How to Qualify for Medicaid Long-Term Care in Colorado

Long-term care costs in Colorado can devastate a family’s finances faster than most people expect. Nursing home care in the state averages over $7,800 per month, and that number keeps climbing. For many Colorado families, Medicaid is the only realistic way to cover these costs without draining their entire life savings.

But here’s the challenge: qualifying for Medicaid long-term care isn’t simple. Colorado has specific rules about income, assets, and even transfers you made years ago. Get something wrong, and you could face months of ineligibility right when you need help the most.

At Meurer and Potter, P.C., we’ve been helping Denver-area families navigate these exact situations since 1991. We understand how confusing and stressful this process can be. In this guide, we’ll walk you through everything you need to know about qualifying for Medicaid long-term care in Colorado, from income limits to the five-year look-back period that trips up so many applicants.

Understanding Colorado Medicaid Long-Term Care Programs

Colorado’s Medicaid program for long-term care operates under Health First Colorado, the state’s Medicaid system. This program provides coverage for people who need nursing home care or intensive services that allow them to stay in their homes or community settings.

There are two main pathways for long-term care coverage:

• Nursing Facility Medicaid: Covers care in licensed nursing homes when someone needs round-the-clock skilled nursing care.
• Home and Community-Based Services (HCBS) Waivers: These programs let people receive care in their own homes or assisted living facilities instead of nursing homes. Colorado offers several waiver programs depending on the individual’s specific needs.

Both pathways require you to meet financial and medical eligibility criteria. The financial rules are strict, but they’re designed to help people who genuinely can’t afford care on their own. The good news is that with proper planning, many families can protect a significant portion of their assets while still qualifying for benefits.

What catches many people off guard is how early you need to start planning. The rules around asset transfers mean that decisions you made five years ago can affect your eligibility today. That’s why we always encourage families to think about Medicaid planning as part of their overall estate plan, not just something to consider when a health crisis hits.

Income Requirements for Medicaid Long-Term Care

Colorado’s income requirements for long-term care Medicaid are actually more flexible than many people realize. Unlike regular Medicaid, the long-term care program has higher income thresholds because the state recognizes that care costs are substantial.

For nursing home Medicaid in Colorado, most of your income goes toward paying for your care. You’re typically allowed to keep a small personal needs allowance (around $50-100 per month) for personal expenses. The rest goes to the nursing facility, with Medicaid covering the difference between what you pay and the actual cost of care.

If your income exceeds the program limits, Colorado allows something called a Qualified Income Trust (also known as a Miller Trust). This legal tool lets you place excess income into a trust, effectively allowing you to meet the income requirements even if your monthly income is too high. The trust must be set up correctly with specific provisions, so it’s not a DIY project.

For married couples, the rules get more complicated. The spouse who stays at home (the “community spouse”) is allowed to keep a portion of the couple’s combined income to maintain their standard of living. This is called the Monthly Maintenance Needs Allowance, and it’s designed to prevent the community spouse from becoming impoverished.

One important point: Social Security, pensions, and other regular income all count. But the income rules are generally less of a barrier than asset limits for most applicants.

Asset Limits and What Counts Toward Eligibility

This is where Medicaid eligibility gets tricky. Colorado enforces strict limits on how much you can own and still qualify for long-term care Medicaid. For a single applicant, the countable asset limit is approximately $2,000. For married couples, the rules are more nuanced, allowing the community spouse to retain significantly more.

What counts as an asset?

• Bank accounts (checking, savings, CDs)
• Stocks, bonds, and investment accounts
• Retirement accounts (IRAs, 401(k)s)
• Real estate other than your primary home
• Cash value in life insurance policies above certain limits
• Additional vehicles beyond your primary car

Medicaid looks at assets owned by both spouses, even if only one spouse needs care. The program takes a “snapshot” of your combined assets when the spouse needing care enters a nursing facility or applies for HCBS waiver services.

Exempt Assets in Colorado

Not everything you own counts against you. Colorado exempts several important assets from the calculation:

• Primary residence: Your home is typically exempt as long as you intend to return there or your spouse continues living there. But, there are equity limits (currently around $713,000 in home equity).
• One vehicle: Regardless of value, one car is exempt.
• Personal belongings and household goods: Furniture, clothing, and similar items don’t count.
• Prepaid burial arrangements: Irrevocable funeral trusts and burial plots are exempt.
• Term life insurance: Policies without cash value don’t count.
• Certain trusts: Properly structured Special Needs Trusts, Pooled Trusts, and other Medicaid-exempt trusts can protect assets.

The community spouse also gets protections. They can keep a Community Spouse Resource Allowance (CSRA), which lets them retain a significant portion of the couple’s assets. This prevents the healthy spouse from losing everything just because their partner needs nursing home care.

Understanding what’s countable versus exempt is crucial. We’ve seen families assume they can’t qualify when, in fact, strategic planning could have protected much of what they’d worked a lifetime to build.

The Look-Back Period and Asset Transfers

Here’s the rule that surprises most families: Colorado Medicaid reviews your financial history for the 60 months (five years) before you apply. They’re looking for any assets you gave away or sold for less than fair market value.

Why does this matter? Because if you gave your daughter $50,000 three years ago, or transferred your vacation home to your son four years back, Medicaid will treat those transfers as if you still have those assets. The result is a penalty period during which you won’t qualify for Medicaid coverage.

How penalties are calculated:

Colorado divides the total value of improper transfers by the average monthly cost of nursing home care in the state. Let’s say you gave away $78,000 and the average cost is $7,800 per month. You’d face a 10-month penalty period where you’d need to pay for care yourself.

This penalty doesn’t start until you’ve already met all other eligibility requirements and are in a nursing home. That’s what makes it so dangerous. You could be in a facility, have depleted your assets, and still face months where Medicaid won’t help pay.

Transfers that don’t trigger penalties:

Some transfers are allowed, even within the look-back period:

• Transfers between spouses
• Transfers to a blind or disabled child
• Transfers of your home to an adult child who lived with you for at least two years and provided care that delayed your nursing home admission
• Transfers of your home to a sibling who has an equity interest and lived there for at least one year before you needed care
• Transfers made exclusively for purposes other than Medicaid qualification (this is hard to prove)

The good news: If you plan more than five years before needing care, those earlier transfers won’t affect your eligibility at all. This is exactly why working with an experienced Medicaid planning attorney at Meurer and Potter, P.C. can make such a difference. Strategic planning while you’re healthy gives you options that simply aren’t available during a crisis.

Functional and Medical Eligibility Criteria

Financial qualification is only half the equation. You also need to demonstrate that you actually require long-term care services.

Colorado uses a functional assessment to determine whether someone meets the “nursing facility level of care” standard. This evaluation looks at:

• Activities of Daily Living (ADLs): Can you bathe, dress, eat, use the toilet, and transfer (move from bed to chair, for example) without assistance? Significant limitations in these areas indicate a need for institutional care.
• Cognitive function: Does dementia, Alzheimer’s, or another condition impair your ability to make decisions or stay safe without supervision?
• Medical needs: Do you require skilled nursing care, such as wound care, medication management, or monitoring of chronic conditions?

For nursing home Medicaid, you’ll need a physician’s certification that nursing facility care is medically necessary. For HCBS waiver programs, the assessment determines whether you need the level of care that would otherwise be provided in a nursing home but can safely receive it at home with appropriate support.

This isn’t about gaming the system. The assessment is designed to match people with appropriate care. If you’re struggling to care for yourself or a loved one, you likely meet the criteria. The functional assessment typically happens during the application process or shortly after admission to a facility.

A diagnosis alone isn’t enough. Someone with early-stage Alzheimer’s might not qualify yet, while someone with severe physical limitations could qualify even without cognitive issues. It’s about your actual ability to function safely and independently.

Steps to Apply for Medicaid Long-Term Care in Colorado

Applying for Medicaid long-term care in Colorado involves several steps, and thorough preparation makes a real difference in how smoothly the process goes.

1. Gather your financial documentation

You’ll need records going back five years. This includes:

• Bank statements for all accounts
• Investment and retirement account statements
• Property deeds and records of any real estate transactions
• Records of gifts, loans, or transfers to family members
• Life insurance policies (showing cash values)
• Vehicle titles
• Trust documents if you have any trusts

2. Document your medical needs

Collect records supporting your need for long-term care:

• Recent medical records and diagnoses
• Documentation from current care providers
• Any existing care assessments

3. Consult with a Medicaid planning professional

Before you apply, it’s worth having an experienced attorney review your situation. Why? Because once you apply, you can’t undo transfers or restructure assets without creating bigger problems. A pre-application consultation can identify strategies you might have missed.

4. Complete the application

You can apply through your local county Department of Human Services or online through Colorado PEAK (the state’s benefits portal). The application asks detailed questions about income, assets, living situation, and medical needs.

5. Attend the functional assessment

A nurse or case manager will assess the applicant’s care needs. Be honest about limitations. This isn’t the time to downplay how much help is needed.

6. Respond promptly to requests

Medicaid will likely ask for additional documentation. Delays in responding can slow down your application significantly. Keep copies of everything you submit.

7. Keep detailed records during the process

Document how you spend money during the application period. Medicaid wants to see that you’re using funds for legitimate expenses, not trying to hide assets.

The application process typically takes 45-90 days, though complex cases can take longer. If care is needed immediately, applying quickly becomes critical.

Conclusion

Qualifying for Medicaid long-term care in Colorado requires careful attention to income limits, asset rules, and especially the five-year look-back period. The families who fare best are those who start planning early, ideally years before care is needed. But even if you’re facing an immediate situation, there are often legal strategies that can help protect at least some of your assets.

The stakes are high. Nursing home costs can consume a lifetime of savings in just a few years. And mistakes in the application process can mean months of uncovered care costs or even denial of benefits.

At Meurer and Potter, P.C., our attorneys have been helping Colorado families with Medicaid planning and spend-down strategies since 1991. We understand the rules, the exceptions, and the planning techniques that can protect your life savings while ensuring you get the care you need.

If you’re thinking about long-term care for yourself or a loved one, don’t wait until a crisis forces your hand. Contact our Denver office to schedule a consultation. We’ll review your specific situation and help you understand your options for protecting your family’s financial future while planning for quality long-term care.

Frequently Asked Questions

What are the asset limits to qualify for Medicaid long-term care in Colorado?

For a single applicant in Colorado, the countable asset limit for Medicaid long-term care is approximately $2,000. Married couples have more nuanced rules, allowing the community spouse to retain significantly more through the Community Spouse Resource Allowance (CSRA) to prevent impoverishment.

How does the 5-year look-back period affect Medicaid eligibility in Colorado?

Colorado Medicaid reviews your financial history for the 60 months before you apply, looking for assets given away or sold below fair market value. Improper transfers result in a penalty period where you won’t qualify for coverage, calculated by dividing the transfer value by the average monthly nursing home cost.

What is a Qualified Income Trust (Miller Trust) for Colorado Medicaid?

A Qualified Income Trust, also called a Miller Trust, is a legal tool that allows Colorado residents with income exceeding Medicaid limits to place excess income into a trust. This helps applicants meet income requirements for long-term care Medicaid even when their monthly income is too high.

What assets are exempt from Colorado Medicaid calculations?

Colorado exempts several assets from Medicaid eligibility calculations, including your primary residence (up to approximately 3,000 in equity), one vehicle regardless of value, personal belongings, prepaid burial arrangements, term life insurance without cash value, and certain properly structured trusts.

Can I receive Medicaid long-term care at home instead of a nursing home in Colorado?

Yes, Colorado offers Home and Community-Based Services (HCBS) waivers that allow eligible individuals to receive care in their own homes or assisted living facilities instead of nursing homes. You must meet both financial and medical eligibility criteria and demonstrate a nursing facility level of care need.

How long does the Colorado Medicaid long-term care application process take?

The Medicaid long-term care application process in Colorado typically takes 45-90 days, though complex cases may take longer. Applicants should gather five years of financial documentation, complete a functional assessment, and respond promptly to requests for additional information to avoid delays.