Question from a Blog Reader

"An applicant has benefits on a flex debit card through a Part C Medicare Advantage (MA) plan. These cover household expenses that do not seem to be related to health and medical costs. Are these benefits income to the family?"

Answer

Summary answer | When enrollees use supplemental benefits from their MA Plans to pay for rent and utilities, that support is included as income. Any other MA benefits are not. 

Details | In a recently published FAQ, HUD informed stakeholders that it has received several questions similar to the one we received above from one of our readers. In the FAQ, they answer these questions and others relating to MA benefits.

What are MA benefits?

Medicare Advantage (MA) health plans cover Hospital Insurance (Medicare Part A), Medical Insurance (Part B), Drug Coverage (Part D), and may include supplemental benefits. These plans are offered by private companies that contract with Medicare and are regulated by the government. There are several types of MA plans and a complete list can be found HERE.

MA supplemental benefits must either be “primarily health-related,” or qualify as special supplemental benefits for the chronically ill. The eligibility criteria for the chronically-ill vary by plan, but the benefits must have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill person. These can include assistance that is clearly directly related to medical costs, like dental coverage or non-prescription medicines. However, they can also provide other assistance, such as help with meals or non-medical transportation costs.

Are MA supplemental benefits included in family income? 

As explained in recent HOTMA implementation guidance, HUD requires that benefits or supports received that can be used for paying rent and utilities, unless specifically excluded in HUD regulations, are counted in family income. This may include some support that may be provided through an MA Plan. Of course, amounts received to reimburse health and medical costs are excluded under HUD regs. 

After HUD considered how MA benefits are used, it determined that when enrollees use supplemental benefits from their MA Plans to pay for rent and utilities the support is included in family income determinations. All other MA benefits not used for rent or utilities are excluded as income.  

Example

A family receives a $200 Flex Card monthly and uses $150 for expenses but none towards rent and utilities. The card loses the remaining benefit each month or at the end of the year. The entire $200 is excluded from the family’s income calculation.

What needs to be verified?

Ask the question. An application or recertification questionnaire should ask if any benefits received from MA supplemental benefits are used by the family to pay rent or utilities. Unless the household answers "yes", the assumption can be that the benefits are not counted. If a family reports that they do receive MA benefits to help pay for rent and utilities, owners/agents must attempt to collect third­-party documentation of the expenses and may accept the self­certification of the family member when third-­party documentation is unavailable. 

According to the HUD FAQ, the vast majority of MA supplemental benefits will be excluded from income determinations, and thus they do not need to be verified when the family reports that no benefits are used to pay rent or utilities. This includes benefits on Flex Cards that are used for anything other than rent and utilities. MA benefits administered through Flex Cards should be excluded from income without additional documentation unless available information (primarily the answer to the rent and utility MA benefit question supplied by the family) indicates that the beneficiary is using the benefit for rent and utilities. 

HUD says that owners/agents should be aware that Medicare beneficiaries often receive benefits administered through Flex Cards in normal commercial transactions, such as using the card when checking out at the grocery store, purchasing a specialized food item recommended by their physician, or paying for over­-the-­counter medication. Applicants and tenants are not expected to keep records of all purchases made. They also probably do not have easy access to such records from vendors administering the benefits through Flex Cards. Because only supplemental benefits for rent and utilities are relevant for income determinations, housing providers should generally assume that benefits administered through Flex Cards have not been used to pay for rent and utilities unless the housing provider has information to suggest otherwise, or the beneficiary has indicated that they receive and have used (or will use) the supplemental benefit for rent and utilities.  

HUD's FAQ on MA benefits can be downloaded HERE.

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