP. Compare the documented need (type, amount and frequency) with the actual verified expense. Calculate non‑prescription costs by multiplying the amount from actual receipts/ statements by the verified frequency.

Verification of Non-Prescription costs can be documented via:

• A MSHDA 100 completed by a HCP; or
• HCP-issued prescription with corresponding cash register receipts, or
• Other written statements/printouts from a HCP that documents the type, amount, and frequency of the expense.

Example: The tenant has a prescription written by an M.D. stating she must take one aspirin per day for heart disease. She has a receipt from the grocery store showing she purchased a bottle of 30 aspirins for $1.50. She needs approximately 12 bottles to last for the full year. Calculate the total annual expense ($18) by multiplying the cost ($1.50) by 12.

d. One-Time Medical Expenses

One‑time medical expenses (i.e. installation of an air conditioner or purifier) apply for the current year only. A MSHDA 100 (or other written statement from the HCP) documents the purpose/medical need for the expense. Use actual receipts, statements, or a payment plan from the service provider to document cost.

e. Ongoing Medical Expenses

Completion of a MSHDA 100 is the preferred method of verifying medical expenses. The form requests the total expenses for the past 12 months and anticipated increases and decreases of expenses for the following 12 months. Use the information to project expenses for the next 12 months. Projected expenses (increases or decreases) must also be documented.

If unable to obtain a MSHDA 100, the following documents are acceptable:

• Pharmacy or other HCP printout;
• Physician issued prescriptions (copies) if cost is documented;
• Medical statements or receipts from providers.

f. Service Animals

• Expenses for one animal that has been specifically trained to assist person(s) with their specified disability (example: guide dog or other animal used by a visually or hearing impaired person) can be included as a medical expense such as:
• Cost of the animal;
• Amounts paid for the care of the specially trained animal; i.e., training expenses, vet bills. Use IRS Publication 502, Medical and Dental Expenses, for more information.
• See Chapter XVII. Reasonable Accommodation, Section F, Service Animals also.

g. Transportation Expenses

Transportation expenses (mileage) for required out-of-town treatments (dialysis, chemotherapy, etc.) are allowable medical expenses.

Documentation of the purpose and frequency of out of town travel for treatment are verified by both the HCP and the appropriate treatment center to determine mileage. Use a MSHDA 100 or other written statement for documentation.

Use the State map to determine city‑to‑city mileage. Use the mileage and frequency noted on the MSHDA 100 (or other written verification from HCP).

If the family uses their own transportation, use IRS Publication 502, Medical and Dental Expenses. Calculate average transportation costs by multiplying map mileage by the IRS mileage rate by verified frequency.

If the family pays a provider for transportation, use actual receipts/statement from the transportation provider. Calculate average transportation costs by multiplying the amount from actual receipts/statements by verified frequency.

Note: Vicinity miles are not allowed unless the family makes a written request and provides an acceptable explanation of the need.

h. Disability Assistance Expenses

Care attendants and auxiliary apparatus expense items (such as wheelchairs, ramps, adaptations to vehicles, special equipment to enable a blind person to read or type, etc.) are allowed if they:

• Directly relate to enabling a family member (including the disabled family member) over 18 years of age to work;
• Are not reimbursed by any other program or agency;
• Exceed 3% of annual household income; and
• Do not exceed the earned income of the household member(s) enabled to work.
• The head, co-head, or spouse does not need to be E or D for the household to qualify for this deduction.

Two examples of eligible disability assistance expenses are:

• Monthly payments on a motorized wheelchair allow the adult son of the head of household to leave the house and go to work on his own. Prior to this purchase, the son was unable to make the commute to work.
• Hourly payments to a care attendant to stay with a disabled 20-year old adult child allows the child’s mother to go to work each day.

Example of calculations to determine allowable disability expenses:

Head of Household Earned Income $12,000

Spouse Earned Income $10,000

Household income $22,000

Expense for care of disabled adult child $ 3,500

Disability Assistance Allowance ($22,000 X 3%) - 660

Allowable Disability Assistance Expense $ 2,840

Since $2,840 is less than the income earned, the full amount is deducted.

• If a family has both medical and disability assistance expenses, a special calculation is required to insure that the family’s 3% share of these expenses is applied only once. The allowance for disability assistance expenses is limited by the amount earned by the person freed for work; therefore, the disability allowance is calculated first. Deduct the 3% amount from the disability expense, and the remainder (if any) from the total medical expenses. If the proper codes are entered in EHS, the system automatically performs the correct calculation.
• If the disability assistance expense exceeds the amount earned by the person who is freed for work, the allowance for disability assistance is capped at the amount earned by that individual.
• If the total un-reimbursed disability expense is equal to or greater than the medical/disability 3% threshold:

3% of the total annual income (medical disability 3% threshold) is subtracted first from the total disability assistance expense.

Compare this amount to earnings made possible by the assistance expense; the lower of the two is the allowable disability assistance expense.

Any remainder is deducted from the total medical expenses.

• If the total un-reimbursed disability expense is less than the medical/disability 3% threshold:

Enter the total disability expense as the maximum disability 3% allowance.

Compare this amount to the earnings made possible by the assistance expense; the lower of the two is the allowable disability assistance expense.

The allowable disability assistance expense is added to the medical expense.

3% of annual income (the medical /disability threshold) is subtracted from the total disability assistance and medical expenses to determine the medical/disability assistance allowance.

• Acceptable verifications of disability expenses:

A MSHDA 100 is the preferred method of verifying the need for auxiliary apparatus, and disability care expenses; or

A letter or statement from a HCP; or

Receipts, canceled checks, statements, or bills from the provider verifying the auxiliary apparatus.

i. Live-In Aide Expenses (Formerly referred as Chore Providers)

• Permanent, temporary, full-time live-in aide or part-time aide expenses are allowable.
• Document tenant paid live-in aide or part-time aides expenses on the MSHDA 100. Do not include live-in aide or part-time aide expenses paid directly by DHS or another agency as a medical expense. Expenses must be verified annually.
• A full-time live-in aide may reside in the unit to provide care for an elderly or disabled member if essential to the care and well being of the person(s). The need for an aide must be documented on the Verification of Disability and/or Special Medical Needs (MSHDA 16).

Refer to Chapter III, Section B, Full-Time Live-in Aide.

j. Child Care

The cost of child care for children (including foster children) aged 12 and under to enable a family member who would otherwise have cared for the child to work, attend school, or actively seek employment, is an allowable deduction from annual income if all the following are true:

1. If working, the cost of child care is not greater than the amount of income earned;
2. The care is necessary to enable family member to work, actively seek employment, or to further their education;
3. The expense is not reimbursed by another agency or individual.

Child care costs are ‘reasonable’; and can be verified through TPV. Determine whether child care costs are “reasonable” (which means reasonable for the care being provided). Reasonable costs for in-home care may be very different from reasonable day-care center costs. Families may choose the type of care to be provided. MSHDA may not decide that the family may receive a deduction only for the least expensive type of care available.

• Note: The child care expense deduction may not be refused because there is an adult family member in the household that may be available to provide childcare.
• When more than one family member works, determine which family member is being enabled to work because child care is provided. This is necessary because the child care allowance cannot exceed the income that family member earns. A general rule is to assume that the child care expenses enable the lowest paid individual to work unless this is obviously not the case.

If a portion of child care expenses are reimbursed by another agency or an individual (indicated on the MSHDA 50), allow only the portion actually paid by the family.

If child care is required for a member to attend school, use only the weeks attended per semester/term to calculate childcare expenses. The total number of hours claimed may include reasonable travel time to and from school. Refer to Chapter IV, Income Verification Irregular income for a breakdown of calculations for school time.

If a family member works and goes to school, the child care expense must be prorated so that the portion of the total child care expense that is specifically related to the hours the family member works can be compared with the amount earned.

Child Support payments are not child care expenses and are not an allowable deduction.

Care expenses for disabled family members over the age of 12 cannot be counted as ‘child care,’ but may be allowed as a disability expense. Refer to b. Disability Assistance Expenses for details.

If child care is provided by someone under age 18 who can not legally complete the MSHDA 50, a statement signed by the under-age provider and the provider’s parent is necessary.

Document all expenses and the need for child care.

k. Verification Forms

Other types of verification (i.e. MSHDA 77) may be appropriate.

Section G: Definitions and Terms

1. Definitions

• AI – Annual Income refers to all gross amounts, monetary or not, and is determined by calculating a household’s anticipated total or gross income minus allowable deductions.
• DHS – Michigan Department of Human Services (formerly known as Family Independence Agency).
• DT – Departmental Technician
• Dependent - A member of the family (except foster children/adults) other than the family head or spouse/co-head, who is under 18 years of age, is a person with a disability, or is a full-time student. Co-heads under the age of 18 are also dependents.
• Disregard (Disallow) – exclusion from annual income.
• Disability assistance expenses – Reasonable expenses that are anticipated, during the period for which annual income is computed, for attendant care and auxiliary apparatus for a disabled family member and that are necessary to enable a family (including the disabled family member) to be employed, provided that the expenses are neither paid to a member of the family nor reimbursed by an outside source (24 CRF 5.603).
• Disabled person – A person who has a disability, as defined in (A) 42 U.S.C. 423 and is determined to have a physical, mental, or emotional impairment that is expected to (1) be of long-continued and indefinite duration, (2) substantially impede his or her ability to live independently, and (3) be of such a nature that the ability to live independently could be improved by more suitable housing conditions, or (B) has a developmental disability as defined in 42 U.S.C. 6001. This definition includes persons who have the disease of acquired immunodeficiency syndrome (AIDS) or any conditions arising from the etiologic agent for acquired immunodeficiency syndrome. For purposes of qualifying for low-income housing, it does not include a person whose disability is based solely on any drug or alcohol dependence; and means “individual with handicaps,” for purposes of reasonable accommodation and program accessibility for persons with disabilities.
• Economic Self Sufficiency Program – Any program designed to encourage, assist, train, or facilitate the economic independence of HUD-assisted families or to provide work for such families. These programs include programs for job training, employment counseling, work placement, basic skills training, and education. English proficiency, workfare, financial or household management, apprenticeship, and any program necessary to ready a participant for work (including a substance abuse or mental health treatment program), or other work activities (24 CFR 5.603).
• Elite – MSHDA Office of Existing Housing Programs software program for tracking applicant, participant, and unit information.
• HCP – Health Care Professional
• HA – Housing Agent
• HS – Housing Specialist
• Irregular Income – Sporadically received or income where the amount received is not consistent.
• Job-training program – See economic self-sufficiency program. Some examples would be training through Michigan Works, vocational training.
• Low-employed - defines a person who, in the previous 12 months, earned no more than would have been earned at the established minimum wage (currently $5.15) for ten hours per week for 50 weeks, or a maximum of $2,575.
• Medical expenses – Medical expenses, including medical insurance premiums, that are anticipated during the period for which annual income is computed, and that are not covered by insurance (24 CFR 5.603).
• Person with a disability – A family member who receives SSI or SSDI or who has verified their disability with a Verification of Disability and/or Special Medical Needs (MSHDA 16).
• PPM – Policy and Procedure Manual
• RM – Regional Manager
• RSDI – Retirement, Survivors, Disability Income - A form of Social Security benefits for disabled individuals administered by the DHS.
• SEMAP – Section Eight Management Assessment Program – A system used by HUD to measure PHA performance in key Section 8 program areas.
• SDA – State Disability Assistance – Cash assistance paid to disabled adults to help them pay for living expenses such as rent, heat, utilities, clothing, food and personal care items if they receive certain other disability related benefits, or reside in a special facility (i.e., AFC home) and is certified by Michigan DHS medical consultants as unable to work due to a mental or physical disability for at least 90 days. Administered by Michigan DHS.
• SSA - Social Security Administration
• SSI – Supplemental Security Income – benefit provided by the Social Security Administration which is funded by general federal tax revenues and paid to adults or children who are disabled or blind who meet eligibility criteria. The monthly benefit varies up to the maximum federal benefit rate which is standardized in all states but not everyone gets the same amount because it may be supplemented by the State or decreased by other countable income and resources.
• SSDI – Social Security Disability Income – disability benefit provided by the Social Security Administration to disabled workers, disabled widow(er)’s or adults disabled since childhood based on the Social Security earnings record of the insured worker on whose Social Security number the disability claim is filed.
• TANF - Temporary Assistance to Needy Families - also known as a welfare, ADC, or FIP grant, received through the State of Michigan’s Department of Human Services (DHS).
• TTP – Total Tenant Payment
• TPV - Third Party Verifications
• Unearned income – Any income not earned; i.e. Social Security, SSI.
• Unemployed - defines a person who, in the 12 months previous to employment, had no earned income.

2. Applicable Forms List