Recently, a senior client who had a very small business that he ran by himself came to see me in a panic. He was just making ends meet. His spouse had been on Medicaid in a nursing home for several years, but the county board of social services was now questioning the nature of the business and whether it was a countable resource that should have been spent down. They were going to terminate the wife’s eligibility. “How can I appeal this?” was one of his worries.
The client was distraught, but we helped him to keep a level head. Our first step was to file for a Medicaid Fair Hearing and make sure that benefits were continued while that administrative appeal was going on. Next was getting more information about this business–did it have any other employees other than the spouse? What equipment or real estate was owned by the business? How were taxes handled–could we see the returns? Did the applicant spouse have an ownership interest in the business?
Once we had this information, it looked like these business activities and the equipment associated with them would fall firmly in the category of excluded resources under the New Jersey Medicaid regulations (N.J.A.C. 10:71-4.4):
“Excludable resources (b) The following resources shall be classified as excludable: 5. Nonhome property that is used in a business or nonbusiness self-support activity that is essential to the means of self-support of an individual and/or spouse, is excluded from resources. i. Tools, equipment or other items that are used for trade or business and required for employment, including, but not limited to, the machinery and livestock of a farmer, are assumed to be of a reasonable value and producing a reasonable rate of return and are, therefore, excluded from resources.”
Further, under the Social Security Administration interpretive publication (called the POMS), there is no value limit to property that is essential to a trade or business. It would all be excludable as long as it is in current use. The income the business generates to a community spouse is exempt, regardless of how much. This is true of all income of a community spouse.
Once we fully disclosed the nature of the business and how it was essential to the spouse’s self-support, the county backed off and reinstated benefits. We could then withdraw the fair hearing. The client was relieved and thrilled. He could get back to caring for his wife without this cloud hanging over his head!
The Medicaid regulations are a thorny thicket, but sometimes protection is available if you can just find where it is hidden in there.
If you or a spouse needs Medicaid, but you are unsure about how an active business affects this, give us a call…. 732-382-6070