2012 Operating Cost Adjustment Factors (OCAFs) Updated in iREMS
The Operating Cost Adjustment Factors (OCAF) for 2012 were updated in iREMS on November 03, 2011. These factors are used for adjusting or establishing Section 8 rents under the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), as amended, for projects assisted with Section 8 Housing Assistance Payments. The factors are effective February 11, 2012, and can be found at
[3] http://www.gpo.gov/fdsys/pkg/FR-2011-10-26/pdf/2011-27816.pdf.
Reminder for HUD and PBCA offices participating in the Auto OCAF Pilot:
Now that the 2012 Factors are updated in iREMS, please delete any Amend Rents record effective 02/11/2012 and beyond that was created either automatically or manually with the old 2011 Factor. A new record will automatically generate with the new 2012 Factor.
Social Security Announces 3.6 Percent Benefit Increase for 2012
The Social Security Administration recently announced that monthly Social Security benefits for more than 60 million Americans will increase 3.6 percent in 2012. Additional information can be found on the Social Security Administration web sites at
[4] www.ssa.gov/oact/cola/SSI.html
[5] www.socialsecurity.gov/cola.
The Part B premium will be $99.90 a month for 2012. Baby boomers who signed up for Medicare this year and were paying $115.40 a month will save $15.50 a month next year. Medicare's Part B annual deductible - the amount beneficiaries pay before their coverage begins - will also drop next year to $140, a decrease of $22. Please monitor the Medicare web site to stay up to date with Medicare premium changes [6] www.Medicare.gov.
Annual Certifications
Many of you have already completed January 2012 and/or February 2012 Annual Certifications. As long as the Social Security income was verified correctly (using EIV, a current award letter or other verification described in HUD Handbook 4350.3 R1, Change 3, Appendix 3), there is no HUD requirement to correct those certifications to include the COLA increase.
HUD has clarified, in various notices, that owner/agents have some flexibility when developing processes to include COLA increases. See HUD HSG Notice 11-21 pages 7 & 8.
[7]http://portal.hud.gov/hudportal/documents/huddoc?id=11-21hsgn.pdf
“The SSA cost of living adjustments (COLAs) are not available from SSA for uploading into the EIV system until the end of the calendar year. When processing re-certifications effective January 1, February 1, March 1, and April 1, in order to complete the Recertification Steps outlined in Figure 7-3 of Handbook 4350.3 REV-1 and provide the tenant with the required 30-day notice of any increase in rent, the O/A must use one of the methods below for determining the tenant’s income:
Use the benefit information reported in the EIV system that does not include the COLA as third party verification as long as the tenant confirms that the income data in the EIV system is what he/she is receiving; Use the SSA benefit or award letter or Proof of Income Letter provided by the tenant that includes the COLA adjustment if the date of the letter is within 120 days from the date of receipt by the owner; Determine the tenant’s income by applying the COLA increase percentage to the current verified benefit amount and document the tenant file with how the tenant’s income was determined; or Request third party verification directly from SSA when the income in the EIV system does not agree with the income the tenant reports he/she is receiving. All certifications effective after April 1 must reflect the SSA benefit that includes the COLA.”
Owner/agents should develop policies to ensure that they incorporate this change in a consistent manner. We have described some options below. Our recommendation is that you review available options and choose how you will verify SS income for annual certifications effective in January, in February, in March and in April.
For example, you might decide that you will use the 2011 SS amounts reflected in EIV for all residents with annual certifications effective January 1, 2012 or February 1, 2012, but you will incorporate the COLA increase for those ARs effective March 1, 2012 or later.
In consideration of fair housing requirements, you should make sure that residents are treated in a uniform manner.
Note: If your company uses the EIV Use Policies offered via the RBD EIV Fast Forms CD, this is described in the policy. Please make sure your management team edits the policy to properly reflect how you incorporate the COLA increase. [8] www.rbdnow.com/formscdinfo.htm
Option 1
Complete ARs using the 2011 SSA/SSI/Medicare amounts reflected in EIV or income amounts reflected on a current award letter (the award letter must not be more than 120 days old from the date verification started and the letter was provided to the manager).
Option 2
Complete ARs using the 2011 SSA/SSI Medicare amounts reflected in EIV or income amounts reflected on a current award/benefit letter (the award letter must not be more than 120 days old from the date verification started and the letter was provided to the manager) and add the increase by completing a manual calculation.
Example:
Using EIV to Verify SS Income and Calculating the 3.6% Increase |
Using Award/ Benefit Letter to Verify SS Income and Calculating the 3.6% Increase |
EIV SS Income = $420 and resident has confirmed that the income is correct |
EIV was not used because a) no income reflected in EIV or b) resident disputed the EIV income information or c) EIV did not include all income. |
|
|
$420 x .036 = $15.12 |
$420.48 x .036 = $15.14 |
|
|
$420 + $15.12 = $435.12 |
$420.48 + $15.14 = $435.62 |
|
|
$435.12 x 12 = $5,221.44 |
$435.62 X 12 = $5227.44 |
|
|
SS income = $5221.44 |
SS income = $5227.44 |
Please note that HUD has clarified several times that owner/agents should use cents when the verification method used reflects cents. Please refer to RHIIP ListServs 256, 231 and 229.
Option 3
Complete ARs using EIV or an award/benefit letter reflecting the new 2012 income. All 2012 ARs will be completed using the 2012 SS income amounts including applicable increases.
It may be difficult to use EIV to verify 2012 income including the COLA increase for January ARs since EIV won’t be updated until the end of the year. Owner/agents can request that the resident provide a new award/benefit letter reflecting the new income. Residents may have these new letters as early as November.
Please remember, owner/agents must not send residents to the Social Security Administration to obtain new award/benefit letters. Instead, the owner/agents must ask the resident to request benefit information from SSA using SSA’s website or toll-free number. See additional information in HUD HSG Notice 11-21 page 23.
[9] http://portal.hud.gov/hudportal/documents/huddoc?id=11-21hsgn.pdf
Move-in Transactions
EIV cannot be used to verify income for new move-ins. So, owner/agents commonly use current award letters to verify SSA/SSI Income and Medicare expenses. If you reference HUD Handbook 4350.3 Revision 1, Change 3, Paragraph 5-4-A, you will note that owner/agents have the option of using Method 1 to verify income (current income projected forward) or using Method 2 to verify income (current income plus any anticipated changes).
A. Annual income is the amount of income that is used to determine a family’s eligibility for assistance. Annual income is defined as follows:
1. All amounts, monetary or not, that go to or are received on behalf of the family head, spouse or co-head (even if the family member is temporarily absent), or any other family member; or
2. All amounts anticipated to be received from a source outside the family during the 12-month period following admission or annual recertification effective date.
Move-in transactions effective before January 1, 2012 can be completed using income and expenses reflected on a current award letter or the owner/agent can use an award letter showing 2011 income and manually calculate the increase. If 2011 income is used, an interim certification is required only if the COLA increase, combined with other income increases, would contribute to a total household increase of $200 or more per month ($2400/12).
Our interpretation and recommendation is that owner/agents include the COLA increase for move-in transactions effective January 1, 2012 or later.
Interim Certifications
In some cases, residents may ask you to complete interim certifications to reflect the Medicare Part B premium increase. Unless HUD provides alternative instruction, we refer to HUD Handbook 4350.3 R1, Change 3, Paragraph 7-11.
**If a tenant reports a change in income that does not increase the household’s cumulative income by $200 or more a month, the owner should not process an interim recertification to increase the tenant’s rent. If a tenant reports any other change addressed above along with an increase in income that does not increase the household’s cumulative income by $200 or more a month, the owner should not include the increase in income in processing the interim recertification.
If a resident requests an interim certification because of the Medicare premium increase, the owner/agent can include the Medicare Part B premium increase, but should not include the COLA income increase unless the COLA increase combined with other income increases would contribute to a total household increase of $200 or more per month ($2400/12).
Summary
I have attempted to summarize our responses to customer inquiries regarding COLA and Medicare premium changes. I have also provided HUD references used to develop these responses. Please keep in mind that HUD Headquarters or local HUD field offices may provide their own clarification. HUD clarification must be used when creating 50059s.
Resource: RBD
EIV Brochure
