Medicaid eligibility: Income Rules For Medicaid In Colorado

What Are The Income Rules In Colorado On Medicaid?

Do you think you have too many assets to qualify for Medicaid assistance with nursing home costs? Think again.

At The Hughes Law Firm, P.C., in Denver, we help people just like you qualify for Medicaid benefits as well as provide assistance with many issues of elder law, VA benefits and estate planning. Let our lawyers help you understand how Colorado’s Medicaid income rules work.

How To Protect Your Assets From Medicaid

Consulting with a Medicaid lawyer in Colorado is crucial to navigating state regulations and protecting your assets from Medicaid while ensuring eligibility. Protecting assets from Medicaid is a goal that an experienced estate planning attorney could implement various strategies to achieve.

Protecting your assets from Medicaid usually involves careful planning. One effective strategy is to establish an irrevocable trust. By transferring your assets into an irrevocable trust, you effectively remove them from your ownership. This would render them exempt from Medicaid. It’s important to note that this would need to be done well in advance of needing Medicaid, as there is a five-year “look-back” period.

Another potential strategy to shield your assets from Medicaid claims is to gift them to a trusted family member. However, just like the establishment of an irrevocable trust, this would need to be done well in advance of needing Medicaid, as the five-year “look-back” period in place could lead to penalties and delays in qualifying for benefits.

Consulting a Medicaid attorney, especially one experienced in Colorado estate planning law, will be invaluable in navigating the complexities of the process.

What Assets Can You Keep While Qualifying For Medicaid

In most cases, your primary residence is exempt as long as its equity value falls within the limit being enforced by the state at the time. Generally, other assets that are typically protected are personal belongings such as clothing, furniture, and household items. Additionally, funeral or burial expenses tend to be considered exempt assets. Finally, in Colorado, one vehicle is exempt from Medicaid asset calculations only if it is used for essential transportation by the applicant for Medicaid.

Spousal protections for the partners of Medicaid applicants are also offered under Colorado state law. The Community Spouse Resource Allowance (CSRA) is designed to prevent the non-applicant spouse from facing financial hardship while their spouse receives Medicaid benefits.

There are various less common scenarios where an asset can be retained while qualifying for Medicaid. It’s advised to work with a knowledgeable attorney on how to maximize the assets relevant to your specific situation. For example, certain life insurance policies with a value of $1,500 or less are usually considered exempt assets. There is also a homestead exemption for some individuals who are disabled or over 60.

There are many reasons why an exemption may be warranted by the law, and you aren’t expected to know all of them! Remember that Medicaid rules and regulations are always changing, so it’s essential to consult with a knowledgeable Medicaid planning attorney to understand the most current guidelines and ensure that your assets are structured appropriately.

How To Calculate Assets For Medicaid Eligibility In Colorado

In Colorado, the general rule is that you are not eligible for Medicaid if you have more than $2,000 in countable assets, including investments and bank accounts. While this number may seem unrealistically low, it is important to remember that there are several assets you don’t have to include when calculating your total countable assets.

There are a number of exemptions when applying for Medicaid. These exempt assets include:

Home: Your home is generally considered an exempt asset as long as it is your principal residence and your equity does not exceed $1,071,000.
Vehicle: You can also exempt one car if the car is used for employment, used to obtain medical treatment or is handicap-equipped.
Personal property: While personal property held specifically for investment ― such as some artwork ― may not be exempt, other personal property is, such as clothing, furniture, wedding rings and many appliances.
Life insurance: As long as the total face value of all of your life insurance policies does not exceed $1,500, the policies are exempt no matter the cash surrender value. However, if the face value does exceed $1,500, then the cash surrender value is considered countable.
Burial insurance: While revocable burial insurance is exempt up to $1,500, irrevocable burial insurance is always exempt regardless of its value. In addition, the value of your burial plot and grave markers may also be exempt.
Retirement accounts: Retirement accounts are a little more complex in that they may be considered countable assets. However, their value can be reduced if you incur taxes and other penalties when withdrawing funds.

Keep in mind that the income and asset rules above are merely a basic outline of how Medicaid asset limitations work, and they can change from year to year. At The Hughes Law Firm, P.C., we will help you understand your options, including:

Gifts
Annuities
Support for the stay-at-home spouse
Planning for long-term care

Can You Own Too Much To Qualify For Medicaid?

If you own too much to qualify for Medicaid, you may be tempted to simply give your assets away to friends and loved ones. However, there are specific Medicaid rules that govern how and when you can gift your assets, and if you fail to follow these rules, you can face severe penalties.

But, don’t fret. With proper Medicaid planning, you may be able to make yourself eligible for Medicaid sooner ― and preserve most of your assets for your family in the process.

Free Initial Consultation ~ No Obligation

To learn more, contact the experienced attorneys and legal professionals at The Hughes Law Firm. You get a free 20-minute phone consult to see if we can help. You can reach us online, or call us at (303) 758-0680. The longer you wait to prepare, the more it may cost you, so contact us today. We have offices in Denver, Fort Collins and at a number of additional locations throughout Colorado.

Review additional information about Medicaid by going to our Medicaid guide.

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