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Payments made by a government agency, such as payments from Child Care Services to a child care provider for child care expenses, for a household member are considered vendor payments and excluded.

Payments made directly to the household are counted as income and are not excluded as vendor payments unless they are pass-through rent payments and equal to or less than the full amount of rent.

Money legally obligated or otherwise payable to the household, but which is diverted by the provider of the payment to a third party for a household expense, is considered income and not excluded as vendor income. Examples of diverted income that are not vendor payments are:

A. Earnings of a household member garnished or diverted by an employer and paid to a third party for a household's expenses, such as rent, are considered as income. If the employer paid the rent directly to the landlord in addition to paying the household member his/her regular wages, the rent payment would be excluded as a vendor payment. In addition, if the employer provides housing to the employee, the value of the housing is not counted as income.

B. All or part of a public assistance grant normally provided in a money payment to the household, but which is diverted to a third party or a protective payee for purposes such as managing the household's expenses, is counted as income to the household. Any payments in excess of the household's normal grant that normally would not be provided to the household are excluded as vendor payments, if paid directly to a third party. This rule applies even if the household has the option of receiving a direct cash payment.

Example: If a relative who is not a household member uses his/her own money to pay the household's rent directly to the landlord, the payment is considered a vendor payment and excluded. The household would not be allowed a shelter deduction for the rent payment. Example: When a non-household member gives money directly to the household to pay an expense, such as day care, the payment is considered as income to the household, unless otherwise excluded. Example 1: Jane is employed by Smith Farms. Mr. Smith pays Jane a monthly salary of $500 and provides her a house on the farm. Mr. Smith pays all utility expenses. $500 gross wage would be budgeted and no deduction for shelter allowed.

Example 2: Jane is employed by Jones Farms. Mr. Jones agrees to pay Jane $800 a month. Mr. Jones rents a house for Jane and pays the landlord $200 a month. Mr. Jones deducts the $200 monthly rent payment from Jane’s salary. $800 gross wage would be budgeted and a rent deduction of $200 allowed. $800 is legally obligated to Jane even if Mr. Jones diverts $200 to the landlord.

Example 3: Jane is employed at Doe Farms. Mr. Doe pays Jane a monthly salary of $800. Mr. Doe rented a house for Jane and pays the landlord $200 a month. Mr. Doe pays the rental cost in addition to paying Jane $800 a month. $800 gross wage would be budgeted with no deduction for rent allowed. The $200 landlord payment is not legally obligated to Jane, therefore is considered a vendor payment and excluded.