Different states vary in eligibility terms for Medicaid long-term care. Some states allow Medicaid applicants to spend down their money on care until they are under the Medicaid limit. Then they can apply. Those states are considered non-income cap states.
Colorado is considered an income cap state. This means that Medicaid eligibility has a hard income limit. Anyone who has income that exceeds the allowed limit when they apply does not qualify.
But Colorado also rewards those who have planned ahead for their long-term care. They have private insurance funds that are merged with state funds to create LTC policies.
How does a LTC policy benefit you?
If you do not want to get rid of all of your money or assets in order to qualify for Medicaid, you can purchase an LTC policy. The benefits to an LTC policy is that for every dollar that the policy pays for your care, an equal value of your assets is protected and not considered when applying for Medicaid.
Why do you need Medicaid when you can have Medicare?
Medicare does not cover long-term care. If you need long-term care in a nursing facility or rehabilitation center, you could end up depleting your entire savings. Care at these facilities can be very expensive.
What type of long-term care does Medicaid cover?
Medicaid insurance covers long-term nursing home care, as well as community-based services. Community-based services, also known as HCBS, are services provided to you in other locations, such as your home or a retirement community. These services include things such as a home health care aide, housecleaning services, meal delivery or assistance with personal hygiene such as bathing or dressing.
What if I purchase an LTC policy and still can't qualify for Medicaid?
Proper planning for Medicaid eligibility should be done at the advice of your estate planning attorney. Just purchasing a LTC policy does not make you eligible for Medicaid. You must still meet the other income eligibility requirements. Your attorney can provide a number of ways to preserve assets that might put you over the income limit.
Source: Senior Planning, "Colorado Medicaid Long Term Care Eligibility," accessed March 05, 2018