How to Verify Workers' Compensation Benefits for Annual Income Determinations
Suppose a household member is injured on the job and tells you that he'll be getting workers' compensation benefits for a number of weeks. Like many managers, you may have little experience with income from employee benefits. But with the increasing popularity of welfare-to-work programs, managers at assisted sites are certifying more and more residents who've received employee benefit income such as workers' compensation.
HUD requires you to get written verification of the workers' compensation benefits from the insurer. But HUD doesn't give you a form to do this. To help you get the verification you need, we'll give you a Model Form: Workers' Compensation/Disability Compensation Benefits Verification.
Workers' Compensation Basics
Workers' compensation benefits cover employees injured on the job. Employees who become ill may also be entitled to workers' compensation benefits if working conditions caused their illnesses.
Workers' compensation benefits provide at least partial replacement of employees' lost wages. Typically, this benefit kicks in only after an initial period of sick leave. For example, the payments may not start until three or four business days after employees become unable to work. Workers' compensation may also cover employees' unreimbursed medical expenses relating to the on-the-job injury and may provide lump-sum payments for permanent injuries, such as the loss of use of a hand or other appendage, as compensation for the effect of the injury on the employee's future earnings potential.
Send Verification Form
HUD requires you to verify the amount of the workers' compensation benefits paid to households, says management expert Mark Alper, senior trainer for the National Center for Housing Management [Handbook 4350.3, par. 5-4, exhibit 5-1]. Ask the household member for the name and address of the insurer or fund that is paying the benefits. Before sending the form to the insurer, fill in the names and addresses of the insurer, your management company, and the injured household member.
Next, fill in the household member's date of birth and Social Security number. This makes it easier for the insurance company to locate the information needed to complete the form. Also, it's important to get the household member to sign the release portion of the form as this shows the insurer that the household member has permitted the release of confidential information to you.
If the insurer sends a computer printout detailing the benefits information you asked for instead of filling out the verification form, you are permitted to rely on the printout when calculating household income. Even if you know from prior experience that the particular insurer will send you a printout rather than filling out the form, send the form anyway. The form tells the insurer exactly what information you need. Also, the insurer is not likely to give you the requisite information without seeing the household member's signed statement that he or she agreed to the release of the information to you.
Verification Information, Interim Recertification
The following is the main information you are asking the insurer to verify:
Payment amount. The form asks for the gross amount of the weekly or monthly payment. This information will then be sued to calculate household income. If the household member receives benefits for a period of less than a year, you will have to annualize this information. In the following section, we'll review how to perform these calculations.
Effective date. The form asks for the date on which the benefits began or will begin. Use this date to calculate the effective date for the change, if any, in the household's assistance.
Duration. The form asks how many weeks the household member will be eligible for coverage. The law in many states requires employers to provide workers' compensation coverage for only a specified number of weeks.
Knowing how long the payments are scheduled to last is useful information, even though it doesn't affect how you must calculate household income. If household members still aren't able to return to work after benefits end, households may be entitled to increased housing assistance.
During this process, be sure to tell households to report for interim recertifications when members' disability benefits stop, and explain that you will need to recalculate household income and assistance at that time [Handbook 4350.3, par. 7-10].
Also, track benefits termination dates by noting on a calendar when benefit payments to households are due to stop. When the household requests recertification, cross out the note from the calendar. However, if the termination date passes and you don't hear from the household, have a staff member contact the household to check on the current status of the benefit payments. The household's failure to request interim recertification when payments end may be an indication that the member has returned to work and the household is attempting to delay a rent increase.
Calculate Annual Workers' Compensation Benefits
Even though employees often receive workers' compensation benefits for shorter periods, HUD requires you to calculate household income as if the payments will be received for one year [Handbook 4350.3, par. 5-5(A)(1)]. To annualize weekly benefits, multiply the gross amount of the weekly payment shown on the returned verification form or printout by 52. If the payments are made monthly, multiply the gross amount by 12. Include the result of this calculation in household income.
For example, suppose the gross amount of Jonas Smith's weekly workers' compensation check is $200. And he is eligible to receive the payments for a maximum of 34 weeks. To annualize the payments, multiply Smith's $200 gross weekly payment by 52 weeks, and include the resulting $10,400 in household income.
If household members receive lump-sum workers' compensation payments that do not represent overdue installment payments, it is not necessary to verify with the insurer. For example, workers' compensation policies may provide for lump-sum payments to employees who have suffered certain kinds of permanent injuries. In that case, HUD says, the payment is counted as a household asset, but only to the extent that it is deposited in a household checking or savings account [Handbook 4350.3, par. 5-7(G)(3)(a)(5)]. As a result, this kind of lump-sum payment must be verified through the financial institution, not the workers' compensation insurer, Alper points out.
By contrast, lump-sum payments representing “delayed periodic payments” are income. It's common for initial benefit payments to be delayed for a few weeks, and in such a case, you may delay recertification until the household begins receiving the money. Annualize the gross amount of the periodic payment that the household member should have received in the ordinary way.
In rare instances, a lump sum representing delayed periodic payments is received after the household member has fully recovered and returned to work. This may occur, for example, because the workers' compensation coverage was initially denied. You may simply request verification of the amount of the lump-sum payment by sending a letter to the workers' compensation insurer, since the amount and duration of the periodic payments the household member should have received are irrelevant. In these cases, HUD requires you to include the lump sum in the household's income [Handbook 4350.3, par. 5-6(Q)(3)].
Mark Alper: Vice President for Compliance, National Center for Housing Management, 333 N. First St., Jacksonville Beach, FL 32250; www.nchm.org.
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|Workers' Compensation/Disability Compensation Benefits Verification|