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

Earned Income Disregard - Continued

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  1. EID Eligibiity Requirements
  2. Verifications, Calculations and Reporting Unique to Earned Income Disregard

1. EID Eligibiity Requirements

To qualify for the EID a HCV family must be a program participant and must be currently receiving assistance under the HCV program.

In addition, a HCV family must experience an increase in annual income that is the result of one of the following three events:

  1. Annual income increases as a result of employment of a family member who is a person with disabilities and who was “previously unemployed” for one or more years prior to employment.

    “Previously unemployed” includes a person with disabilities who has earned, in the twelve months previous to employment, no more than would be received in 10 hours of work per week for 50 weeks at the established minimum wage. The established minimum wage means the federal minimum wage ($7.25) unless there is a higher state ($7.40) or local minimum wage. i.e., $7.40 x 10 x 50 = $3,700.

  2. Increased earnings by a family member who is a person with disabilities and whose earnings increased “during” participation in an economic self-sufficiency program or other job-training program.

    A qualifying training or economic self-sufficiency program is defined as follows:
    • 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, education, English proficiency, financial or household management, apprenticeship and any program necessary to ready a participant for work (including substance abuse or mental health treatment program) or other work activities.
  3. New employment or increased earnings by a family member who is a person with disabilities and who has received TANF benefits or services during or within the past six months.

    If the TANF is received in the form of monthly maintenance, there is no minimum amount.

    If the TANF is received in the form of one-time payments, wage subsidies, or transportation assistance, the total amount received over a six-month period must be at least $500.

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2. Verifications, Calculations and Reporting Unique to Earned Income Disregard

At annual recertification, move or interim, any increases in income of family members who “are not eligible” for the EID will be considered in determining the family’s rent.

The EID is effective when the rent increase would otherwise have gone into effect regardless of whether interim reporting is required, or the tenant fails to report timely changes in income. Generally, the family’s portion of rent payments will stay the same (rather than increasing due to an increase in earnings), so the tenant still receives the benefit of the full-earned income disregard.

If an increase occurred January 1st, but was not reported/processed until their May Recertification, the 100% disregard/50% disregard would become effective January 1st even though the recertification date is May 1st. Effective dates for EID may not coincide with effective dates for annual recertification, move or interim. Interim re-examination changes are required when applicable. See chapter on Interim Re-examinations for additional details.

Verification of earnings is required even if the income will be disregarded. Write ‘disability disregard’ in the MSHDA-Use box of the Verification of Earnings (MSHDA 49) or other third party verification form.

The beginning and ending dates of employment must be properly documented and verified to tickler properly. If the person with disabilities has earned income from more than one source, add them together to determine eligibility. Use the date of the earliest reported increase for tickler date to determine when an Interim change is needed.

During the initial 12-month exclusion period, calculate the amount of the disregarded income by comparing the total amount of the disabled family member’s income before any new or increased earnings (pre-qualifying income) to the total amount of the disabled family member’s income after new employment or an increase in earnings. Disregard the difference between the amounts.

During the second 12-month exclusion and phase in period, calculate the amount of the disregarded income by comparing the total amount of the disabled family member’s income before any disregards (pre-qualifying income) to the disabled family member’s current income. Disregard 50% of the difference.

The HA must establish a tickler system to request updated income verifications at least 90 days prior to the end of the 12-month (100% disregard), 24-month (50% disregard) and/or the 48-month (lifetime disregard) periods.

Tracking of the EID must be documented with every transaction submitted up until the disabled member meets their lifetime limit of one year at 100% disregard and one year at 50% disregard, not to exceed 48 months from the initial exclusion.

Complete a Disregard Worksheet (Form 252) to assist in the tickler process and in calculations.

Note: Earned income disregards for persons with disabilities will be different in every case. These must be calculated on an individual case basis.

Initial Twelve-Month 100% Disregard

  • Disregard 100% of new or increased earnings by a person with disabilities for a cumulative 12-month period. The months do not have to be consecutive.
  • The exclusion begins on the date the disabled family member becomes employed or first experiences an increase in income due to employment.

Second Twelve-Month at 50% Disregard

  • After the family has been allowed 100% disregard for 12 cumulative months, begin disregarding 50% of the increase in income attributable to employment or increased earnings for another 12 cumulative months. The months do not have to be consecutive.

Maximum Four-Year Disregard (Lifetime)

  • The EID cannot exceed four-years (48-months) from the beginning of the disregard period. If the increased earnings do not last for 12 consecutive months, the disregard period will stop and then resume at any time within the four-year (48-months) period when the disabled member experiences an increase in income attributable to employment or increased earnings. Each HCV disabled family member can only receive a total of 12 months of 100% disregard and 12 months of 50% disregard. No disregard can be given after the four-year (48-months) lifetime maximum exclusion regardless of whether the disabled family member received the full four-year (48-months) lifetime maximum exclusion.

Example: New or increased earnings are effective on June 1, 2001. The four-year (48-months) lifetime disregard period ends on May 31, 2005. The increased earnings last for 6 months (November 30, 2001), and then begin again March 1, 2002 and end August 31 2002. An annual recertification was completed at recertification time as the 100% disregard period covers two recertification periods. The initial 12-month 100% disregard covers June 1, 2001 to November 30, 2001 and March 1, 2002 to August 31, 2002. The tenant has minimal income from September 2002 through August 2004, which is less than their pre-qualifying income. The four-year (48-months) disregard period stops again. The second 12-month 50% disregard starts September 1, 2004 and ends August 31, 2005. No income disregards would be allowed beyond May 31, 2005 as the four-year (48-months) lifetime maximum exclusion expired. The HCV family would receive nine months at 50% disregard and the remaining three months are no longer eligible for the EID.

See examples.

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