Are Business Assets Protected From Medicaid in Maryland?

Imagine you’ve spent years building a successful business, and now you’re faced with the need for long-term care. Now, the big question is, “Are business assets protected from Medicaid in Maryland?”

In this blog post, we will delve into how Medicaid views business assets. We’ll explore the key factors that determine whether your business assets will be protected while still helping you qualify for the Medicaid benefits you need.

Medicaid Eligibility Criteria

Medicaid examines both your income and assets to determine eligibility. This includes a thorough evaluation of what you own and what you earn.

Income Evaluation

In Maryland, the asset limit for an individual applying for long-term care Medicaid was a mere $2,500 per month in 2023. This includes your regular income sources like wages, pensions, and social security benefits.

Asset Evaluation:

Here’s where you might wonder, “Are business assets protected from Medicaid in Maryland?” The answer: It’s complicated.

Generally, Medicaid classifies assets as either “countable” or “non-countable.” While personal assets like your home might be non-countable, business assets are scrutinized differently.

The structure of your business (sole proprietorship, partnership, LLC, etc.) and your role in the business can influence this evaluation.

The Five-Year Look-Back Period

Any asset transfers made within five years prior to applying for Medicaid can affect your eligibility. Transfers that appear as attempts to reduce your countable assets to qualify for Medicaid might lead to penalties or a period of ineligibility.

Understanding Business Assets

  • Physical Assets: Includes tangible items like machinery, office equipment, and inventory. Physical assets are often the most visible components of your business.
  • Stocks and Investments: Ownership in stocks or other business investments. These are financial assets that can fluctuate in value.
  • Intellectual Property: Patents, trademarks, and copyrights. Intellectual property is unique as value hinges on legal protections and market demand.

Business assets differ significantly from personal assets in their usage and purpose. Personal assets are primarily for your personal life, like your home or personal vehicle. In contrast, business assets are integral to the operation and revenue generation of your business.

This distinction is crucial in Medicaid planning, as the way an asset is classified can significantly impact your eligibility.

Business Assets and Medicaid Evaluation

It’s also important to grasp how Medicaid distinguishes between countable and non-countable assets, the characteristics of your business assets, and the nature of your business itself. Understanding this distinction is essential in answering the question, “Are business assets protected from Medicaid in Maryland?”

Countable vs. Non-Countable Assets

Generally, Medicaid classifies assets into two categories: Countable and non-countable. Non-countable assets include things like belongings and primary residence. Countable assets, on the other hand, can affect your Medicaid eligibility.

Nature of Business Assets

Whether or not business assets are considered countable depends largely on their nature and necessity for business operation. For instance, equipment essential for your business operations may be considered non-countable. However, surplus funds in a business account or non-essential real estate owned by your business might be classified as countable.

Active Business Involvement

If you are actively involved in the business, any income generated will likely be considered in your Medicaid eligibility assessment and, therefore, countable. Passive investments, where you’re not actively managing the business, may be evaluated differently.

The Nature of Your Business

Whether or not your business assets are counted may also depend on the type of business in question:

  • Assets from a sole proprietorship, which you manage and own alone, are likely to be considered countable by Medicaid.
  • If your business is an LLC or S-Corp, the situation may differ, depending on the extent of your control over the business. Consult with a Medicaid planning attorney to understand your specific circumstances.

Scenarios Affecting Eligibility

  • Selling business assets: The proceeds from asset sales may be counted as a liquid asset, potentially affecting eligibility.
  • Transferring business assets: The five-year look-back period applies to your business asset transfers. Transfers done within the look-back period can lead to penalties or disqualification.

Each situation is unique, and the specifics of how your business assets are evaluated depend on multiple factors. When in doubt, consult a Medicaid planning attorney to ensure your assets are structured in a manner that both protects them and ensures your eligibility for Medicaid.

Protecting Your Business Assets

Understanding how to shield your business assets from Medicaid eligibility considerations involves serious strategic planning.

Legal Structures for Protection

  • LLCs (Limited Liability Companies): Forming an LLC separates your personal assets from your business assets, potentially safeguarding them from being counted towards Medicaid eligibility.
  • S-Corporations: Similar to LLCs, S-Corps offer a separation of personal and business assets. However, the way income and dividends are treated can differ, influencing how Medicaid views your assets.

Importance of Timely Planning

It is absolutely vital to start planning before the need for Medicaid arises. This is crucial, especially considering the five-year look-back period for asset transfers. Late planning can lead to penalties and affect your eligibility.

Seeking Professional Advice

Each business and personal financial situation is unique. An elder law and Medicaid planning attorney can provide customized advice, ensuring your asset management aligns with Medicaid eligibility requirements–while preserving your business assets.

Can a Medicaid Asset Protection Trust (MAPT) Help Protect Business Assets?

Yes, a Medicaid Asset Protection Trust (MAPT) can help protect business assets–in certain situations. A MAPT is a specific type of irrevocable trust designed to protect assets from being counted for Medicaid eligibility, including some types of business assets. For more info on MAPTs and how they can help, contact us.

The Bottom Line

The question, “Are business assets protected from Medicaid in Maryland?” doesn’t have a one-size-fits-all answer. The protection of business assets under Medicaid is contingent on several factors, including the type of assets, the business structure, and your involvement in the business.

Certain business structures (like LLCs and S-Corps) and MAPTs may offer a level of protection. However, each case is unique. Therefore, it’s essential to seek professional guidance to understand how your business assets might be affected by Medicaid eligibility criteria.

Contact PathFinder Law Group

If you need help protecting your business assets from Medicaid or have other questions related to “Are business assets protected from Medicaid in Maryland?” Schedule a Risk-Free Consultation today or call us at 443-579-4529.

About Adam Zimmerman

Adam Zimmerman is known for his unique ability to put people at ease. Within minutes of meeting Adam, his clients realize he is not the stereotypical attorney and is genuinely invested in helping them through their life situations. He is committed to empowering his clients to be decision makers in the process, so they are knowledgeable about the course of action they decide over their affairs.