Dramatic Cost of Living Adjustment (COLA) for 2022

Cost of Living Adjustments (COLA) was announced on On October 13, 2022. The Social Security Administration announced an 8.7% COLA increase for Social Security beneficiaries beginning January 2023. This has been the largest increase since 1980 when the COLA was a remarkable 14.3%.

Under the current RD regulations (7 CFR § 3560.152(e)), owners/agents would have to recertify households and execute a new tenant income certification form at least annually or when the household experiences a change in income of $100 or more per month (or $50 per month if the household requests a change be made). Under current Rural Development regulations, the large COLA increase for 2023 could result in owners/agents processing a lot of paperwork to ensure program compliance is being maintained.

Here is an example of how the COLA Adjustment would impact the current rules.

A current tenant residing at a Rural Development property is currently receiving $1,267 a month in Social Security benefits (before any deductions for Medicare). The 2023 COLA increase would be calculated as follows:
$1,267 (current monthly benefit amount) × 8.7% (2023 COLA increase) = $110.23 (anticipated monthly increase for 2023). Under the current RD regulations, the increase of $110.23 would activate the requirement for the household to be recertified and a new tenant income certification form to be initiated.

Interim Recertifications Temporarily Waived for COLA Increases

In an Unnumbered Letter dated November 10, 2022, Rural Development provided an unexpected gift to owners and agents of RD properties regarding the recent Social Security Cost of Living Adjustment (COLA) and recertification requirements.

To combat the burden of unnecessary paperwork for both management agents and current tenants, Rural Development is temporarily waiving the interim recertification requirements for households whose income, regardless of the income type, has increased by more than $100 but less than $200. During this exception timeframe of the 2023 calendar year (expiring on December 31, 2023), households will not be required to complete an interim recertification unless their household income changes by $200 or more per month (which is the current HUD regulatory requirement).

With the Unnumbered Letter, the following guidance is being provided for interim certifications:

• Rural Development is temporarily waiving the recertification requirements found under 7 CFR § 3560.152(e) for tenants whose household income has changed by more than $100 but less than $200 per month.
• During this waiver period, households must still be recertified. A new tenant income certification form must be initiated at least annually or whenever a change in household income of $200 or more per month occurs. This temporary waiver will expire on December 31, 2023.
• The requirement that owners/agents must recertify households for changes of $50 per month if tenants request that such changes be made is still in effect.
• The temporary waiver does not apply to or change the annual recertification requirements.

Some Practical Examples of USDA/RD Interim Recertification Exemption

Here are some practical examples of where this exemption would and wouldn’t apply from Amanda Lee Gross:

Exception Applies
The McVie household moved in on 7/3/2022. The effective date of their certification is 8/1/22, which will expire on 7/31/23. The household’s only source of income is social security. At the time of move-in, the head of household’s current monthly benefit amount was $1247. In October of 2023, SSA announced an 8.7% COLA increase beginning January 2023. The COLA will increase the McVie household’s monthly income by $110.23 per month. Although the household’s monthly income will be increasing by $100 or more, due to RD’s 2023 COLA exception, the housing provider is not required to conduct an interim recertification as the increase in income is less than $200 per month. If the household experiences no other income changes, the housing provider would wait to include the increase in benefit income until the household’s 8/1/23 recertification.

Exception Does Not Apply
The Lynn household moved in on 12/15/2022. The effective date of their certification is 1/1/23, and the certification will expire on 1/01/23. The household’s only source of income is social security. At the time of move-in, the head of household’s current monthly benefit amount was $1247. In October of 2023, SSA announced an 8.7% COLA increase beginning January 2023. The COLA will increase the Lynn household’s monthly income by $110.23 per month. Even though the household’s income increased due to the 2023 COLA, as the household’s certification expires on 12/31/22, the housing provider must still complete the annual recertification due on 1/1/23 and include the new benefit amount.