Two owners, one van company: ownership splits, buy-sell terms, and what Medicaid checks on each partner

Two owners can split a NEMT company’s work well: one on the road and one in the office, or one with the money and one with the broker experience. The government sees two owners differently from one. Medicaid screens each partner, a lender asks each one to sign, and the state’s default business law decides anything you never wrote down. Settle the percentages, the voting, and the exit before the enrollment application goes in, because the names on that application are hard to change later.

Pick the split with the 5 and 20 percent lines in mind

Two ownership thresholds decide what each partner owes the paperwork. Medicaid’s line is 5 percent. The SBA’s line for personal guarantees is 20 percent.

Under 42 CFR 455.101, a person with an ownership or control interest is anyone holding 5 percent or more of the company directly, indirectly through another company, or in combination. The definition also reaches a lender with a 5 percent or larger interest in a loan or mortgage backed by the company’s property, if that interest is worth at least 5 percent of the company’s assets, every officer and director of a corporation, and every partner of a company organized as a partnership. For each one, the state collects a name, address, birth date, and Social Security number, whether that person is related to another owner as a spouse, parent, child, or sibling, and any other Medicaid provider that person owns (455.104). The ownership disclosure entry covers the form itself.

The SBA standard operating procedure in force since October 1, 2026 (SOP 50 10 8.1) requires an unlimited full personal guarantee from any individual with a 20 percent or larger stake, held directly or through another company. The lender may also ask for guarantees from people below that line, such as a minority partner the business depends on.

Here is how the two lines play out for a single partner in a company organized as an LLC:

The six-month lookback catches a partner who trims a stake just before a loan. Anyone who held 20 percent or more at any point in the 6 months before the application still has to guarantee, unless that person sold out completely and has no role at all in the company, paid or unpaid, for the life of the loan. Note too that a partner below 5 percent is still disclosed if that partner runs the operation day to day, because Medicaid separately collects every managing employee.

What Medicaid checks on each partner

Every partner at 5 percent or more goes through the company’s screening, and one partner’s problem becomes the company’s problem.

• Fingerprints. When a state places NEMT in its high-risk screening tier, 42 CFR 455.434 requires fingerprints from the provider and from each 5 percent owner, submitted within 30 days of a request. If a set never arrives, the state has to deny or terminate the enrollment unless it documents in writing why that would hurt the program (455.450, 455.416). Minnesota added NEMT to its high-risk list in January 2026 and requires a fingerprint-based background study for every direct or indirect owner at 5 percent or more before revalidation, at $44 per study plus the fingerprinting fee. Each study has to come back “eligible” or “set-aside.” The provider risk levels entry explains the three tiers.
• Program crimes. A program-related conviction (Medicare, Medicaid, or CHIP) within 10 years for any 5 percent owner forces the state to refuse or end the enrollment, unless it documents in writing that keeping the provider serves the program. A partner who holds back required details, gives wrong ones, or will not take part in screening leaves the state no choice: the rule requires termination. How a partner’s record is judged is covered in owning a NEMT company with a felony record.
• Exclusion. The OIG’s bulletin on the effect of exclusion says any provider owned 5 percent or more by an excluded person is potentially subject to exclusion itself. Run each partner through the OIG exclusion list and your state’s own list before you form the company.

Brokers ask similar questions. MTM’s standard provider agreement has the company warrant that none of its owners or officers has ever been terminated or excluded from any state Medicaid program or Medicare, or found to have committed fraud against either. Check every partner’s history before the operating agreement is signed, not after the application is denied.

What state law decides when your agreement is silent

If two people start running vans together without filing anything, the law treats them as partners. Minnesota’s partnership act, for example, says two or more people carrying on a business as co-owners for profit form a partnership “whether or not the persons intend to form a partnership.” Every partner is then personally liable, jointly and severally, for all of its obligations. The LLC guide covers how an LLC keeps most company debts away from its owners and where that protection stops.

An LLC without a written operating agreement still has rules. They come from the state’s LLC act, and the defaults are rarely what two owners would choose. Minnesota’s act, based on the revised uniform LLC act, is a useful example:

• Voting is one member, one vote. Unless the operating agreement says otherwise, the company is member-managed, each member has equal management rights, and ordinary disagreements are decided by “a majority of the members.” Two members cannot form a majority against each other, so they deadlock whether they own 50/50 or 70/30.
• Big moves need everyone. Anything outside the ordinary course, and any change to the operating agreement, needs the consent of all members.
• Cash splits by head count. Minnesota’s default divides distributions in equal shares among members, regardless of who put in more money. Delaware’s default does the opposite and divides them by the agreed value of each member’s contributions. The same 70/30 deal can produce different checks depending on the state where the company was formed.
• Quitting is not a buyout. A member who gives notice of withdrawal loses management rights but keeps the economic interest as a transferee, and the act says dissociation does not entitle the person to a distribution. The company owes no automatic buyout, and the departed partner keeps collecting a share of future profits.
• Courts are the fallback. A member can ask a court to dissolve the company when it is no longer reasonably practicable to carry on its activities, or when those in control act illegally, fraudulently, or oppressively. In the oppression case the court may order a buyout at fair value instead.

The IRS follows the same logic. Publication 541 says that when a partnership agreement is silent on a matter, the provisions of local law are treated as part of it. Writing the agreement yourself is how you choose those terms instead of inheriting them.

The clauses a two-owner van company needs

A lawyer in your state should draft the operating agreement. These are the terms to bring to that meeting, with the NEMT-specific reasons behind each.

• Who runs what, and who signs. Name the partner who signs Medicaid applications, revalidations, and broker contracts, and the one who handles payroll and the bank. If one partner will run daily operations as manager, Medicaid will list that person as a managing employee regardless of ownership.
• A way to break ties. A named tiebreaker on operational calls, a mediation step for larger ones, and a buyout procedure as the last resort. One buyout format lets either partner name a price per percentage point, and the other must either buy at that price or sell at it.
• Capital calls. Say how much each partner must add when a van needs replacing or a broker pays late, and what happens to a partner who cannot pay: dilution, a loan from the other partner, or a forced sale. Delaware’s act holds a member to a promise to contribute cash, property, or services even when death or disability keeps them from performing, so put only real promises in writing.
• Buyout triggers that fit Medicaid. Death, disability, divorce, and leaving the company are standard. Add the events that endanger the enrollment: exclusion from any federal health program, a conviction that falls under 455.416, refusing to submit fingerprints or disclosure information, and, for an owner who drives, losing a license. Minnesota’s act lets the other members expel a member by unanimous consent when it is unlawful to carry on the business with that person as a member, but a written trigger is faster and clearer.
• Price and payment terms. Use a formula or an appraisal method, and pay out in installments so the buyout does not drain the cash that covers payroll. The valuation guide explains how buyers price these companies.
• Rider and client information. MTM’s agreement restricts anything you learn about its members to performing that contract, a duty that survives termination. Spell out that facility accounts, private-pay clients, phone numbers, and the company’s records stay with the company.

Taxes once there are two of you

By default, an LLC with two members is taxed as a partnership. It files Form 1065 by the 15th day of the third month after its tax year ends, which put the deadline for 2025 returns on March 16, 2026, and gives each partner a Schedule K-1. Missing the deadline is expensive with partners: the 2025 instructions charge $255 per partner for each month or part of a month the return is late, for up to 12 months. A two-partner return filed six months late costs $3,060 before any tax is owed.

Partners are not employees. The IRS says partners should not receive a Form W-2 for distributions or guaranteed payments. A partner who drives full time while the other runs the office can be paid a guaranteed payment, a fixed amount set without regard to the company’s income, which the company deducts and the partner reports as ordinary income. Publication 541 gives the example of a partner promised 30 percent of income but at least $8,000: in a $20,000 year, $2,000 of the $8,000 is a guaranteed payment.

An S corporation election changes the rules. An S corporation may have only one class of stock, which generally means every share carries identical rights to distribution and liquidation proceeds, and it may not have a nonresident alien shareholder. Distributions then follow ownership percentages, so a partner who put in more cash cannot simply take a larger share of profits, and every owner on the job needs a reasonable salary through payroll. The guide to paying yourself from a NEMT business works through when that election pays off.

Adding or removing a partner later

Every ownership change is a filing. Federally, the company owes Medicaid updated disclosures no later than 35 days after its ownership changes. States add shorter deadlines. Ohio’s provider agreement rule gives a provider 30 days to tell the Ohio Department of Medicaid about an ownership change, and rule 5160-1-17.6 lists a missed 30-day notice among the reasons ODM may propose ending the provider agreement.

Brokers expect faster notice. MTM’s standard agreement asks the company to report changes to its owners, officers, directors, or controlling interest right away. An ownership change, a new EIN, or a renamed company requires a new MTM agreement, so plan the change with your MTM representative before closing. The change of ownership entry covers how states and brokers treat a CHOW.

A few habits keep a partner change from interrupting trips:

1. Tell the state and the broker ahead of closing, and ask what each will need.
2. Screen the incoming partner against the exclusion lists and, where NEMT is high risk, plan for fingerprints within the 30-day window.
3. Ask your SBA lender before any owner crosses 20 percent in either direction, since a partner who held 20 percent or more in the six months before an application can still be required to guarantee it.
4. File the updated disclosure within 35 days, or by the state’s shorter deadline if it has one.
5. Amend the operating agreement in the same week, so the paperwork and the ownership match.

If a partner’s exit turns into a sale of the whole company, the guides to selling and buying a NEMT company cover the larger filings.

One board for both owners

Partners argue less when they look at the same numbers. In HealthRide, both owners work from the same dispatch board and the same reports. Each person on your team sees only what their role allows, every change is recorded, and financial reports stay visible only to the roles you choose. See reports and the dispatch board.