His $90,000 in Private-Company Shares Looks a Lot Like a Windfall. Medicaid May Value Them Before He Can Find a Buyer
Private company shares that have no buyer and no market price can still block a Medicaid application, and the agency gets to assign a value if the family does not show up with one first.
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A retired engineer helped a friend launch a manufacturing business decades ago and took stock as part of the deal. He is a composite of the clients elder law attorneys describe. Now he needs a nursing home, and his family is filling out the Medicaid application. His latest statement lists $90,000 of shares in the private company.
The shares have no ticker, no daily quote and no brokerage app with a sell button. Nobody has offered to buy his stake in years. Medicaid may still count the shares against him and assign them a value before he ever finds a buyer.
Families often mix up the two programs here. The federal health insurance for seniors, Medicare, pays only for short skilled-nursing stays after a hospitalization. Long-term nursing home care is covered by Medicaid, the joint federal and state program for people with limited income and assets. That’s why Medicaid’s asset test matters so much.
How Medicaid Counts Private Stock With No Market Price
Many state Medicaid programs borrow their resource rules from Supplemental Security Income, the federal cash benefit the Social Security Administration runs. Under those rules, stock generally counts as a resource if the owner has the legal right and the practical ability to turn it into cash.
The SSA’s operating manual for SSI caseworkers tells them to assume an owner can sell shares at will at current value unless evidence shows otherwise. Public stock is easy: caseworkers pull the closing price. With closely held stock, the manual notes the shares trade rarely, change hands privately and often carry restrictions. So the agency has to work from an estimated cash value.
State rules vary. Some states write their own resource rules, so the caseworker’s starting assumptions shift depending on where the application lands.
Why $90,000 on Paper Can Block Eligibility Before Anything Sells
The shares can disqualify him even though he can’t turn them into cash anytime soon. A stake he can’t sell can still cost him eligibility.
The burden also lands on the applicant. The agency’s manual places the burden of proof for establishing the value of non-traded stock on the individual. A buyback agreement might cap the price. The bylaws might bar sales to outsiders.
Maybe nobody wants a minority piece of a small family business. Any of these can push the real value well below the paper figure, but the family has to prove it. If the family stays quiet, the bigger number stands.
Meanwhile, the nursing home bills keep coming. A stalled application leaves the family paying out of pocket while it argues over a valuation it could have determined months earlier.
Documents That Turn a Paper Value Into a Realistic One
The valuation argument gets much stronger when the family can show exactly what limits the shares and what a real buyer would likely pay The strongest files include:
- The shareholder agreement and bylaws
- Any transfer restrictions, consent requirements or rights of first refusal
- Recent private sales or outside offers
- The company’s buyback terms, including any formula price
- Recent financial statements
- A valuation letter from the company’s accountant or another qualified appraiser
That accountant’s letter carries extra weight. Social Security’s guidance calls a written estimate from the firm’s accountants the preferred evidence, ideally explaining its basis: most recent sale, most recent offer from outsiders, assets minus debts, a wind-down or bankruptcy.
Shares that are merely hard to sell can still count, leaving the fight over how much they’re actually worth. A binding restriction that leaves him without the legal power to sell them can change whether they count at all. Under the agency’s rules, assets aren’t resources when the owner lacks the legal right, authority, or power to liquidate them.
The agency’s own example involves siblings who co-own stock under a binding agreement that neither sells without the other’s consent. When one sibling refuses, the stock stops counting for the other. If consent later comes, the stock gets counted beginning with the month following the month of consent.
That line gets drawn in the paperwork. A shareholder agreement needing board approval for any transfer reads very differently from one that simply gives the company first dibs.
Determine the Valuation Before Medicaid Settles It for You
The smart order runs valuation first, application second. Families that collect the agreement, order the accountant’s letter and document every failed attempt to find a buyer walk in with their own number.
Eligibility can turn on what those shares are actually worth in cash, not what they once cost or what appears on a company statement. Families that document that value before applying walk in with evidence. Families that wait give the paper number far more room to control the conversation.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
