Income Derived from Personal Businesses Must Be Counted for Eligibility for Benefits

HNWBusiness Law, Medicaid Eligibility and Asset Protection Planning

When applying for welfare through a county’s Board of Social Services, whether it’s Medicaid or SNAP benefits, you are required to provide to the agency sources of income to determine your eligibility.  One of the areas that comes into question are small businesses you run or have a stake in.  Failure to accurately report income could lead to a loss of benefits, and the state require you to return improperly obtained benefits.  Even if the income is received by the business, but not distributed directly to the person applying for benefits, it would still need to be reported.  This issue was tackled in a recent Appellate Division matter, Ocean County Board of Social Services & Department of Human Services v. A.H. & Z.H., Docket No. A-2481-18T1.

A.H. and Z.H., a married couple, applied for and successfully obtained food stamps from the Ocean County Board of Social Services.  However, an investigator for the County found some tax returns with higher income than what was reported on the application for SNAP food stamp benefits.  One business was Madison Tristate Management, Inc., a NJ S-corporation wholly owned by A.H., whose income on the tax return was much higher than reported on the application, and The Fro Pro, Inc., a partnership in which A.H. had an interest whose income was never reported.  A.H. denied any wrongdoing, claiming he wasn’t self-employed from what he was told by his accountant because he only received a paycheck from Madison, which he reported as his income.

In his decision, the administrative law judge rejected this argument, stating that the SNAP regulations required the reporting of gross income from a “self-employment enterprise” and it did not distinguish between income received as a business owner versus income being self-employed.  All that income had to be reported.  In addition, using the IRS definition of constructive receipt of income, which defines income not in the actual possession of a recipient as having been received if it “is credited to his account, set apart for him, or otherwise made available so that he may draw upon it at any time,” the judge concluded that the income was constructively received by A.H.  Thus, the income should have been reported on the application, and A.H. & Z.H.’s benefits should be terminated, with a portion of the benefits being paid back to reflect the correct income.  The Appellate Division affirmed for the same reasons as the judge.

If you are looking for additional details on this topic or if you require advice about your situation, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

Written by Stephen W. Kornas, Esq. of Hanlon Niemann & Wright

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