PM 07-02-11

Property used in a trade or business and necessary for self-support is exempt if it meets the following criteria:

  • resources (such as land, buildings, equipment, supplies and tools) including farmland and personal property (such as equipment and supplies, motor vehicles, and tools) currently used for income-producing purposes are exempt up to $6,000 of the person's equity in the property if the property produces a net annual income of at least 6% of the excluded equity value of the property (equity in excess of $6,000 is not excluded); or
  • resources that had been income-producing but currently produce income less than 6% of the exempt equity due to reasons beyond the person's control (such as illness or crop failure) are exempt up to $6,000 if there is a reasonable expectation that they will be used again within a year of last use. For example, property such as, inventory, equipment, machinery, and livestock. 

If the person owns more than one income-producing property, look at each to determine if the 6% rule is met.  The total equity value of all exempt properties is limited to $6,000.

  • Example 1:
  • Mr. J applies for medical assistance and has $5,000 in supplies and equipment for his shop. He provides proof that he earns about $100 per month from his business.  To be exempt, the resources must be producing at least 6% of the excluded equity value of the property annually. $5,000 x .06 (6%) = $300.  Mr. J earns about $1200 per year. The resources are exempt.
  • Example 2:
  • Ms. Y has tools and craft supplies for her business worth $4,800 in equity value. Ms. Y has only been able to make $5 to $20 a month and only $180 over the last year. She doesn't expect to be able to earn more over the next year. For the resources to be exempt, they would have to be producing at least $288 per year ($4,800 x .06 (6%) = $288). The resources are non-exempt and counted toward her resource limit. 

Non-business income-producing property is property such as land-use fees, tools, uniforms, royalties, and property used to produce foods for home consumption.

For AABD Cash or MANG cases based on blindness, if the property is part of a self-support plan, document details of the plan and the assets in the case record.