Colorado Medicaid Eligibility for Long Term Care: Income & Asset Limits

Colorado Medicaid Long-Term Care Definition

Medicaid is a health care insurance program for low-income individuals of all ages. While health coverage is provided for varying groups of Colorado residents, our focus is on long-term care Medicaid eligibility for seniors. In addition to providing nursing home facility coverage, CO Medicaid provides home and community based services to help the elderly live in their homes or in assisted living residences. There are three categories of Medicaid long-term care programs for which Colorado seniors may be eligible.

1) Institutional / Nursing Home Medicaid – An entitlement; anyone who meets the eligibility requirements will receive assistance. Benefits are provided only in nursing home facilities.

2) Medicaid Waivers / Home and Community Based Services (HCBS) – Not an entitlement; the number of participants is limited and wait lists may exist. Benefits are intended to prevent and delay nursing home admissions and may be provided at home, adult day care, or in assisted living. More on Waivers.

3) Regular Medicaid / Aged Blind and Disabled (ABD) – An entitlement; if eligibility criteria is met, assistance is received. Various long-term care benefits, such as personal care assistance or adult day care, may be available.

In Colorado, Medicaid is called Health First Colorado. While it is jointly funded by the state and federal government, it is administered by the state under federally set parameters. The Colorado Department of Health Care Policy & Financing is the administering agency.

Income & Asset Limits for Eligibility

Each of the three Medicaid long-term care programs have varying financial and medical eligibility criteria. Further complicating financial eligibility is that the requirements change annually, vary with marital status, and Colorado offers alternative pathways towards eligibility.

The table below provides a quick reference to allow seniors to determine if they might be immediately eligible for a Colorado Medicaid long-term care program. Alternatively, one can take the Medicaid Eligibility Test. IMPORTANT: Not meeting all the requirements does not mean one is ineligible or cannot become eligible for Medicaid. More.

Income Definition & Exceptions

Countable vs. Non-Countable Income
Nearly all income that a Medicaid applicant receives is counted towards the income limit. This includes employment wages, alimony payments, pension payments, Social Security Disability Income (SSDI), railroad retirement annuities, Social Security Income (SSI), IRA withdrawals, and stock dividends. Nationally, Holocaust restitution payments are not counted as income. Furthermore, in CO, the VA Aid and Attendance, which is above and beyond the Basic VA Pension, does not count.

Treatment of Income for a Couple
When only one spouse of a married couple applies for Nursing Home Medicaid or a Medicaid Waiver, only the applicant’s income is counted towards Medicaid’s income limit. Furthermore, the non-applicant spouse may be entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their applicant spouse. The MMMNA is the minimum amount of income a non-applicant spouse is said to require to avoid spousal impoverishment.

Effective 7/1/24 – 6/30/25, the MMMNA in CO is $2,555. If a non-applicant’s monthly income falls under $2,555, income can be transferred to them from their applicant spouse to bring their income up to this level. In Colorado, a non-applicant spouse can further increase their Spousal Income Allowance if their housing and utility costs exceed a “shelter standard” of $766.50 / month (eff. 7/1/24 – 6/30/25). However, in 2025, a Spousal Income Allowance cannot push a non-applicant’s monthly income over $3,948. This is the Maximum Monthly Maintenance Needs Allowance. Learn more about calculating this allowance.

Income is counted differently when only one spouse applies for Regular Medicaid; the income of both the applicant and non-applicant spouse is calculated towards the applicant’s income eligibility. There is no Monthly Maintenance Needs Allowance for the non-applicant spouse. More on how Medicaid counts income.

Asset Definition & Exceptions

Countable vs. Non-Countable Assets
Countable assets (non-exempt assets) are calculated towards Medicaid’s asset limit. This includes cash, stocks, bonds, investments, bank accounts (credit union, savings, and checking), and real estate in which one does not reside. In Colorado, IRA’s and 401K’s are counted. There are other assets that are non-countable; they are exempt from Medicaid’s asset limit. Exemptions include personal belongings, household furnishings, an automobile, irrevocable burial trusts, and generally one’s primary home.

Treatment of Assets for a Couple
All assets of a married couple are considered jointly owned (regardless of the long-term care program for which one or both spouses is applying). There is, however, a Community Spouse Resource Allowance (CSRA) that protects a larger amount of a couple’s countable assets for the non-applicant spouse of a Nursing Home Medicaid or Medicaid Waiver applicant. In 2025, the community spouse (non-applicant spouse) can keep up to $157,920 of the couple’s countable assets. Note: There is no CSRA for Regular Medicaid.

Medicaid’s Look-Back Rule
Colorado has a 60-month Medicaid Look-Back Period for Nursing Home Medicaid and Medicaid Waivers that immediately precedes one’s date of application.

During the “look-back”, Medicaid checks all asset transfers to ensure none were sold or gifted under fair market value. This includes asset transfers made by one’s spouse. This rule is meant to discourage persons from gifting assets in order to meet Medicaid’s asset limit. Violations are penalized with a Penalty Period of Medicaid ineligibility. Note: The Look-Back Rule does not apply to Regular Medicaid.

The U.S. Federal Gift Tax Rule does not extend to Medicaid eligibility. In 2025, the Gift Tax Rule allows one to gift up to $19,000 per recipient without filing a Gift Tax Return. Gifting under this rule violates Medicaid’s 5-year Look-Back Period.

Colorado Medicaid Home Exemption Rules

For home exemption, the Medicaid applicant or their spouse must live in their home. If there is no spouse in the home, there is a home equity interest limit of $1,097,000 (in 2025). Home equity is the value of the home, minus any outstanding debt against it. Equity interest is the amount of the home’s equity that is owned by the applicant. Furthermore, if neither the applicant nor their spouse live in the home, the applicant must have Intent to Return. Note: There is no home equity interest limit for Regular Medicaid. Other exemptions exist.

While one’s home is generally not counted towards Medicaid’s asset limit, it is not exempt from Medicaid’s Estate Recovery Program (MERP). After a CO long-term care Medicaid beneficiary’s death, the state Medicaid agency attempts reimbursement of care costs through whatever estate of the deceased still remains. This is often the home. Without proper planning strategies in place, the home will be used to reimburse Medicaid for providing care rather than going to family as inheritance.

Medical / Functional Need Requirements

An applicant must have a medical need for Medicaid long-term care. For Nursing Home Medicaid and Medicaid Waivers, a Nursing Facility Level of Care (NFLOC) is required. Furthermore, there may be additional eligibility requirements for some program benefits. For example, for home modifications to be covered under a waiver, an inability to safely live independently without modifications might be required. For long-term care services via the Regular Medicaid program, a functional need with Activities of Daily Living is required, but a NFLOC is not necessarily required.

Qualifying When Over the Limits

Elderly Colorado residents (65+ years old) who do not meet the financial eligibility requirements above may still be able to qualify for Medicaid long-term care.

1) Qualified Income Trusts (QIT’s) – Called Income Trusts in Colorado, these trusts allow Nursing Home Medicaid and Medicaid Waiver applicants with income over Medicaid’s limit to become income-eligible. This is because Medicaid no longer counts income put into an irrevocable Income Trust towards the income limit. “Irrevocable” means the terms of the trust cannot be altered or canceled. Essentially, one’s “excess” income is directly deposited into the trust, in which a trustee is named, giving that individual legal control of the money. In CO, the Medicaid applicant can be the trustee, given a successor trustee is named. Trust funds can only be used for very specific purposes (i.e., contributing towards the cost of nursing home care, HCBS long-term care, and medical expenses accrued by the Medicaid enrollee). Upon the death of the Medicaid participant or in the event of Medicaid disenrollment, the remainder of the funds must be paid to the Colorado Department of Health Care as reimbursement of care costs.

2) Asset Spend-Down – Persons who have countable assets over CO Medicaid’s asset limit can become asset-eligible by “spending down” excess assets on non-countable ones. This includes making home improvements (i.e., replacing a leaky roof, updating the heating/plumbing), home modifications (i.e., wheelchair ramps, roll-in showers, and stair lifts), vehicle modifications (i.e., wheelchair lifts, adaptive control devices, and floor modifications to allow one to drive from a wheelchair), prepaying funeral and burial expenses, and paying off debt. Recall that due to Medicaid’s Look-Back Period, all asset transfers made for 60-months immediately preceding one’s Nursing Home Medicaid or Medicaid Waiver application are scrutinized to ensure none were gifted or sold for under fair market value. When “spending down”, it is best to keep documentation of how assets were spent as evidence this rule was not violated.

3) Medicaid Planning – The majority of persons considering Medicaid are “over-income” and / or “over-asset”, but they still cannot afford their cost of long-term care. For these individuals, Medicaid Planning exists. By working with a Medicaid Planning Professional, families can employ a variety of strategies to help them become Medicaid-eligible, as well as to protect their home from Medicaid’s Estate Recovery Program. Connect with a Certified Medicaid Planner.

Specific Colorado Medicaid Programs

In addition to paying for nursing home care, Colorado Medicaid offers the following programs that assist elderly individuals in living at home or in the community.

1) Elderly, Blind and Disabled (EBD) Waiver – Services and supports are provided at home and in assisted living facilities to promote independent living and prevent premature nursing home placements. Benefits include adult day care, assistance with daily living activities, home modifications, personal emergency response systems, and more. Two options are available for self-direction of personal care and homemaker services: Consumer-Directed Attendant Support Services (CDASS) and In-Home Support Services (IHSS). Both options allow a program participant to hire the caregiver of their choice, including a spouse.

2) Program of All-Inclusive Care for the Elderly (PACE) – Combines the benefits of Medicaid, including long-term care services, and Medicare into one program. Additional benefits, such as dental and eye care, may be available.

3) Money Follows the Person (MFP) – This federal program helps institutionalized persons who are eligible for Medicaid to transition back home or into the community.

4) Community First Choice Program (CFC) – A new statewide Medicaid program beginning July 1, 2025: Colorado’s Community First Choice (CFC) Program offers a suite of long-term services and supports.

How to Apply for Colorado Medicaid

One can apply for Colorado Medicaid online at Colorado PEAK, by calling the Colorado Department of Human Services at 1-800-221-3943, or in-person at one’s county Department of Human Services’ office or Application Assistance Site. The Medicaid application, Application for Health Insurance & Help Paying Costs, can be found here. One’s local Single Entry Point Agency / Case Management Agency can provide assistance with applying for Medicaid. The application process may vary based on the program for which one is applying.

Colorado Medicaid applicants should be certain that all eligibility requirements are met prior to applying for benefits. For seniors who have income and / or asset(s) greater than the allowable amounts, Medicaid planning can be invaluable. Furthermore, the application process is complicated and assistance with the process may be welcomed. Familiarizing oneself with general information about the application process for long-term care Medicaid can be helpful.