42-200 J. Restricted Account

 

Table of Contents

The Restricted Account section includes the following information:

 

Topic

Restricted Accounts

Written Agreement

Account information

Treatment Of Interest

Qualifying And Non-Qualifying Withdrawals

Verification Of Expenditure

Good Cause

Excess Resource

Period Of Ineligibility (POI)

QR/PB Impact

Examples

Shortening The Period Of Ineligibility (POI)

 

 

 

Restricted Accounts

 

 

An AU, which includes a recipient, is allowed to retain cash reserves in one or more restricted accounts at a financial institution. 

 

There shall be no limit to the amount of money that can be saved in a restricted account.

 

These funds are in addition to the resource limits for the assistance unit (AU) indicated on CPG 42-200.B Property Resource Limit section. 

 

Funds withdrawn from restricted accounts can be used for:

·   Buying a home;

·   Any education or job training expense;

·   Starting a business; or

·   Costs associated with securing permanent housing or to make rent payments to overcome an episode of homelessness.

 

Reapplying for CalWORKs

If the AU is discontinued and later reapplies for CalWORKs, the funds held in a restricted account will no longer be exempted as a resource.

 

Written Agreement

 

 

 

Before an account can be designated as “restricted” the AU must sign an agreement which explains the requirements, restrictions and penalties.  The written agreement must include a statement which advises recipients to first retain resources close to the resource limit to pay for unexpected expenses or emergencies before they enter into a restricted account agreement.

 

The written agreement for the restricted account terminates when:

·         The AU is discontinued from CalWORKs; or

·         The restricted account is closed; or

·         The AU does not provide timely verification of the account information as specified in the Account Information section; or

·         State or federal law changes the conditions or no longer permits these restricted accounts.

 

Account Information

 

 

 

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The AU must provide verification to the Human Services Specialist (HSS) for each account within 30 calendar days from the date of the written agreement.  Failure to comply will result in termination of the agreement.

 

The AU must provide:

·   Names of persons as shown on the restricted account;

·   Name and address of the financial institution;

·   Account number; and

·   Account balance and activity since the date the agreement was signed.

 

The AU must establish and maintain a restricted account separately from any other account.

 

Treatment of Interest

 

 

 

 

Interest payments are exempt for purposes of determining eligibility and grant amount when the interest is deposited directly into the account by the financial institution. 

 

Interest not deposited directly into the restricted account is a non-qualifying withdrawal. 

 

If interest is not deposited due to an error by the financial institution, the AU has 30 calendar days from the date of receipt to deposit the interest into the restricted account. 

 

Failure to deposit the interest within 30 days will result in a determination that a non-qualifying withdrawal has occurred.

 

Qualifying Withdrawals

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The AU is allowed 30 calendar days to spend funds for one or more of the following expenses:

 

Purchase of a home - Expenses associated with the purchase of a home that will be the principal residence of the AU.  These expenses include, but are not limited to:

·   Deposits;

·   Fees;

·   Down payment;

·   Principal payment;

·   Repairs;

·   Fixtures; and

·   Closing costs.

 

NOTE: Expenses for furniture and household goods are not allowable.

 

Education - Expenses for any education or job training for the account holder or any person who is claimed or could be claimed by the account holder as a dependent for federal income tax purposes.  These expenses include, but are not limited to:

·   Fees;

·   Tuition;

·   Books;

·   School supplies;

·   Equipment;

·   Special clothing;

·   Student housing;

·   Meals;

·   Transportation costs to and from school; and

·   Child care services necessary for school attendance.

 

Start up of a new business - Allowable expenses include, but are not limited to:

·   Purchase and maintenance of capital equipment;

·   Uniforms or other protective clothing and shoes;

·   Tools;

·   Inventory;

·   Payments on loan principal;

·   Interest for capital assets or durable goods;

·   Rent for office of floor space and associated utilities;

·   Shipping and delivery costs;

·   Employee salary;

·   Fees;

·   Business taxes;

·   Insurance; and

·   Bookkeeping or other professional services.

 

NOTE: Personal expenses such as entertainment are not allowable.

 

Overcoming an episode of homelessness - Expenses associated with securing permanent housing or to make rent payments to overcome an episode of homelessness.  These expenses include, but are not limited to:

·   Overdue rent payments;

·   Deposits, such as cleaning deposits;

·   First and last month’s rent deposits; and

·   Utility deposits.

 

NOTE: Expenses for furniture and household goods are not allowable.

 

No Expense Incurred - Funds withdrawn in anticipation of an expense that does not occur or is less than anticipated, must be redeposited into the restricted account within 30 calendar days from the date of the withdrawal.  Failure to timely redeposit the funds will result in a determination that a non-qualifying withdrawal has occurred.

 

 

Verification of Expenditure

 

The AU must provide the following verifications within 30 calendar days from the date of expenditure:

 

·   Balance prior to the withdrawal;

·   Date and amount of the withdrawal; and

·   A receipt, canceled check, or signed statement from the provider of goods or services which verifies the type and the amount of expense paid.

 

Non-Qualifying Withdrawals

 

 

Non-qualifying withdrawals include:

 

Noncooperation - The AU fails to expend or provide verification of a withdrawal or expenditure within the 30 day time limit, unless good cause exists;

 

Nonallowable purpose - The AU withdraws or spends the funds for purposes or expenses other than those allowed; or

 

Receipt of interest income - When the interest payment was not deposited directly into the account

 

When the HSS determines that a nonqualifying withdrawal exists, the HSS shall calculate a period of ineligibility (POI).

 

Good Cause

 

 

 

 

 

 

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Good cause exists when situations beyond the AU’s control occur.

These situations include, but are not limited to:

 

·   Illness or medical emergency;

·   Failed or delayed completion of a home purchase;

·   Lack of transportation; or

·   Other extenuating circumstances. 

 

When good cause is found, the AU will be allowed to fulfill the necessary requirement within a reasonable period of time based on the circumstances for the delay.  Good cause also exists when the AU complies before the effective date of the notice of action.

 

Excess Resource

When good cause does not exist, the case must be reviewed for excess resources. When the resource limit is exceeded the AU must be discontinued with timely and adequate notice.

 

Period of Ineligibility (POI)

 

To calculate the period of ineligibility, the HSS will

A.   Determine the total amount in all the restricted accounts immediately prior to the nonqualifying withdrawal or prior to the issuance of an interest payment when it is not directly deposited into the account by the financial institution;

B.   Subtract any portion which is a qualifying withdrawal;

C.   Divide the result by the Minimum Basic Standard of Adequate Care (MBSAC) for the number of persons in the AU, plus any special needs; and

D.   Round down the result to the nearest whole number for the number of months of ineligibility.

 

QR/PB Impact
 

When applying a period of ineligibility, the period of ineligibility shall begin on the first day of the month of the next QR Payment Quarter following the reported nonqualifying withdrawal on the QR 7 and continue for the determined number of months.

 

Examples

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Example 1:

An AU of three is in an April/May/June Quarter.

Bank balance prior to May withdrawal:

$8,000

Amount withdrawn from account:

$4,000

Amount used to purchase home:

$3,000

Amount used to buy furniture:

$1,000

 

Since the AU used a portion of the withdrawal on a nonallowable expenditure, the county shall calculate a period of ineligibility as follows:

A.

Balance prior to withdrawal:

$8,000

B.

Allowable expense for purchase of home:

-3,000

 

=

$5,000

C.

Divide the remainder by MBSAC* for 3 + special needs:

$1,097

 

=

4.56 months

D.

Round down the result to the nearest whole number for number of months of ineligibility:

4 months

*  MBSAC amounts are subject to change.

 

The AU is ineligible for four months. The AU shall be discontinued at the end of June. The AU can reapply for aid on November 1.

 

Example 2:

An AU of three is in the April/May/June Quarter and has the following property:

Checking account:

$  100

Restricted account:

$2,000

Savings account:

$  800

Total:

$2,900

Amount used to buy furniture:

$2,500

 

The AU wants to buy new furniture and withdraws all of their funds from their accounts, including the restricted account, to pay for the purchases in May. The county determines that the AU made a nonqualifying withdrawal.

 

Although the AU's total property reserve prior to the nonqualifying withdrawal is under the $2,000 property limit, the HSS will calculate a period of ineligibility as follows:

1.

Balance prior to nonqualifying withdrawal in May:

$2,000

2.

Divide the remainder by MBSAC* for 3 + special needs:

$1,097

 

=

1.8 months

3.

Round down the result to the nearest whole number for number of months of ineligibility:

1 month

*  MBSAC amounts are subject to change.

 

The AU is ineligible for one month. The AU will be discontinued at the end of June. The AU can reapply for aid on August 1.

 

 

Shortening the Period Of Ineligibility (POI)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The HSS will shorten the period of ineligibility when the AU reapplies for aid and the standard of need increases.

 

An increase in the standard of need includes any increase in AU size, general increase in the MBSAC (COLA increases), or a determination that the ineligible family would be eligible for a special need item as specified in CPG 44-200.

 

To shorten the period of ineligibility due to an increase in the standard of need, the HSS will:

A.   Identify the restricted account balance used to calculate the original period of ineligibility.

B.   Identify the original MBSAC plus any special needs allocated to the ineligible family unit and multiply it by the number of ineligible months prior to the increase.  Subtract the total from the amount in step A above.

C.   Divide the result calculated in step B above by the increased standard of need.  Round down the result to the nearest whole number.

D.   The revised period of ineligibility is the final result in step C above plus the number of ineligible months prior to the increase.

E.   The revised period of ineligibility shall begin in the same month as the original period of ineligibility.

 

Example:

An AU of two is in a period of ineligibility due to a nonqualifying withdrawal. The pertinent facts of the period of ineligibility are as follows:

Original balance used to calculate the period of ineligibility:

$3,000

Original MBSAC*:

$  885

Number of months of ineligibility:

3

First month of ineligibility:

January

*  MBSAC amounts are subject to change.

 

The AU size increased to three people in February and the need standard increased to $1,097*.

Original balance:

$3,000

MBSAC* for one month of ineligibility:

-    885

=

$2,115

Divide by increased MBSAC* for 3 ($1,097):

1.93

Number of ineligible months after increase (rounded down):

1

 

Number of months before increase:

   1

Number of months after increase:

+ 1

Revised period of ineligibility (number of months):

   2

*  MBSAC amounts are subject to change.

 

The prior period of ineligibility has been reduced from three months to two months; January and February are the ineligible months.