Treatment of income and resources of disqualified members.

(1) Disqualified for an intentional program violation or for failure to comply with a food stamp work registration requirement or a food stamp work requirement as provided in section 385.3 of this Title.

(i) Income, resources and deductible expenses. The income and resources of the disqualified individuals continue to be counted in the determination of the household's food stamp eligibility and benefit levels. However, the entire household's allowable earned income, utility standard, medical expenses, dependent care and excess shelter deductions continue to apply to the remaining household members.

(ii) Eligibility and benefit levels. Disqualified members are not to be included when determining the household's size for the purposes of:

(a) assigning a benefit level to the household;

(b) comparing the household's monthly income with the income eligibility standards; or

(c) comparing the household's resources with the resource eligibility standards. The household's coupon allotment must not increase as a result of the disqualification of one or more household members.

(2) Disqualified because of ineligible alien status, failure to attest to citizenship or alien status or for refusal to apply for or provide a social security number.

(i) Resources. The resources of persons disqualified because of ineligible alien status, failure to attest to citizenship or alien status or for refusal to apply for or provide a social security number continue to be counted as household resources in the determination of the household's food stamp eligibility.

(ii) Income. A pro rata share of the income of such disqualified members is counted as income to the household. This pro rata share is calculated by first subtracting the allowable exclusions from the disqualified members' income and dividing the income equally among the household members, including the disqualified members. All but the disqualified members' shares are counted as income for the remaining household members.

(iii) Deductible expenses. The 20-percent earned income deduction specified in section 387.12(b) of this Part will apply to the prorated income earned by such disqualified members. That portion of the household's allowable shelter and dependent care expenses which are either paid by or billed to the disqualified members will be divided evenly among the household's members including the disqualified members. All but the disqualified members' shares are counted as deductible shelter expenses for the household.

(iv) Eligibility and benefit levels. Such disqualified members must not be included when determining their households' sizes for the purposes of:

(a) assigning benefit levels to the households;

(b) comparing the households' monthly income with the income eligibility standards; or

(c) comparing the households' resources with the resource eligibility standards.

(3) Reduction or termination of benefits within the certification period. Whenever an individual is disqualified during the household's certification period, the remaining household members are determined to be eligible or ineligible based, to the extent possible, on information in the case file. When an individual is disqualified, the following rules apply:

(i) Disqualified for intentional program violation. If a household's benefits are reduced or terminated within the certification period because one of its members was disqualified because of an intentional program violation, the social services district must notify the remaining members of their eligibility and benefit level at the same time the disqualified member is notified of the disqualification. The household is not entitled to a notice of adverse action but may request a fair hearing to contest the reduction or termination of benefits, unless the household has already had a fair hearing on the amount of the claim as a result of consolidation of the administrative disqualification hearing with the fair hearing.

(ii) Disqualified for other causes. If a household's benefits are reduced or terminated within the certification period because one or more of its members is an ineligible alien, was disqualified for refusal to apply for or provide a social security number, or was disqualified for failure to comply with a food stamp work registration requirement or a food stamp work requirement as provided in section 385.3 of this Title, the social services district must issue a notice of adverse action, DSS-3260, which informs the household of the disqualification, the reason for the disqualification, the eligibility and benefit level of the remaining members, the actions the household must take to end the disqualification and the household's right to a fair hearing.