Understanding Colorado Long-Term Care Medicaid - 2026

Qualified Income Trust (Miller Trust)

Upon the applicant's death, State Medicaid is the beneficiary of the Trust to the extent Medicaid has paid out benefits. If the applicant resides in an independent setting, the excess income must be deposited monthly into the trust account and remain in the trust, unless other allowable deductions apply.

If an applicant resides in assisted care or a nursing home, all monthly income must be transferred to the trust account and paid out of the trust.

Medicaid Planning/Asset Protection/Annuity Rule

Restructuring current countable assets, allowing for immediate eligibility, preserving countable assets, and home equity. There are a variety of rules for asset preservation. Up to 100% of marital assets can be protected, and 50% of assets can be protected for a single applicant.

Annuities: A Medicaid-compliant annuity is a specialized annuity used with Medicaid Planning, which converts countable assets into monthly income. All other annuities must be reviewed to determine whether they are acceptable by medicaid rules.

5-Year Look-Back Penalty Rule

If an applicant or a spouse transfers assets or makes gifts to others within 5 years from the application date, a period of ineligibility (POI) is imposed. The POI penalty is the amount of time the applicant is not eligible for benefits. The length of the POI is determined by the total assets/gifts transferred, then divided by $10,814. The POI begins on the assigned approve date. No benefits are available for use until the POI has been served.

Estate Recovery Rule

State Medicaid is responsible for administering estate recovery and has the legal right to file a claim against the estate of a deceased Medicaid recipient for personal and real property.

Exempt from Estate Recovery efforts: If the decedent is survived by a spouse or dependent child, or the property is titled in joint tenancy.

Intent to Return Home Rule

A signed, written statement with "Intent to Return" can protect a Medicaid beneficiary's primary home as an exempt asset; however, it does not protect against the Estate Recovery rule.

Medicaid Pending

The application has been submitted to the county Medicaid office and is waiting for approval.

Personal Needs Allowance

In a community setting, the recipient is allowed to retain a small amount of their income, and the remaining income is paid to the community.

Spousal Impoverishment Rule

The allocation of the applicant's monthly income retained for a spouse. Specific conditions apply. The county Medicaid office calculates the amount to be granted to the spouse.

Legal Documents

Power of Attorney, a Will, or a Trust should be reviewed before applying for benefits to make certain provisions align with Medicaid eligibility rules.

Life Insurance Rule

A policy with a cash value greater than $1500 either has to be liquidated or transferred to another individual. Transfers to someone other than a spouse are subject to the 5-year look-back rule.

Medicaid/Assisted Living or Nursing Home Care

The community collects recipients' monthly income, less the applicant's personal needs allowance. When benefits are approved, the community collects additional financial reimbursement from the State Medicaid. Most assisted living usually requires private funds for a certain period of time before benefits are accepted.

Medicare/Medicaid Dual Eligibility Health Coverage

Do not cancel Medicare benefits. Medicaid provides supplemental health coverage based on the Medicaid recipient's income or care setting.

Veteran's Benefits

A Veteran's Pension is counted as income. VA Aid & Attendance is a non-service-connected pension and is not counted as income. If the recipient resides in a nursing facility, the pension is reduced to $90 per month.

Real Estate Deeds

A Beneficiary Deed is not allowed. Quit Claim & Life Estate Deeds are allowed and considered a transfer of property ownership to another person. The 5-year look-back rule and other eligibility conditions may apply.

Reverse Mortgage

Distributions from a Reverse Mortgage loan are permissible and not considered income.

IRS Annual Gift Tax Exclusion Rule

Financial gifts to others, excluding spouses, are subject to the 5-year look-back rule. The government exempts $13.99 million in financial gifts from tax over a person's lifetime. If over the limit, tax is due.

1. Skilled Nursing (LTSS)

Long-term skilled nursing care services.

2. Home Community-Based Services (HCBS)

In-home/independent living, paid family caregiving at home, adult day, assisted living, in-home modifications, transportation, meal delivery, home health, medical alert pendant, self-directed care, dental care & durable medical equipment.

3. Specialized Care: Brain Injury, Spinal Cord Injury, Behavioral Health, & Developmental Disabilities

AI PACE, an all-inclusive care system for ages 55+. Provides clinical care, adult care, in-home care, and direct placement in select assisted living and nursing homes. Specialized care and paid family caregiving are not available.

Note: PACE is zip code-based and is offered in most Denver Front Range counties, excluding Douglas County. Upon approval for benefits, recipients may transfer to other applicable long-term care programming.