Medicare beneficiaries increasingly rely on long-term care, and the portion of seniors needing these services will keep rising as the population ages. However, long-term care is mostly not covered by Medicare. While Medicaid fills the gap in Medicare coverage for long-term care, its complex eligibility rules can make qualifying for benefits difficult. What’s more – eligibility rules vary significantly from state to state.
As of 2022, Colorado uses a Special Income Limit (SIL) equal to three times the federal Supplemental Security Income (SSI) payment amount to determine eligibility for Medicaid long-term care. Colorado has a Medicaid spend-down, which would allow long-term care applicants to subtract medical and long-term care expenses from income counted toward the Medicaid eligibility limit.
Fortunately, federal rules allow some Colorado applicants to qualify for Medicaid long-term care benefits by depositing income into a Miller Trust. This process is discussed below.
Medicaid nursing home coverage
Most seniors used to receive long-term care in nursing homes. Today, many Americans receive LTSS in their homes. But some seniors’ housing or medical situations make nursing home care a better choice.
Income limits: The income limit is $2,742 a month per applicant. When only one spouse needs nursing home care, the state may only count income received by that spouse toward this limit.
Despite this income limit, nursing home enrollees can only keep a small personal needs allowance (of $95.97 each month) and money to pay for health insurance premiums (such as Medicare Part B and Medigap). Remaining income must be paid toward an enrollee’s care.
Assets limits: The income limit is $2,000 if single or $3,000 if married (and both spouses need care). If only one spouse has Medicaid, federal spousal impoverishment rules allow the other spouse to keep up to $148,620.
Certain assets – like household effects, family heirlooms, some prepaid burial arrangements, and one car – are not counted toward the Medicaid asset limit.
Home and Community Based Services (HCBS) waivers
Medicaid also covers community-based long-term care, which is provided at an enrollee’s home, adult day care center, or assisted living facility. Programs that cover this care are called Home and Community Based Services (HCBS) waivers, as enrollees continue living in the community, rather than entering a nursing home.
Colorado’s Elderly, Blind and Disabled Waiver (EBD) covers many long-term care services for applicants requiring a nursing home level of care:
- Adult day services
- Home delivered meals
- Home modifications
- Consumer Directed Attendant Support Services
- Personal care services
- Respite care
Income eligibility: The income limit is $2,742 a month per applicant. If only one spouse needs HCBS, the state may only count income received by that spouse toward this limit.
In Colorado, HCBS recipients are allowed to keep a personal needs allowance from their income equal to this limit (of $2,742 a month). This money can be used for living and health related expenses.
Asset limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses need care). If only one spouse has Medicaid, federal spousal impoverishment rules allow the other spouse to keep up to $148,620.
Spousal impoverishment protections in Colorado
Unlike other Medicaid programs, Medicaid LTSS programs usually factor in only the applying spouse’s income. Normally with Medicaid benefits, the income of both spouses is counted.
In Colorado in 2022, spousal impoverishment rules allow the community spouse (i.e., the non-applying spouse) to keep a:
These rules only apply to spouses who don’t receive any Medicaid benefits themselves.
Qualifying for Medicaid LTSS with income above the eligibility limit in Colorado
Colorado limits Medicaid long-term care benefits to applicants with incomes below an eligibility limit of $2,742 a month (for singles). If an applicant’s income is higher than this amount but below the regional average cost for nursing home care, they can qualify for long-term care benefits by depositing their monthly income into a Qualified Income Trust (QIT). This is also called a “Miller Trust.”
Nursing home enrollees have to pay most of their income toward their care, but HCBS recipients can retain up to $2,742 a month for personal and health-related needs.
Most states don’t have a maximum income limit for using a Miller Trust, but Colorado has chosen to implement one; it is equal to the regional average private pay rate for nursing home care. (Those amounts are listed in this document.)
In Colorado, applicants can only use a Miller Trust to become eligible for Medicaid nursing home care or HCBS – but not for Medicaid ABD.
Permitted home equity in Colorado
Federal law requires states to limit the home equity of enrollees who receive Medicaid coverage for nursing home care or HCBS. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
Colorado uses the federal maximum home equity limit – meaning applicants are not eligible for nursing home benefits or HCBS if they have more than $1,033,000 in home equity.
Penalties for transferring assets in Colorado
Because long-term care is expensive, Medicare beneficiaries may feel the need to “impoverish” themselves by giving away or transferring assets to qualify for Medicaid nursing home benefits or HCBS. Federal law requires states to deter this practice by having a penalty period – during which time an applicant is ineligible for nursing home benefits – when assets are given away or transferred for less than their value. States can choose to also have a penalty period for HCBS.
Colorado has a five-year Medicaid look-back period that applies to all LTSS benefits, including nursing home care, HCBS, and the Program for All-Inclusive Care for the Elderly (PACE) program. During this period, asset transfers and gifts are prohibited.
This penalty period’s length is determined by dividing the amount transferred or given away during the look-back period by the average cost of nursing home care (which is $9,186 a month in Colorado in 2023).
In Colorado, this look-back period is fixed at five years, but the penalty period can last an unlimited amount of time.
Estate recovery in Colorado
Colorado Medicaid, along with all other state Medicaid programs, must attempt to recover what it paid for long-term care related costs for enrollees while they were 55 or older. States can also recover the cost of all other Medicaid benefits. This process is called estate recovery.
The state usually only recovers what Medicaid paid for long-term care for enrollees in this age range, but it also recovers from estates of younger enrollees who permanently resided in an institutional setting. If an enrollee receives Medicaid coverage for other medical or prescription drug services while Medicaid was paying for LTSS, the state will recover those costs, too.
