Verification & The Medical Expense

Transcription

1 April 2015 Verification & The Medical Expense Mary Ross, CPO, MORS, FHC ROSS BUSINESS DEVELOPMENT, INC.

2 All rights reserved. Not for duplication. All other brands and product names are trademarks or registered trademarks of their respective owners. Printed in the United States of America Ross Business Development, Inc Shumard Way Marietta, GA Disclaimer The material contained in this document is not comprehensive of the continually emerging issues surrounding policies in The Multifamily Housing industry. In addition, the handbook guidance is derived from The HUD Handbook Rev 1 Change 4 released in August 2013 and in December The student should understand that these training materials are not designed for, nor should be relied upon, as a source of legal guidance or as a final authority with respect to any particular circumstance. Ross Business Development makes no warranty of merchantability or fitness for a particular purpose or any other warranty of any type with regard to these materials. Owners and management should seek competent legal advice in developing and carrying out housing policies and procedures. While we have been diligent in our efforts to provide comprehensive and accurate regulatory training, Ross Business Development shall not be responsible for errors or inaccuracies. 2 info@rbdnow.com

3 Verification & the Medical Expense Deduction HUD Handbook Revision 1, Chapter 5 is probably one of the most frequently referenced chapters in the Handbook. The edits included in Chapter 5 of Change 4 are significant and should be communicated to site and compliance staff as quickly as possible. It is also important to note that these changes are specific to the HUD program. There is a lot of new language explaining requirements for using EIV. EIV is to be used solely for HUD Multifamily programs and Public and Indian Housing programs. PARAGRAPH 5-13 ACCEPTABLE VERIFICATION METHODS A. Methods of Verification Paragraph 5-13 incorporates the most exciting modification to the Handbook. This change to the verification requirements reflects how owner/agents actually verify information. Using the new method will make verification significantly easier. Owners must use verification methods that are acceptable to HUD. The owner is responsible for determining if the verification documentation is adequate and credible. *Acceptable methods of verification, in order of acceptability: 1) upfront-income verification (UIV) with use of EIV being mandatory and use of non-eiv UIV being optional; 2) third-party verification from source (written), 3) third-party verification from source (oral), and 4) family certification.* If third-party verification is not available, owners must document the tenant file to explain why third-party verification was not available. Appendix 3 provides a detailed list of acceptable forms of verification by type of information. A. Third-Party Verification 1) The following describes the types of third-party verification in order of acceptability a) Upfront-income verification (UIV) b) Third-party verification from source (written) 1. An original or authentic document generated by a third party source that is dated within 120 days from the date of receipt by the owner. Such documentation may be in possession of the tenant (or applicant), and commonly referred to as tenant-provided documents. These documents are considered third-party verification because they originated from a third-party source. Examples of tenant-provided documentation that may be used includes, but is not limited to: pay stubs, payroll summary report, employer notice/letter of hire/termination, SSA benefit letter, bank statements, child support payment stubs, welfare benefit letters and/or printouts, and unemployment monetary benefit notices. 2. Written documentation sent directly by the third-party source by mail or electronically by fax, or internet. Note: See Paragraph 9-10 for situations when this method of verification must be used prior to verifying through (1) above. 3 info@rbdnow.com

4 c. Third-party verification from source (oral). d. Family Certification. An owner may accept a tenant s notarized statement or signed affidavit regarding the veracity of information submitted only if the information cannot be verified by another acceptable verification method. In these instances, the owner must document the file why third-party verification was not available. (See Paragraph 5-18.E for documentation requirements when third-party verification is not available.). The owner may witness the tenant signature(s) in lieu of a notarized statement or affidavit. PARAGRAPH 5-16 EFFECTIVE TERM OF VERIFICATIONS The effective term of verification has always been confusing. HUD has provided new language in this paragraph that makes the requirement clear. Verifications and consent forms must be used within a reasonable time. HUD has set specific limits on the duration of verification consents. In addition, verified information must be used in a timely manner since family circumstances are subject to change. HUD places several other limits on the information that may be requested and when and how it may be used. A. Duration of Verification Authorization Owner-created verification forms and the forms HUD-9887 and HUD-9887-A expire 15 months after they are signed. Owners must ensure that the forms HUD-9887 and HUD-9887-A have not expired when processing verifications. However, there are differences between the duration of form HUD-9887 and that of the individual verification forms. B. Effective Term of Verifications 1. Verifications are valid for 120 days from the date of receipt by the owner, not the effective date of the If verifications are more than 120 days old from the date of receipt by the owner, the owner must obtain new verifications. 3. Time limits do not apply to information that does not need to be re-verified, such as: a. Age; b. Disability status; c. Family membership; or d. Citizenship status. For example: AR Due Date 11/1/2014 (120 days from effective date is 7/4/2014) Initial Notice sent 7/1/2014 Documentation received on 7/20 must be dated 3/22 or later and can be used until 11/20 Document received on 8/22 must be dated 4/24 or later and can be used until 12/22 Document received on 9/24 must be dated 5/27 or later and can be used until 1/24 Document received on 10/20 must be dated 6/22 or later and can be used until 2/20, etc. 4 info@rbdnow.com

5 CHANGES TO PARAGRAPH 5 18 DOCUMENTING VERIFICATIONS Once again, HUD has added clarification about verification documentation and recordkeeping requirements Documenting Verifications A. Key Requirement Owners must include verification documentation in the tenant file. B. Documenting Third-Party Verification All third-party verification documentation must be put in the tenant file, e.g., EIV Income Reports or verifications received from sources via mail, etc. C. Documenting Telephone Verification When verifying information by phone, the owner must record and include in the tenant s file the following information: 1. Third-party s name, position, and contact information; 2. Information reported by the third party; 3. Name of the person who conducted the telephone interview; and 4. Date and time of the telephone call. D. Recording Inspection of Original Documents Original documents should be photocopied, and the photocopy placed in the tenant file. *Originals of tenantprovided documents are to be returned to the tenant.* If the original document cannot be copied, a clear note to the file must describe the type of document, the information contained in the document, the name of the person who reviewed the document, and the date of that review. SUMMARY OF NEW VERIFICATION REQUIREMENTS So what does all of this mean, really? There are now two methods of verification. One method for employment, unemployment and Social Security income and one method for everything else. SUMMARY OF NEW VERIFICATION REQUIREMENTS OTHER VERIFICATION For medical expenses, bank account balances, asset balances, etc. the owner/agent is no longer required to obtain all verifications directly from a third-party source. Owner agents may use documents, provided by available databases (UIV), or documents provided by the resident as third-party verification. If an owner/agent accepts documents from the resident then: 1. The document may not be more than 120 days old at the time the owner/agent accepts the document 2. The document must be used within 120 days of the date the owner/agent accepts the document Documenting the file used to be the third step in the verification process. Compare the two methods used when you are verifying income and expenses other than employment income, unemployment income and Social Security income. 5 info@rbdnow.com

6 The following is a summary of the method is used for verifying information including, but not limited to: Asset balances (Bank Accounts, Stocks, Annuities, Trusts, etc.) Medical Expenses Family Type Other Income (VA, Pension, TANF, Welfare, etc.) Change 3 Verifying Income And Expenses Other (Not Employment Income, Unemployment Income And Social Security Income/Expenses) Obtain release from the resident Attempt Third-party verification from the source Document file if the verification source will not provide verification Request verification documents from the resident Use current documents provided by the resident to verify If resident cannot provide verification documents, and the verification source will not provide verification, the owner/agent may accept notarized family/self-certification Change 4 Verifying Income And Expenses Other (Not Employment Income, Unemployment Income And Social Security Income/Expenses) Request verification documents from the resident Use current documents provided by the resident to verify If resident cannot provide verification documents, obtain release from the resident Attempt third party verification from the source Document file if the resident cannot provide documentation and the verification source will not provide verification If resident cannot provide verification documents, and the verification source will not provide verification, the owner/agent may accept notarized or witnessed family/self-certification THE MEDICAL EXPENSE DEDUCTION Of all the items that need to be verified, we receive the most inquiries regarding the Medical Expense Deduction. Let s take a quick look at HUD s guidance in Paragraph D. Medical Expense Deduction 1. The medical expense deduction is permitted only for families in which the head, spouse, or co-head is at least 62 years old or is a person with disabilities (elderly or disabled families). 2. If the family is eligible for a medical expense deduction, owners must include the unreimbursed medical expenses of all family members, including the expenses of nonelderly adults or children living in the family. 3. Medical expenses include all expenses the family anticipates to incur during the 12 months following certification/recertification that are not reimbursed by an outside source, such as insurance. 4. The owner may use the ongoing expenses the family paid in the 12 months preceding the certification/recertification to estimate anticipated medical expenses. 5. The medical expense deduction is that portion of total medical expenses that exceeds 3% of annual income. 6 info@rbdnow.com

7 6. In addition to anticipated expenses, past one-time nonrecurring medical expenses that have been paid in full may be included in the calculation of the medical expense deduction for current tenants at an initial, interim or annual recertification. Past one-time nonrecurring medical expenses that have been paid in full are not applicable when calculating anticipated medical expenses at move-in. If the tenant is under a payment plan, the expense would be counted as anticipated a. There are two options for addressing one-time medical expenses. These expenses may be added to the family s total medical expenses either: (1) at the time the expense occurs, through an interim recertification, or (2) at the upcoming annual recertification NOTE: If the one-time expense is added at an interim recertification, it cannot be added to expenses at the annual recertification. b. The following example illustrates the two options. Tenants may use either option. 7. When a family is making regular payments over time on a bill for a past one-time medical expense, those payments are included in anticipated medical expenses. However, if a family has received a deduction for the full amount of a medical bill it is paying over time, the family cannot continue to count that bill even if the bill has not yet been paid. 8. Not all elderly or disabled applicants or participants are aware that their unreimbursed expenses for medical care are included in the calculation of adjusted income for elderly or disabled families. For that reason, it is important for owners to ask enough questions to obtain complete information about allowable medical expenses. The following list highlights some of the most common expenses that may be deducted. A list of examples of eligible medical expenses may be found in Exhibit 5-3. a. Services of doctors and health care professionals; b. Services of health care facilities; c. Medical insurance premiums or costs of an HMO; d. Prescription/nonprescription medicines that have been prescribed by a physician; e. Transportation to treatment; f. Dental expenses; g. Eyeglasses, hearing aids, batteries; h. Live-in or periodic medical assistance such as nursing services, or costs for an assistance animal and its upkeep; i. Monthly payments on accumulated medical bills; j. Medical care of a permanently institutionalized family member if his or her income is included in annual income; and k. Long-term care insurance premiums. The family member paying a long-term care insurance premium must sign a certification that states the insurance is guaranteed renewable, does not provide a cash surrender value, will not cover expenses covered under Medicare, and restricts the use of refunds. The certification must be maintained in the family s occupancy file. ASSISTANCE ANIMAL EXPENSES Please note item 8h; costs associated with assistance animals should be considered as part of the medical expense deduction for qualified households. This includes the out of pocket expenses for the cost of the animal, veterinary bills and other expenses related to the upkeep of the assistance animal are allowed medical expense for an assistance/companion animal. See HH R1, C3, Exhibit 5-3 and various HUD web sites including Also see HUD s clarification provided in the Handbook Questions and Answers document. 93. Question: Chapter 5, Paragraph 5-10 D.8.h refers to the upkeep of a service animal as a medical expense. What are some of the things that HUD considers upkeep of the service animal? 7 info@rbdnow.com

8 Answer: Items considered a part of the upkeep of a service animal include dog food, veterinary bills, required shots, license fee, and the ID tattoo on the ear. Owners must use their discretion when discerning what is considered upkeep items. HUD obviously receives numerous questions on the same topic. Additional clarification to posted questions appears on the HUD web site. Questions 1: What is considered an "assistance animal?" If someone brings a prescription for an animal to lower blood pressure, or for depression or emotional well-being, do we then consider this an assistance animal? Do we then allow for vet bills on those animals in an elderly/disabled household? Answer 1: An assistance animal is one that works, provides assistance or performs tasks for the benefit of a person with a disability. Page 4 of the Glossary in the handbook gives a full definition of an Assistance Animal. Part of which is "providing emotional support to persons with disabilities who have a disability related need for such support." See paragraph 2-44 and 3-38 for additional information on determining if a resident meets the definition of a person with a disability that makes them eligible for an assistance animal as a reasonable accommodation and how to verify the need for an assistance animal. The need for an assistance animal has to be directly related to a disability, and the services performed by the animal must alleviate one or more identified symptom of that person's disability. Veterinary bills as well as other expenses related to the upkeep of the assistance animal are allowed medical expense for a qualified assistance animal. Question 2: Are companion animals' expenses medical deductions just like assistance animals? Answer 2: Yes, if the animal you refer to as a companion animal meets the definition of an assistance animal and the requirements of Paragraphs 2-44 and 3-38 in HUD Handbook REV-1 are followed. PROJECTING AND VERIFYING THE MEDICAL EXPENSE What is the best way to project and verify medical expenses? The first thing you should do is determine the type of certification. If you are processing a move-in, you should remember that past one-time nonrecurring medical expenses that have been paid in full are not included when calculating anticipated medical expenses at move-in. So you only need to worry about recurring medical expenses. For example: you have a resident taking a series of medications on a daily basis. If you obtain a pharmacy printout, the printout can be used to determine and verify that the medical expenses that occurred in the last year. This will also help you determine the expense for the upcoming year. 8 info@rbdnow.com

9 The trick is to use the current year pricing unless there has been no change. You may want to confirm the actual expense using 1) the most current bill or 2) verification of the cost from the pharmacist. This is especially important with the recent change to the cost of generic drugs. Some common generic drugs have seen a 300 to 400% cost increase in OVER-THE COUNTER DRUGS The cost of over-the-counter medicines can be used as part of the medical expense deduction if the products are used to treat a specific medical condition as opposed to a product used for general good health. For example, many people with heart disease take a baby aspirin every day to reduce the risk of a heart attack; that expense would be allowable. Some people use Airborne as a supplement to help prevent colds or the flu. In this case, use of Airborne is for general good health and not to treat a specific medical condition. NEW RECURRING EXPENSES A little known fact about the recurring expenses is that you are not limited to the treatments administered in the last year. Remember, you are anticipating all out-of-pocket medical expenses for the upcoming year. Question: A tenant has provided a list of medications that he/she is prescribed to take. If the tenant has been buying some of the medications, but cannot afford to buy all of them, should the owner/agent allow the expense deductions for all of the medications on the list, if the cost can be verified by the pharmacy? Is this a situation where only the medications for which the tenant has receipts can be counted? Answer: The owner/agent must include all medical expenses the family anticipates to incur during the 12 months following certification/recertification that are not reimbursed by an outside source, such as insurance (Chapter 5, Paragraph 5-10 D.3). 9 info@rbdnow.com

10 If the tenant indicates that he/she will begin to purchase the medications during the next 12 months and the cost will not be covered by an outside source, the cost of the medications may be included in the calculation of the deduction. If the tenant does not plan to purchase the medications for the next 12 months, the tenant may request an interim recertification when he/she begins purchasing the prescriptions. If you want to use the past 12-month method, you can, but that is not the only way to project or verify medical expenses. NON-RECURRING MEDICAL EXPENSES If you are completing an Annual Certification or an Interim Certification, include past one-time nonrecurring medical expenses that have been paid in full as part of the medical expense if that expense has not been used on a prior certification. It is up to the resident to request an IR to include the expense or wait until the next AR. Once the expense has been included on a certification, it cannot be used again. Sometimes, residents choose to make payments on a one-time expense. If this is the case, the resident chooses whether to include the full amount of the expense one time or to include the payments as a recurring expense. Let s say Mr. Stevens has spinal fusion surgery and the charges after all insurance reimbursements are $ Mr. Stevens is paying $ per month. He can choose to: Include the $8, medical expense on an interim certification; or Include the $8, medical expense on the next annual certification; or Include $1, per year as a recurring medical expense until the $8, is paid. You must not use the $8, on one certification and then use the $ per month on anther certification because if you do, the deduction is being given twice which is not compliant with HUD rules. ADDITIONAL HUD CLARIFICATIONS We rely on various HUD resources to provide guidance to students who participate in our training. Preferably, such guidance is posted on HUD s web sites. 86. Question: Chapter 5, Paragraph 5-10 D states, "Past one-time nonrecurring medical expenses that have been paid in full may be included in the medical expense deduction." How is "one time nonrecurring medical expense" defined? Does this mean once in a lifetime or nonrecurring in the recertification year? Can you provide any examples? Answer: The guidance provided in Chapter 5, Paragraph 5-10 D.6 was intended to simplify the recertification process by reducing the number of interim recertifications. Past "one-time nonrecurring expense" is not defined because the circumstance of each occurrence must be evaluated on a case-bycase basis info@rbdnow.com

11 A tenant may require a dental procedure, such as a root canal, or cataract surgery, which would qualify under this category, although these procedures may not be a once in a lifetime occurrence. Owners must use good judgment based on the circumstances of each case. The tenant will determine whether to request an interim or to report the expense at the annual recertification. An example of a recurring expense is the addition of a new medication that will require continued use. The owner would estimate the cost of the medication forward at the annual recertification and not include the cost of the medication for the prior year unless an interim was requested for the prior year. This provision does not apply when calculating anticipated medical expenses at the time of move-in. 88. Question: Can the cost of Life Line or a cell phone recommended by a physician for a frail, elderly person to use in case of a medical emergency be counted as a medical expense? Answer: The cost of Life Line or a cell phone should not be considered as a medical expense. An allowable medical expense is an item that treats or alleviates a medical condition. Life Line or a cell phone do not qualify as a medical expense since neither have an impact on the actual medical condition. 89. Question: Can the various options for calculating medical expenses be combined on one certification? When calculating medical expenses, can owners/agents choose which method to use or should the owner/agent use the past twelve months, if anticipating a tenant s medical expenses is not possible? Must the same method be used consistently or on a case-by-case basis? If using the previous twelve months and an ongoing expense stops or a new one starts, should an interim be conducted? Answer: The owner/agent determines the procedure to be used to determine anticipated medical expenses based on the guidance in Chapter 5, Paragraph 5-10 D. Since this amount is an estimate, the owner should use a methodology that will provide the most accurate estimate. Whatever procedure is selected should be used consistently for all tenants. It is possible that all options would be included in the owner s procedure for determining medical expenses. 92. Question: If a tenant in a wheelchair pays $20 every two weeks to enable him/her to run errands, can the amount spent be considered a medical expense? Answer: Household help is not a medical expense. As stated in the examples in Chapter 5, Exhibit 5-3 concerning "Household help" - it is counted as a medical expense only if it is a nursingtype service or certain maintenance, or personal care service provided for qualified long-term care. HUD provides additional guidance on their web site at _gird 41. Question: If a family takes out a loan to pay medical expenses, can the provider use the payment on the loan as a medical expense deduction? 11 info@rbdnow.com

12 Answer: The source of income that a family will use to pay a medical expense, such as a loan, does not impact the eligibility of the expense itself. Just like any other medical expense, a PHA would be required to determine whether or not the family qualifies as an elderly or disabled family (see 24 CFR 5.403) and has eligible medical expenses, per 24 CFR 5.611, and then calculate and verify those expenses based on adopted policies. 42. Question: What happens if a provider calculated a medical expense deduction based on projected medical expenses, but the family then does not incur the medical expenses? Can the PHA calculate an underpayment by the family? What recourse does the PHA have to rectify this situation? Answer: All components of annual and adjusted income, including medical expenses are, by definition, based on what is anticipated for the 12-month period following admission or annual reexamination, per 24 CFR Therefore, it is not only possible, but likely that actual expenses will not match what was anticipated. Typically, this would not be considered an underpayment as long as at the time of the annual reexamination, the expenses were calculated based on appropriate verification. The only time this situation could be considered an underpayment by the family is if a provider s interim reporting policy explicitly required families to report changes in medical expenses. It is unlikely that a provider would have this type of a policy. HOUSE RULES AND EXTENDED ABSENCE While the plan for this class was to discuss the medical expense, I thought I would take some time to discuss the House Rules and Extended Absence policy as well. RBD is getting more and more inquiries in regards to HUD s rules regarding residents who are in nursing homes and there is no knowledge of when the resident may return. Often we hear that the resident s family wants to keep the unit just in case. Owner/agents should refer to HH R1, C4, Paragraph 6-9 for HUDs guidance in regards to extended absence. 2. Extended absence or abandonment. As part of a property s house rules, owners may establish rules specifying when tenants give up their right to occupancy because of their extended absence or abandonment of the unit. Under these rules, owners may initiate action to terminate tenancy in response to an extended absence or abandonment of the unit by the tenant or individual listed on the lease for that unit. NOTE: Abandonment is distinguished from an absence from the unit by the tenant s failure to pay the rent due for the unit and failure to acknowledge or respond to notices from the owner regarding the overdue rent. a. Owner discretion. The decision to establish rules regarding extended absence or abandonment of a unit as part of a property s house rules rests solely with the owner. b. Requirements and guidelines. If owners elect to establish such rules, they must be consistent with the requirements and guidelines listed below: (1) Rules regarding extended absence and abandonment must be consistent with state and local law info@rbdnow.com

13 (2) Guidelines for rules regarding extended absence from a unit. Owners may establish a house rule defining extended absence as the tenant being absent from the unit for longer than 60 continuous days, or for longer than 180 continuous days for medical reasons. Owners may allow exceptions for extenuating circumstances. (3) Guidelines for abandonment of a unit. If abandonment of a rental unit is not addressed by state or local law, owners may establish a rule for declaring a unit abandoned. Rules regarding abandonment must be consistent with state and local law regarding nonpayment of rent, specify the actions that the owner will take to contact the tenant, and describe the handling and disposition or any tenant possessions left in the unit. New York state has its own laws regarding termination/eviction and also regarding the unit contents. Most NY state attorneys will tell you to include certain provisions in your lease. In our case, these provisions would have to be provided in the House Rules. We include extensive language in the House Rules we provide to our customers. Take a look at the sample language below. This may help you start developing language to comply with your own policies and procedures. EXTENDED ABSENCES FROM THE APARTMENT (NOTE FROM RBD OPTIONAL. PLEASE DELETE OR EDIT TO CONFORM TO YOUR OWN POLICIES. REFER TO HH R1, C4, PARAGRAPH 6-9 FOR GUIDANCE. DELETE THIS NOTE BEFORE COMPLETING EDITS TO THE HOUSE RULES) Residents may be absent from their apartment (other than for medical reasons) for no more than sixty (60) cumulative days, not necessarily consecutively, in any six (6) month period. In cases of illness or confinement in a hospital or nursing care facility, for a resident who is the sole member of a household, a resident may be absent from her/his apartment for up to one-hundred eighty (180) days when a licensed medical professional, familiar with the resident s condition, will verify that a return to the unit will occur within the one-hundred eighty (180) days. The unit may not be occupied by a person who is not a part of the lease/household (as indicated on the current HUD Form 50059) while the resident is absent unless the owner/agent has given permission in writing. Such permission will be given under limited conditions, such as in consideration of the Sailors and Soldiers Act, a request by local law enforcement, a reasonable accommodation, or other extenuating circumstances. ABANDONMENT OF A UNIT (NOTE FROM RBD OPTIONAL. HUD INDICATES THAT O/A MAY ESTABLISH POLICIES THAT PERTAIN TO ABANDONMENT. CHECK LOCAL TENANT/LANDLORD LAWS FOR REQUIREMENTS. PLEASE DELETE OR EDIT TO CONFORM TO YOUR OWN POLICIES. DELETE THIS NOTE BEFORE COMPLETING EDITS TO THE HOUSE RULES) If the owner/agent and/or property staff does not receive written notice of an extended absence from a household member, the owner/agent and/or property staff shall consider the household to have abandoned the unit if any of the following occur: The owner/agent and/or property staff or property staff has reason to believe the unit has been unoccupied for more than 14 consecutive days (note from RBD, this timeframe may be shorter or longer depending on local law) It appears as if an animal has been abandoned in the unit for more than 24 hours Another resident or staff reports/confirms that there has been activity that indicates that the resident has moved Rent is more than five (5) days past due and there has been no contact from the resident or the resident s representative as appropriate The household has not acknowledged or responded to requests for communication and/or meetings The owner/agent has sought and obtained a court order to enter the unit in the case of suspected abandonment The owner/agent has credible information to believe the sole household member has been incarcerated, admitted for extended hospitalization or has died 13 info@rbdnow.com

14 Subject to local tenant/landlord requirements, if a unit is thought to be abandoned, property staff will: Attempt to contact the residents by phone or other communication for one (1) business day Attempt to contact any alternative person indicated in the tenant file Enter the unit to conduct an emergency inspection If household members or alternative contacts do not respond to the property staff s attempts to contact the resident, the owner/agent and/or property staff will take appropriate steps to have the unit declared abandoned. The owner/agent and/or property staff will take legal action, including termination of assistance, and eviction. INCARCERATION (NOTE FROM RBD OPTIONAL. HUD INDICATES THAT O/A MAY ESTABLISH POLICIES THAT PERTAIN TO ABANDONMENT. CHECK LOCAL TENANT/LANDLORD LAWS FOR REQUIREMENTS. PLEASE DELETE OR EDIT TO CONFORM TO YOUR OWN POLICIES. DELETE THIS NOTE BEFORE COMPLETING EDITS TO THE HOUSE RULES) If the owner/agent or property staff discovers that a resident has been incarcerated the property staff will review the current criminal screening criteria included in the current resident selection plan. If the resident has been convicted of any of the crimes that would constitute denial of a new applicant, the owner/agent and/or property staff will immediately begin the process to terminate the resident. This may include contacting the remaining household members, in accordance with HUD requirements and beginning the process to remove the resident from the household. If the incarcerated resident is the sole household member, this may mean starting the process required when a unit is abandoned. REMOVAL OF PERSONAL PROPERTY IN THE EVENT OF DEATH, ABANDONMENT OR INCARCERATION (NOTE FROM RBD OPTIONAL. LOCAL TENANT/LANDLORD LAW USUALLY PRESIDES IN REGARD TO REMOVAL OR PERSONAL PROPERTY. PLEASE DELETE OR EDIT TO CONFORM TO YOUR OWN POLICIES. DELETE THIS NOTE BEFORE COMPLETING EDITS TO THE HOUSE RULES) Upon notification of death, or incarceration of a sole household member or in the case of abandonment, all locks providing entry to the individual apartment will be changed. The owner/agent reserves the right to initiate eviction, as required, in order to take possession of the unit. Unless previously established, the owner/agent and/or property staff will require legal authorization before allowing unit contents to be removed by family or other representatives. Examples of legal authorization include but are not limited to: Executor of the will Permission from Probate Court Court ruling Upon confirmation of abandonment of the unit, and/or once the owner/agent has received an eviction order, the property staff will take written and photographic inventory of property in the unit and remove the contents from the unit so that it may be prepared for another family. The contents will be stored for the greater of thirty (30) days or the amount of time dictated by local laws. Perishable items, food items and live plants will be removed but not stored. Animals will be removed based on the Pet Policy and/or the Assistance Animal Policy. The owner/agent and/or property staff is not responsible for any loss or damage to property during transfer from the unit to the storage facility. Subject to local requirements, if it is discovered that the contents of the unit are infested (e.g. lice, bed bugs, fleas, etc.), the contents will be removed, treated and/or disposed of based on guidance from a licensed pest control provider. Cost of damage caused by such infestation and costs to eradicate will be charged to the resident or the resident s estate Cost of moving and storage and treatment/disposal will be charged to the resident or the resident s estate. Death of a Sole Household Member: In the case of death of a sole household member, personal belongings from the apartment must be removed within fourteen (14) days following the date of death info@rbdnow.com

15 HUD regulations allow subsidy to continue for fourteen (14) days after the date of death. In the case of death of a sole household member, the resident or the resident s estate will be charged current market/contract/operating rent beginning on the fifteenth (15th) day after death. In the event that the apartment has not been cleared of personal items within fourteen (14) days following death or abandonment, the owner/agent and/or property staff reserves the right to take legal possession of the apartment as specified by federal, state, or local landlord/tenant laws. The owner/agent and/or property staff will dispose of the property or consolidate it as defined by local law. While there is no HUD language to assist in defining extended absence policies, it is good to establish your rules and discuss the rules with residents during the lease process or during certification. Also remember that if you decide to change your House Rules, this is considered a modification to the lease and must be done in accordance with HH R1, C4, Paragraph B. Key Requirements 3. Although not a HUD requirement, an owner may choose to determine whether any applicable state or local law (State Tenant-Landlord Law) requirements also apply when modifying the lease. Such a practice would ensure that an owner s lease is in compliance with, and enforceable under, state and local laws. 4. A modification to the lease may only be effective at the end of a lease term. The owner must provide the tenant with the approved modifications at least 60 days prior to the end of the lease term. The notice must include a copy of the revised lease or an addendum revising the existing lease agreement. Owners must include a letter clearly stating that the tenant can either accept the modification or move, but that a response is due within 30 days. 5. A tenant must either: a. Accept the modification by signing both copies of the modification and returning one to the owner; or b. Refuse the modification and give the owner a 30-day notice of intent to vacate. 6. If, within 30 days, the tenant indicates that the modification is unacceptable or does not respond, the owner may begin the procedures for terminating tenancy set forth in paragraph 8-13 B of this handbook. D. Providing Notice to the Tenant The tenant must be provided with proper notice when HUD or the owner modifies the lease. An owner must comply with the following requirements to provide such notice. 1. The owner must provide the tenant with the approved modifications at least 60 days prior to the end of the lease term. 2. The notice must include a copy of the revised lease or lease addendum revising the existing lease agreement. Owners must include a letter clearly stating that the tenant can either accept the modification or move, but that a response is due within 30 days. 3. The notice must be served by: a. Sending a letter by first-class mail, properly stamped and addressed and including a return address, to the tenant at the unit address; and b. Delivering a copy of the notice to any adult person answering the door at the unit. If no adult answers the door, the person serving the notice may place it under or through the door, or affix it to the door. 4. The date on which the notice is deemed received by the tenant is the later of: a. The date the first-class letter is mailed; or b. The date the notice is properly given. 5. Service of the notice is deemed effective once the notice has been both mailed and delivered info@rbdnow.com

16 SUMMARY This lesson covered HUD s new verification requirements, and included a discussion of the Medical Expense Deduction. This is the latest information we could provide. It is good to update information used to create certifications so that you are compliant with the most current requirements info@rbdnow.com

17 APPENDIX A: UNOFFICIAL LIST OF MEDICAL EXPENSES In accordance with HH R1, C4, Paragraph 5-10, owner/agents must provide a medical expense deduction when the head-of-household, co-head or spouse is either is person with a verified disability or a person who is 63 or older. The medical expense deduction includes any out-of-pocket medical expense anticipated in the next 12 months for all family members. HUD provides some guidance in HH R1, C4, Exhibit 5-3, but HUD also indicates that their list is not exhaustive. HUD has one basic rule, the expense must be to treat a specific medical condition. The IRS provides a more comprehensive list of allowable medical expense deductions. While the rules for HUD are not necessarily the same as the IRS, we have attempted to take a combination of the two lists, incorporating HUD rules, to provide additional input. The student should understand that these training materials are not designed for, nor should be relied upon, as a source of legal guidance or as a final authority with respect to any particular circumstance. Ross Business Development makes no warranty of merchantability or fitness for a particular purpose or any other warranty of any type with regard to these materials. Owners and management should seek competent legal advice in developing and carrying out housing policies and procedures. Medical Expense Acupuncture Alcoholism Ambulance Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Chiropractor Comments Include in medical expenses the amount paid for acupuncture. Include in medical expenses amounts paid for an inpatient's treatment at a therapeutic center for alcohol addiction. This includes meals and lodging provided by the center during treatment. You can also include in medical expenses amounts paid for transportation to and from Alcoholics Anonymous meetings in the community if the attendance is pursuant to medical advice that membership in alcoholics anonymous is necessary for the treatment of a disease involving the excessive use of alcoholic liquors. Include in medical expenses amounts paid for ambulance service. Include in medical expenses the amount paid for an artificial limb. Include in medical expenses the amount paid for artificial teeth. Include in medical expenses the cost of medical supplies such as bandages. Include in medical expenses the amount paid for birth control pills prescribed by a doctor. Include in medical expenses the cost of an electronic body scan if such a scan is conducted at the recommendation of a medical professional. Include in medical expenses the part of the cost of Braille books and magazines for use by a person with a visual disability that is more than the cost of regular printed editions. Include in medical expenses the cost of breast pumps and supplies that assist lactation. Include in medical expenses the amounts paid for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. See cosmetic surgery, later. Include in medical expenses fees paid to a chiropractor for medical care info@rbdnow.com

18 Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Equipment Drug Addiction Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Hospital Services Insurance Premiums Medicare A Include in medical expenses fees paid to Christian Science practitioners for medical care. Include in medical expenses amounts paid for contact lenses needed for medical reasons. You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. See eyeglasses and eye surgery, later. Include in medical expenses the amount paid to buy or rent crutches. Include in medical expenses the amounts paid for the prevention and alleviation of dental disease. Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to pre-vent tooth decay. Treatment to alleviate dental disease include services of a dentist for procedures such as x-rays, fillings, braces, extractions, dentures, and other dental ailments. But see teeth whitening under what expenses are not includible, later. Include in medical expenses the cost of devices used in diagnosing and treating illness and disease. Example. A resident or applicant has diabetes and use a blood sugar test kit to monitor blood sugar levels. Include the cost of the blood sugar test kit in your medical expenses. Include in medical expenses amounts paid for an inpatient's treatment at a therapeutic center for drug addiction. Include in medical expenses the amount paid for eye examinations. Include in medical expenses amounts paid for eyeglasses and contact lenses needed for medical reasons. See contact lenses for more information. Include in medical expenses the amount paid for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy. Include in medical expenses the cost of the following procedures to overcome an inability to have children. Procedures such as in vitro fertilization (including temporary storage of eggs or sperm). Include in medical expenses fees paid for treatment at a health institute only if the treatment is pre-scribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. Include in medical expenses amounts paid to entitle a family member living in the unit to receive medical care from an HMO. These amounts are treated as medical insurance premiums. See Insurance Premiums, later. Include in medical expenses the cost of a hearing aid and batteries, repairs, and maintenance needed See Nursing Services, later. Include in medical expenses amounts paid for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. This includes amounts paid for meals and lodging. Also see lodging, later. This would not include expenses incurred because of voluntary cosmetic surgery or illegal surgery. Include in medical expenses insurance premiums paid for policies that cover medical care for a family member living in the unit. The payroll tax paid for Medicare A is not a medical expense. If the resident is not covered under social security (or were not a government 18 info@rbdnow.com

19 Medicare B Medicare D Insurance Premiums You Cannot Include Laboratory Fees Lactation Expenses Long-term Care Medicines Medicines and Drugs from Other Countries Non-Prescription Medicine or Medical Supplies employee who paid Medicare tax), they can voluntarily enroll in Medicare A. In this situation include the premiums paid for Medicare A as a medical expense. Medicare B is a supplemental medical insurance. Premiums paid for Medicare B are a medical expense. Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Include as a medical expense premiums paid for Medicare D. You cannot include premiums paid for: Life insurance policies, Policies for loss of life, limb, sight, etc. Policies providing payment for loss of earnings, Policies that pay a guaranteed amount each week for a stated number of weeks if the resident is hospitalized for sickness or injury The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents is not stated separately from the part of the premium providing insurance for medical care for others. Include in medical expenses the amounts paid for laboratory fees that are part of medical care. See Breast Pumps and Supplies, earlier. Medical care of permanently institutionalized family member IF his/her income is included in Annual Income Include in medical expenses amounts paid for prescribed medicines and drugs. A prescribed drug is one that requires a prescription by a doctor for its use by an individual. You can also include amounts paid for insulin. HUD does not prohibit owner/agents from including, in the medical expense, medicines purchased from another country. The IRS does have a specific rule. In general, you cannot include on a tax return, your medical expenses for the cost of a prescribed drug brought in (or ordered shipped) from another country. You can only include the cost of a drug that was imported legally. For example, Include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals. Include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States. Include in medical expense only if recommended in writing by a medical professional to treat a particular medical condition info@rbdnow.com

20 Nursing Services Operations Osteopath Oxygen Personal Use Items Nutritional supplements, vitamins, herbal supplements, natural medicines Physical Examination Prosthesis Psychiatric Care Psychoanalysis Psychologist Include in medical expenses wages and other amounts paid for nursing services. The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility. Generally, only the amount spent for nursing services is a medical expense. If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the times spent performing household and personal services and the time spent for nursing services. For example, because of your medical condition you pay a visiting nurse $300 per week for medical and household services. She spends 10% of her time doing household services such as washing dishes and laundry. Include only $270 per week as medical expenses. The $30 (10% $300) allocated to household services cannot be included. Include in medical expenses amounts paid for legal operations that are not for unnecessary cosmetic surgery. See cosmetic surgery under what expenses are not included, later. Include in medical expenses amounts paid to an osteopath for medical care. Include in medical expenses amounts paid for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition. This includes additional utility costs to tenant because of oxygen machine (in properties with tenant paid utilities only) Include in medical expenses an item ordinarily used for personal, living, or family purposes when it is used primarily to prevent or alleviate a physical or mental defect or illness. For example, incontinence supplies or the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease can be included with medical expenses Include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, natural medicines, etc., when they are recommended in writing by a medical practitioner licensed in the locality where practicing. These items must be recommended as treatment for a specific medical condition diagnosed by a physician or other health care provider licensed to make a diagnosis in the locality where practicing. Otherwise, these items are taken to maintain ordinary good health, and are not for medical care and are not included in the medical expense. Include in medical expenses the amount paid for an annual physical examination and diagnostic tests by a physician. Residents do not have to be ill at the time of the examination. See Artificial Limb and Breast Reconstruction Surgery, earlier. Include in medical expenses amounts paid for psychiatric care. Include in medical expenses payments for psychoanalysis. However, you cannot include payments for psychoanalysis that is part of required training to be a psychoanalyst. Include in medical expenses amounts paid to a psychologist for medical care info@rbdnow.com