Impact of Increased Income on Housing Voucher Programs
Increasing income through employment and Social Security disability benefits is critical for maintaining housing stability. However, for individuals utilizing housing vouchers, fear of losing their vouchers often prevents them from exploring employment. To encourage work, the U.S. Department of Housing and Urban Development (HUD) has numerous incentives to protect those returning to work from immediate rent increases and voucher loss.
Flat Rent versus Income-Based Rent
HUD Earned Income Disallowance (EID)
- During the first cumulative twelve month period that a member of a qualified family (as defined in 24 CFR 960.255) is first employed or the family first experiences an increase in annual income from employment, the PHA must exclude from annual income any increase in income of the family member as a result of employment over prior income of that family member
- During the second cumulative twelve month period after the date a member of a qualified family is first employed or the family first experiences an increase in annual income attributable to employment, the PHA must exclude from annual income of a qualified family fifty percent of any increase in income of such family member as a result of employment over income of that family member prior to the beginning of such employment.
- The disallowance of increased income of an individual family member is limited to a lifetime 48 month period.
Alternative to HUD’S EID Program
- The PHA must advise the family that the savings account option is available;
- At the option of the family, the PHA must deposit in the savings account the total amount that would have been included in tenant rent payable to the PHA as a result of increased income that is disallowed;
- Amounts deposited in a savings account may be withdrawn only for the purpose of:
- Purchasing a home;
- Paying education costs of family members;
- Moving out of public or assisted housing; or
- Paying any other expense authorized by the PHA for the purpose of promoting the economic self-sufficiency of residents of public housing;
- The PHA must maintain the account in an interest bearing investment and must credit the family with the net interest income, and the PHA may not charge a fee for maintaining the account;
- At least annually the PHA must provide the family with a report on the status of the account; and
- If the family moves out of public housing, the PHA shall pay the tenant any balance in the account, minus any amounts owed to the PHA.
HUD Family Self-Sufficiency (FSS) Program
- Services include: child care, transportation, education, job training, employment counseling, financial literacy, and homeownership counseling
- Any increases in the family’s rent as a result of increased earned income during the family’s participation in the program result in a credit to the family’s escrow account. Once a family graduates from the program, they may access the escrow and use it for any purpose.
Termination of Housing Assistance
- Once the family’s income-based payment amount covers the entire rent, the family may continue in the program for six months following the reassessment of rent by the PHA
- If the family circumstances change during the six month period and the family again needs assistance, the PHA conducts an interim reexamination and reinstates assistance
- At the end of six months, if the subsidy has not been restored, the HAP contract will terminate. The PHA must provide the family and the owners at least 30 days advance notification of the proposed termination and an opportunity to request an informal hearing.
- May, 2022