Advisory Opinion 2020-003

Part 1611 Income and Extra $600 Pandemic Payments

QUESTION PRESENTED

When determining an applicant’s annual income pursuant to 45 C.F.R. Part 1611, how should an LSC grantee account for the extra $600 provided with unemployment benfits through July 31 as part of the federal COVID-19 pandemic relief program?

BRIEF ANSWER

Part 1611 permits LSC grantees’ governing bodies to adopt income-determination policies that include flexible approaches for estimating annual household income with consideration of temporary increases of income that are not expected to last a full year.  For example, a grantee’s policies may permit annualizing 13 weeks of the extra $600 based on prior income and future income prospects.  Additionally, § 1611.5 permits grantees to have board-adopted policies for determining that an applicant is financially eligible even with an annual household income between 125% and 200% of the Federal Poverty Guidelines.  A grantee may determine, pursuant to its policies, that the massive unemployment caused by the pandemic greatly reduces the likelihood of the applicant regaining employment before the expiration of unemployment benefits and, thus, presents a sufficient “other significant factor” under § 1611.5.

BACKGROUND

Supplemental $600 Weekly Unemployment Payments

In response to the COVID-19 pandemic, Congress created a program to provide additional payments of $600 a week to recipients of unemployment insurance through July 31. Congress excluded this $600 from income eligibility for Medicaid and the Children’s Health Insurance Program. Pub. L. 113-136, Title II, § 2104(h) (Mar. 27, 2020). For other benefits programs, Congress left it to the relevant agencies to determine whether the applicable statutes and regulations permit exclusion of the extra $600 from income. For example, the U.S. Department of Agriculture includes the $600 as current income for the Supplemental Nutrition Assistance Program, while the U.S. Department of Housing and Urban Development excludes the $600 from annual household income for housing assistance.[1]

Unemployment benefits normally pay half of a worker’s prior salary, up to a state-determined maximum, for a limited number of weeks. The majority of states set the maximum weekly unemployment payment amount below $600. According to U.S. Department of Labor data, the average weekly unemployment payment was $378 in 2019. Thus, for many people, the extra $600 means that unemployment payments will temporarily increase their gross weekly income above what it was before the pandemic. In some cases, that may cause their income at the time of application for legal assistance to rise above the LSC income ceilings set by 45 C.F.R. Part 1611. Nonetheless, LSC does not require grantees to use gross weekly income to determine client eligibility. Rather, Part 1611 provides mechanisms to determine an applicant’s annual income and ability to afford legal counsel even when dealing with incomes that vary during the year.

LSC Definition of Income

Part 1611 defines “income” as “actual current annual total cash receipts before taxes[.]” 45 C.F.R. § 1611.2(i) (emphasis added). “Income” includes, but is not limited to, wages and salaries, income from self-employment after deductions for business or farm expenses, and “other regular or recurring sources of financial support that are currently and actually available to the applicant.” Id. LSC explicitly included “unemployment and worker’s compensation payments” in the definition as sources of income. Id. Part 1611 does not prescribe a method for determining current annual income for an applicant with irregular income. For example, when a seasonal worker, who may earn the majority of their annual income in the summer with very little the rest of the year, applies for legal services, grantees have discretion to use any reasonable method to estimate annual household income based on available information.  Grantees must determine applicant income pursuant to board-adopted policies under Part 1611.

Grantees may accept as clients (subject to grantee-adopted policies and other eligibility requirements) households with a net income that does not exceed 125% of the Federal Poverty Guidelines issued annually by the U.S. Department of Health and Human Services. 45 C.F.R. § 1611.4. For households with net incomes that exceed 125% but not 200% of the Federal Poverty Guidelines, LSC authorizes grantees to adopt policies for finding an applicant financially eligible based on other factors that “affect the applicant's ability to afford legal assistance.” Id. at § 1611.5. The examples of such factors, include “[c]urrent income prospects, taking into account seasonal variations in income” and “[o]ther significant factors that the recipient has determined affect the applicant's ability to afford legal assistance.” Id.at§ 1611.5(a)(4)(i) & (vii).

ANALYSIS

The extra $600 Congress has appropriated in response to COVID-19 is provided with payments for unemployment available under previously existing laws.  Unemployment payments are included as income under Part 1611.  However, the extra $600 is only available through July 31 and not for a full year.  As with any short term or seasonal income, grantees can adopt policies to annualize it based on the expected duration of payments, prior income, and future income prospects. 

ANNUALIZE THE EXTRA $600 FOR DETERMINING ANNUAL INCOME

A grantee may choose to annualize the extra $600 because it will be provided only for a limited time. For example, a person receives an extra $600 and expects to remain unemployed through July 31. That person will receive the extra $600 for no more than 13 weeks, which is a maximum of $7,800. Annualized over 52 weeks, the $600 becomes an additional $150 per week.  Alternatively, a grantee may adopt another method of determining annual income such as adding up all actual and anticipated income for a twelve month period.

PANDEMIC EXCEPTIONS TO THE INCOME CEILING

Even if a grantee adopts a policy of annualizing the additional $600 weekly benefit, some house­holds may still exceed the 125% threshold but not the 200% threshold set in 45 C.F.R. § 1611.5 for exceptions to the income ceiling.  For those households that also meet the asset eligibility requirements of § 1611.3(d), the grantee has the discretion, if provided in its board-adopted policies, to determine that the applicant is financially eligible based on one or more of the factors in § 1611.5(a), which include “[o]ther significant factors that the recipient has determined affect the applicant's ability to afford legal assistance.”  Part 1611 permits the grantee to determine that the massive unemployment caused by the pandemic greatly reduces the likelihood of the applicant regaining employment before the expiration of unemployment benefits and, thus, presents a sufficient “other significant factor.”  As with all exceptions to the income ceiling, that decision and the specific factor must be sufficiently documented in the case file pursuant to § 1611.5(b).

CONCLUSION

A grantee’s governing body may adopt policies for consideration of temporary or seasonal income that does not last an entire year when determining an applicant’s annual household income under Part 1611.  As with any short term or seasonal income, a grantee may annualize the extra $600 under those policies based on the expected duration of payments, prior income, and future income prospects.  Additionally, a grantee’s governing body may adopt policies that permit the grantee to determine that the pandemic creates a sufficient “other significant factor” under § 1611.5 for accepting an applicant as financially eligible even with an annual household income over 125% of poverty but not exceeding 200% of poverty.

RONALD S. FLAGG

Vice President for Legal Affairs and General Counsel


[1] Supplemental Nutrition Assistance Program – Questions and Answers, COVID-19, Set #1, U.S. Dept. of Agriculture, Food and Nutrition Services (April 11, 2020); Questions and Answers for Office of Multifamily Housing Stakeholders—Coronavirus (COVID-19), Dep. of Housing and Urban Dev., Fed. Housing Admin., Office of Multifamily Housing Programs (April 19, 2020 update).