The long-awaited Cost of Living Adjustment (COLA) for Social Security benefits was announced on Thursday, October 13th. Social Security and SSI recipients will see their entitlements increase by a staggering 8.7% beginning in January 2023. This, combined with the fact that Medicare B Premiums will decrease by $5.20 means the average beneficiary will experience an award amount of $145.20 higher than they did in 2022.
The adjustment has far-reaching impacts on rent calculations for residents of subsidized properties. Owners/Agents (O/As) may not only be required to adjust certifications for the upcoming Annual Recertification cycle, but they may also need to execute Interim Recertification adjustments to account for this change.
The annual COLA tends to be modest; between 2017 and 2022, the increase ranged from 0.3% to 5.9%. As a result, most subsidized properties simply accounted for the adjustments upon the next Annual Recertification; the COLA did not increase most households’ incomes by $200 or more per month. The average Social Security benefit is approximately $1,548, and subsidized tenants’ benefits tend to be substantially lower than that.
The 8.7% adjustment is far more likely to warrant an Interim Recertification than is typical. Any household whose combined SSA/SSI benefits reach $2,294 will be subject to reporting for an Interim Recertification at their subsidized property. This includes single-recipient households whose benefits reach the number, but also multi-person households whose collective benefits reach that number.
NCHM would like to remind O/As of projects covered by HUD’s Office of Multifamily Housing, of the rules that apply when it comes to income increases, in particular, those that follow a Cost-of-Living Adjustment.
First, the HUD Handbook 4350.3 Change 4, Revision 1 dedicates Par. 9-6B1(e), pgs. 9-3 to 9-4 to the discussion of how to address the COLA. For residents whose Annual Recertifications fall between January and April, (and whose ARs are processed between September and December), there are four options to handle the adjustment.
- Use what is in EIV (without applying the COLA) as long as the resident confirms it is currently correct.
- Use the SSA benefit award letter that includes the COLA, if they have it.
- Apply the COLA to the current, verified benefit amount as documented in the tenant file.
- Request third party from SSA (when the income in EIV does not match what the resident reports they are receiving). Urge residents to visit http://ssa.gov/myaccount to acquire such third-party verifications.
Regardless of the option an O/A chooses, they must apply the methodology consistently across all SSA/SSI beneficiaries; how you process one AR should be the same for all. Additionally, all certifications effective after April 1 must include the COLA.
The second element of this situation is the requirement to perform Interim Recertifications once a household experiences an income increase of $200 or more per month. According to the 4350.3, tenants have the obligation to notify management when they experience such a change (Par. 7-10A4, pg. 7-22), and owners are required to execute the change per Par. 7-11A2, pg. 7-23.
Since residents may not be mindful of the extent to which the COLA impacts their overall gross annual income, it’s a good idea for O/As to analyze the certifications for all households who have SSA/SSI income and determine who may be required to undergo an Interim Recertification. Addressing the issue now, instead of allowing an Income Discrepancy to appear several months later, will prevent either the tenant or the O/A from being required to repay HUD money for improperly calculated subsidy.
If you operate housing programs that are governed by HUD’s Office of Public and Indian Housing, your COLA rules may be different. Please refer to your ACOP, in conjunction with the Public Housing and Occupancy Guidebook, to determine how to incorporate the COLA for upcoming Annual Recertifications.
If you have other layers of compliance to follow at your site, you will need to abide by the certification rules for those programs as well. Keep in mind that you must always stay in compliance with the most restrictive rule when it comes to blended sites.
For more information on Annual and Interim Recertifications, verification, and Cost of Living Adjustment changes, consider enrolling in Certified Occupancy Specialist (COS) or Enterprise Income Verification Specialist (EIVS) today. Happy COLA season!