In a settlement of the class action case Adeline Diaz, et al. v. Chater, filed in the U.S. District Court, Northern District of Texas, SSA agreed to revise its rental subsidy policy as it is applied to residents of the State of Texas. In the settlement agreement, SSA agreed not to charge a rental subsidy whenever the required rent equals or exceeds the presumed maximum value (PMV).

The settlement agreement provides for the following relief to class members:

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  SSA will apply the policy described below to all SSI applicants who reside in the State of Texas, beginning with all SSI applications filed on or after May 1, 1996;

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  SSA will apply the policy described below to all SSI recipients who reside in the State of Texas, beginning with all SSI redeterminations or any other posteligibility actions initiated on or after May 1, 1996.

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  The policies and procedures in this section will apply to Texas residents for all months after April 1996.

The following policies apply to all Texas residents who apply for, or are receiving, SSI benefits after April 1996.

A business arrangement exists (and, therefore, no income results from the arrangement) when the required rent is equal to or greater than:

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  the current market rental value (CMRV); or

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  the applicable presumed maximum value (PMV).

A business arrangement does not exist and in-kind support and maintenance (ISM) may be charged when the required rent is less than both the CMRV and the PMV.

The amount to be considered income to the household because a business arrangement does not exist is the difference between the required rent and either the CMRV or the PMV (whichever is less).

The policy is effective May 1, 1996, for all cases.

For initial claims filed before that date, where rental subsidy development is required and a rental subsidy is found, charge ISM under the rules in SI 00835.380, through April 1996.

The rules of administrative finality, e.g., the 1- and 2-year rules for reopening (SI 04070.040), do not apply to reopenings and revisions made pursuant to this case. Therefore, retroactive corrections can be made to May 1, 1996 even though a case is first identified beyond the normal 1- or 2-year limits of the initial determination or decision. However, any reopenings and revisions made later on these same cases, even involving the same issues, will be subject to the rules of administrative finality unless they are also made pursuant to the Diaz court case.

1. a. 

   Follow the instructions in SI 00835.380 to determine whether rental subsidy is an issue.

2. b. 

   If the verified required rent equals or exceeds either the CMRV or the applicable PMV, develop no further.

3. c. 

   If the verified required rent is less than the CMRV and less than the PMV, determine the amount to be considered income to the household because of reduced rent as follows:

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  subtract the required rent from either the CMRV or the PMV (whichever is less);

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  the difference is the amount of income received by the household in the form of reduced rent (rental subsidy).

Divide the rental subsidy by the number of household members to determine the individual's income.

For initial claims filed on or after May 1, 1996, enter the required "Rental payment" on the Home Ownership and Rental Liability page. Also enter the "Current market rental value" using either the actual CMRV or the PMV, whichever is less.

IMPORTANT: Do not enter an amount greater than the PMV as the "Current market rental value" on the Home Ownership and Rental Liability page for periods after April 1996.

In "Remarks," record the actual CMRV when it is greater than the PMV.

EXAMPLE: The claimant pays $140 monthly rent in May 1996. The landlord (who is the claimant's child) verifies the rent and states that the current market rental value is $275.

The technician inputs the $140 rental payment on the Home Ownership and Rental Liability page, and records the CMRV on Home Ownership and Rental Liability page as $176.66 (the PMV), since the CMRV exceeds the PMV. The CCE will compute the amount of the rental subsidy as $36.66. The technician also records in "Remarks" for the Home Ownership and Rental Liability page "Diaz case-actual CMRV = $275 per contact with landlord 5/15/96."

If a claim has been entered in CCE prior to May 1996, but is being adjudicated on or after May 1, 1996, and a rental subsidy is involved, a new living arrangement iteration must be input effective May 1, 1996.

REMINDER: You must walk the entire living arrangement path in order for the new rental subsidy ISM amount to be transmitted to the SSR. You must review each screen in the path, even if there are no changes made to a particular screen.

On the Living Arrangement Change page, answer Yes to "Change in living arrangement and/or residence situation since MM/DD/YY." For "Change Date," show 04/30/96.

On the Home Ownership and Rental Liability page, change the "Current market rental value." In a Diaz case, this will generally be equal to the PMV.

On the In-Kind Support and Maintenance page, answer Yes to "Does any person (not living with you) or any agency pay for any of your shelter items or provide you or your household (if applicable) with any shelter items?", only if the Diaz policy still results in a chargeable rental subsidy or if there is another source of outside ISM. Otherwise, answer No.

On the In-Kind Support and Maintenance (ISM) Sources, overkey the "Rental Subsidy" amount with the new amount (if there will still be some ISM chargeable, e.g., Diaz reduces the amount of rental subsidy but does not eliminate it), or $0 if the rental subsidy is now $0 but there is another source of outside ISM.

Identify all Diaz cases in which the required rent was less than the CMRV by coding the CG field as follows:

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  enter DIAZ in the first four spaces and

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  enter in the next four spaces a whole dollar amount (drop the cents) showing the required rent.

Review all cases where type "H" unearned income is present whenever a PE action is taken on a case. This includes scheduled or unscheduled redeterminations, limited issues, reports of change of address, income or resources, etc. Determine whether any part of the ISM posted to the record represents a rental subsidy. If it does, apply the Diaz policy and make the appropriate systems input, including the CG entry explained in 4. above.

A change in the PMV due to a cost of living adjustment (COLA) may affect the amount of rental subsidy that may be charged under the settlement agreement.

EXAMPLE: If the claimant was paying rent of $178 monthly, and the rent exceeded the 1996 PMV of $176.66, no rental subsidy could be charged, even if the CMRV was $250 per month. However, when the PMV increases to $180.66 per month in January 1997 (estimate), there may be a rental subsidy chargeable as unearned income (ISM) beginning in January if the recipient's required rent did not increase to at least $180.66. If the rent remains $178, then there would be a chargeable rental subsidy of $2.66 per month beginning January 1997.

Whenever a Diaz case is reviewed because of a scheduled or unscheduled redetermination, limited issue development, recipient report, or any other reason, and there has been a COLA since the last recipient contact, the issue of rental subsidy should be explored with the recipient or the recipient's representative payee.

Determine whether the rental subsidy determination remains correct. Re-contact is necessary if the required rent shown in the CG field is less than the new PMV rate. If the required rent is less than the new PMV, develop the CMRV following instructions in SI 00835.380D.

Make any necessary correction in the amount of rental subsidy being charged and in the CG field entry.

A parent rents an apartment from their child.

July 1996:

Required rent = $185.00

CMRV = $225.00

PMV = $176.66

Rental subsidy under Diaz = 0 because the required rent exceeds the PMV.

Input to the CG field: DIAZ, 0185.

A parent rents an apartment from their child.

September 1996:

Required rent = $150.00

CMRV = $185.00

PMV = $176.66

Rental subsidy under Diaz = $26.66 because the required rent is less than both the CMRV and the PMV. $26.66 is the difference between the PMV (which is lower than the CMRV) and the required rent.

Input to the CG field: DIAZ, 0150.

A parent rented an apartment from the parent's child beginning in July 1996.

July 1996:

Required Rent = $180.00

CMRV = $200.00

PMV = $176.66

Rental subsidy under Diaz = 0 because the required rent exceeds the PMV.

Input to the CG field: DIAZ, 0180.

March 1997:

FO obtains a redetermination listing which shows this case has a pending scheduled redetermination diary.

The FO notes that it is a Diaz case, and that the required rent entered in the CG field is less than the current PMV (assume a 1997 PMV of $180.66).

Because of the increase in the PMV, the PMV is greater than the required rent and there is the possibility of a rental subsidy in 1997. The FO redevelops the CMRV effective with the month the redetermination is initiated.