My brother is on Medicaid and wants to sell some assets but how can he not get disqualified?

Unless the terms of the LLC agreement itself prevent a transfer of your brother's interest, then it is a countable asset. Its value would be what he can sell it for on the open market; there are companies that specialize in valuing LLC interests, but clearly if it generates $12,500 for him annually, it would be worth more than the $2,000 limit for countable assets.
If he cannot transfer it, then it only has a value as income, not as an asset. But of course, that means that he cannot sell his interest. He could still qualify for Medicaid, depending on the rules in his state for Medicaid health coverage.

I agree with other commenters that he is only allowed ONE car of any value; the second car is a countable asset, and he cannot have more than $2,000 in countable assets (includes all cash, investment assets, etc.).

So many red flags here......
Community based Medicaid eligibility is VERY different than NH Medicaid and just how your state & even how his caseworker evaluates his income and exempt assets are going to be dependent on his states Medicaid programs guidelines & how accurate the information was that your brother provided. NH Medicaid is pretty straightforward...they must be "at need" financially (2k non exempt assets & under about $2,100 monthly income) & medically (need skilled nursing care). But for at-home community based medicaid lots more latitude as they need more funds to continue to live in thier home in their community...lots more grey area.

Based on what you wrote I'm kinda surprised he qualified......2 cars? that in & of itself should have been an issue as my understanding is they are allowed a car / 1 car as an exempt asset. So did he report ownership on both? Is there a wife so 2 cars can be done? Or is it that 1 of these is in the LLCs name? So it doesn't exactly initially show up?

So what did he report for his income? Did he view he LLC $ as not being "monthly income" cause it's not a job that pays wages and doesn't pay like a job does?

About the LLC....is it a bricks & mortar biz? So he's getting his % of profits which was 12k for last year? Or Is it more static - like land or royalties - which produces a 50k profit with his share of 12k? Does the LLC have a layered ownership, so that its owned by another entity? What is the value of the LLC? If he is a 25% owner then the overall value of this LLC is 25% his asset.

Did he disclose the LLC on his medicaid application?

About the LLC......Did it do IRS 1065 Partnership Income return? K -1(form 1065)? IRS Partners Capital Account Summary? The other partners if they owned 50% did they do a Schedule B-1? How is the LLC paying the 12K to brother...and how is it being reported for taxes by the LLC?

All the answers for these are going to matter as eventually the LLC as a reportable asset of which your brother is an owner of will surface.....and to paraphrase Ricky Ricardo...."Lucy, you have splaining to joo"...someone will have to deal with this. Otherwise he will be ineligible for Medicaid and Medicaid will clawback payments. The other 75% of the LLC will be quite peeved as it could complicate the LLC if 1partner has huge debts.

One hot mess.

Before this morphs more, I'd get all his finances, the Medicaid application he did (he should have a copy of what he submitted and that he signed off as accurate) & the past 3 years on the LLC and the initial LLC filing (that shows who the partners are & %) and it's last 3 years of annual reports and a current certificate of good standing. The last 3 from your states Sec of State & they should be a pretty inexpensive on-line download via SOS website. Get his medical bills for the last year. And take all these to a NAELA or CELA level atty to review. ASAP.

None of this is a DIY. Good luck....

He needs to contact a lawyer who does eldercare law. That person can help him. It is too complicated for an average person to answer. But he can legally spend down his assets after contacting his lawyer. In my case, I could spend it on my house which I own outright. I could update appliances, fix a basement or a roof, remodel a bathroom all legally. If they are necessities, it is possible to do it. I was even told I could use it to take a vacation......however I would not have done that! Good luck!

I don't see how he got Medicaid if he has two cars and an LLC investment.

Again, review your state laws and go from there. If you find your brother is in violation of the state Medicaid laws, you can contact Medicaid and report fraud. I don't know how everything is set up, but if you have a trust then the trust on the assets, not you. Do your homework and check everything out very carefully before reporting fraud. You want to make sure you have all the facts first and foremost

I just thought of another idea. Have you considered just calling Medicaid and asking questions? You can try that and see where it goes

I'm not sure about his cars or his business. I do know in Ohio if you sell something that puts you over Medicaid regulations, you have 30 days to spend it back down to the limit of $2000. You must show proof of the sale, why it sold for the amount it sold for and what you bought with the proceeds. This HAS to be done in a 30 day time frame. Proof of sale is important if it's called at a larger amount than it's sold for. You have to show justification as to why it sold that low.
My mother and I sold her house this spring so I'm somewhat familiar with their requirements. We had to hire an appraiser to justify it's sale price due to the county having it appraised by what she bought it for and the previous person. This was, of course, before the real estate bombing in '08.
It was very stressful!!!

JustHelping: Below is the link that should assist your brother for Medicaid in Colorado---

https://www.colorado.gov/hcpf/contact-hcpf

JustHelping: His quarter of the Limited Liability Company may be a sore spot. IDK. Look at the Colorado Medicaid website that I provided and go through the steps to see where your brother would stand.

It sounds like selling his business and using that instead of accepting Medicaid is proper, but think about it. If he sells the business, he will have that much money for bills, but then he will no longer have the income that keeps him off of further public assistance. Once he has no money at all coming in, then he'll really really need public assistance. Makes no sense to lose the business for anyone.