HOTMA Information

Inflationary Adjustments for Mandatory Deductions:

• Dependent and elderly/disabled family deductions will be adjusted annually for inflation. HUD will publish the annual amount no later than September 1. When adjusted, the new amounts will apply to a family’s next annual or interim reexamination.
  • The dependent deduction will start at $480.
  • The elderly/disabled deduction will start at $525.

Medical and Disability Expenses:

• Unreimbursed health and medical care expenses may be deducted if the head, co-head, or spouse is at least age 62 or is a person with a disability.
• Unreimbursed attendant care and disability expenses may be deducted for any household member with a disability. The expenses must enable a member of the family to work and cannot exceed the individual’s wages.
• The threshold for deducting unreimbursed medical and disability expenses is increasing from 3% to 10%.
• Health and medical care expenses include costs incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.
  • This includes medical insurance premiums and long-term care premiums that are paid/anticipated to be paid during the period for which annual income is calculated.
• Concurrently with the increase in threshold for unreimbursed health and medical care expenses, regulations provide financial hardship exemptions for these expenses. A family will benefit from the hardship exemption only if the family has eligible expenses that can be deducted in excess of 5% of annual income. Qualified families may be eligible for relief under one of two categories:
  • Phased-in relief: All families who received health/medical care deductions as of January 1, 2024, will have their threshold increased from 3% to 10% over a period of 24 months, beginning at the family’s next reexamination.
    • The threshold will be 5% at the first reexamination processed after a PHA becomes HOTMA-compliant.
    • Twelve months after the 5% threshold was established, the threshold will increase to 7.5%
    • After the family has completed 24 months of phase-in at the increasing thresholds, the family’s threshold will increase to 10%, unless the family qualifies for relief under a hardship.
  • General relief (Hardship exemption): To qualify for general relief, a family must demonstrate that the family’s unreimbursed health and medical care expenses have increased, or a family’s financial hardship is a result of a change in circumstances that would not otherwise trigger an interim reexamination.

Childcare Expense Deduction:

• Childcare expenses for children under age 13 (including foster children) are deducted when the following are true:
  • The childcare is necessary to enable a family member to work or attend school and
  • The expense is not reimbursed by another agency or individual
  • The childcare expenses cannot exceed the amount earned by the family member that is enabled to work
• A family whose childcare expense deduction is ending may receive a hardship exemption in certain circumstances when the family is unable to pay the rent and no longer has a family member that is:
  • Working
  • Looking for work
  • Seeking to further their education
• The hardship exemption and income recalculation must remain in place for a period of up to 90-days and may be extended at the PHA’s discretion based on family circumstances.

Hardship Policy Requirements:

• PHA must establish their own policies on how they define what constitutes a hardship. These policies must be written in the PHA’s Administrative Plan/ACOP.
• PHAs must notify families in writing of the change in the family’s adjusted income and the family’s new rent. This written notice must include:
  • The dates that the hardship exemption will begin and end
  • The requirement that the family must report any change in circumstances to the PHA
  • A statement that the family’s adjusted income and rent will be recalculated upon the hardship exemption’s expiration
• The PHA must provide a family with 30 days' notice before any rent increase.
• PHA must obtain third-party verification of the family’s inability to pay rent or must document why the third-party verification was not available.

Permissive Deductions:

• A Permissive Deduction is an additional deduction from a family’s adjusted income that the PHA may choose to establish based upon community needs or as an incentive.
  • The public housing Operating Fund formula does not account for any decrease in PHA revenue due to implementing permissive deductions. This decrease will not be considered when determining PHA’s HCV renewal funding or PH operating funding.
  • A PHA must have sufficient funding to cover increased HAP cost.