In-Home Supportive Service Payments Considered Household Income

Facts: A Section 8 resident lives with her severely disabled adult daughter. As a Section 8 participant, the resident receives a monthly rent subsidy, or “housing assistance payment,” the size of which varies depending on her income. The family also participates in a state social services program designed to help incapacitated persons avoid institutionalization. The In-Home Supportive Services (IHSS) program compensates those who provide care for aged, blind, or disabled individuals incapable of caring for themselves. The resident’s daughter suffers from a severe developmental disability, such that she requires constant supervision, and IHSS pays the resident for providing her daughter with caregiving services.

The resident and her two daughters moved into a three-bedroom apartment in 1998. In 2004, one daughter moved out, but the resident failed to inform the local PHA of her departure. Five years later, when the resident told the PHA that this daughter no longer lived with her, the PHA informed the resident that her failure to report the departure earlier was a violation of program rules and that she could stay in the apartment only if she paid damages to the PHA in the amount of $16,011. The resident and the local PHA agreed to a settlement that called for the resident to make monthly payments, initially of $486, toward that sum. Because the resident was unable to afford these payments, the parties revised the plan several times, eventually reducing her obligation to $150 per month. Still, she missed multiple payments.

By letter in April 2015, the resident asked the PHA to recalculate her rent and exclude her income from IHSS. The PHA didn’t respond to that request, but soon thereafter served her with notice of a proposed termination of her Section 8 voucher. She was issued a termination notice, alleging that she failed to make multiple payments under the repayment plan. At an informal hearing, the resident argued that the PHA had improperly included her IHSS payments as income and that, excluding these payments, there was no lawful basis for the PHA to have demanded $16,000 from her.

The hearing officer upheld the PHA’s decision to terminate the resident’s housing voucher based on missing payments for 16 months. The hearing officer didn’t address the issue of whether IHSS payments were properly counted as income. The resident sued in state court to require the PHA to reinstate her Section 8 voucher, terminate the repayment plan, and exclude her IHSS payments in calculating income going forward. The trial court ruled for the PHA, and the resident appealed.

Ruling: A California appeals court agreed with the lower court’s decision.

Reasoning: According to HUD regulations, income doesn’t include “[a]mounts paid by a State agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home.”

The resident argued that IHSS pays the resident, rather than a third party, to care for her daughter, so those payments are excludable under HUD regulations on the grounds that the services she provides are necessary for her daughter to live at home, and the IHSS payments offset the costs of those services. The PHA argues that one must incur an expense before it can be offset with a reimbursement payment, so the services the resident provides cannot be characterized as offsetting the costs of the services her daughter needs.

The court relied on the common dictionary meaning of the word “cost”—namely, “the amount or equivalent paid or charged for something; price.” If “cost” means “price,” then the cost of services that the resident provides her daughter is zero to the resident. And because her services are free to the family, the family incurs no “cost of services or equipment” that the IHSS payments could be said to offset. The court found that the “cost of services and equipment needed to keep the developmentally disabled family member at home” must refer to amounts of money that the family pays, rather than lost opportunities or other non-financial penalties it incurs.

• Reilly v. Marin Housing Authority, April 2018