The almost 70 million Americans who rely on Social Security benefits will receive an unprecedented 8.7% increase in 2023.
The 8.7 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2023. Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2022.
We will be offering a new FREE RBD FASTClass next week to explain this year’s COLA increase in more detail.
HUD provides the following guidance in HH 4350.3 R1, C4, Paragraph 9-6:
When processing certifications with an effective date of January 1, February 1, March 1, and April 1, in order to complete the Recertification Steps outlined in Chapter 7, Figure 7-3, and provide the tenant with the required 30-day notice of any increase in rent, the owner must use one of the methods below for determining the tenant’s income.
1. Use the benefit information reported in EIV that does not include the COLA as third-party verification as long as the tenant confirms that the income data in EIV is what he/she is receiving; (Note from RBD – EIV will be updated to reflect the COLA increase in December. Please remember that, if the COLA increase (in addition to any other increase) causes the family income to increase by $200 or more per month, the owner/agent will need to include that increase for any certification effective 1/1/2023 or later.)
2. Use the SSA benefit, 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;
3. 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 (Note from RBD – this is accomplished using Streamlined Verification of Fixed Income. Owner/agents should print the 2023 COLA Fact Sheet and use that as verification of the COLA percentage. Then apply the COLA percentage to the previous year’s benefit amount); or
4. Request third-party verification directly from SSA when the income in EIV does not agree with the income the tenant reports he/she is receiving. https://www.ssa.gov/myaccount/
All recertifications effective after April 1 must reflect the SSA benefit that includes the COLA.
For those of you who have implemented Streamlined Verification of Fixed Income, remember that, if you conducted traditional verification in 2021 or 2022, you need only calculate the increase and include the 2023 COLA Fact Sheet in the Tenant File. No new award letter or EIV verification is required. This year, implementation of Streamlined Verification significantly reduced the SS income verification burden.
See HSG Notice 16-09 Streamlining Administrative Regulations for Multifamily Housing Programs.
See our RBD OnDemand Training Streamlined Verification & Implementation of the FAST Act for additional information. When using this method, do not round the monthly benefit amount; round after the annual benefit amount is calculated.
While most families will not see an income increase of $200 or more per month, families with multiple members receiving federal benefits may experience such an increase. For example:
Resident’s January 2023 Annual Recertification
Current SSA Income
Randy Resident $1214.00 * 12 = $14568.00
Rachel Resident $1181.00 * 12 = $14172.00
New SSA Income if COLA is 8.7%
Randy Resident $1214.00 + 8.7% = $1319.62
$1319.62 x 12 = $15835.44 ($15835.00 Annual Income)
Increase $105.62 (monthly increase)
Rachel Resident $1181 + 8.7% = 1283.75
$1283.75 * 12 = 15405.00 (Annual Income)
Increase $102.75 (monthly income)
Using this example, this results in a monthly income increase of $208.37
The expected reduction in Medicare Part B Premiums and lowering the annual Medicare deduction will make the increase of Adjusted Income slightly higher.
If you have already completed January 2023 ARs, there is no requirement to correct those certifications to incorporate this change unless the household income increase will be $200 or more.
