Colorado Medicaid Estate Recovery 2026: Protect the Home

Colorado Medicaid estate recovery can reach a family home after a long-term care recipient dies, and in Colorado that includes a home left by beneficiary deed. But no recovery is made while a spouse, a child under 21, or a blind or disabled dependent survives, and the home itself is protected while a qualifying sibling or caregiver child still lives there.

Colorado Medicaid estate recovery is the process the state uses to recoup what it paid for a person's care after that person dies. It is run by Health First Colorado, the state's Medicaid program, which is administered by the Colorado Department of Health Care Policy and Financing (HCPF).1 The rules sound frightening when you first meet them, especially the part about the house, so it helps to take them one piece at a time. Recovery waits while a spouse or a young or disabled child survives, the home has its own protections, and HCPF can waive or settle a claim for good cause. One point runs the other way, though: in Colorado, the state's claim is not limited to what passes through probate, so a beneficiary deed or a living trust does not by itself keep a home out of reach.2

Who Is Affected by Colorado Medicaid Estate Recovery

Colorado's rule, 10 CCR 2505-10 § 8.063, sets out two groups whose estates HCPF recovers from:

• People who were institutionalized when they received Medicaid, at any age. For them, HCPF recovers all medical assistance it paid on their behalf.
• People who were 55 or older when they received Medicaid. For them, HCPF recovers what it paid for nursing facility services, home and community-based services, and related hospital and prescription drug services.

For the 55-and-older group, Colorado stops there. Federal law lets a state choose to recover for other Medicaid services too, and HCPF's rule says Colorado does not make those optional recoveries. Health First Colorado puts it plainly to members: it may only recover from the estates of members who received services in an institutionalized setting, or for the cost of services received by members age 55 and older. Recovery is also limited by cost. HCPF may limit recovery to cases where it is cost-effective, and Colorado law bars it from pursuing an amount that is economically inappropriate compared with the expense of recovering it.2

These groups track the federal floor. Under 42 U.S.C. § 1396p(b), a state must seek recovery for a recipient who was 55 or older for nursing facility services, home and community-based services, and related hospital and prescription-drug services, and for a nursing-facility or other institutional resident whose real property the state could lien because it determined, after notice and an opportunity for a hearing, that they could not reasonably be expected to return home.3

What Colorado Can Reach: Not Just the Probate Estate

Under Colorado law, the Medicaid that HCPF paid is a claim against the recipient's estate, so anything that passes through probate is within reach. Colorado's probate code then carries that claim to some property that passes outside probate. Two statutes do the work.2

Beneficiary deeds. C.R.S. § 15-15-407(4) says the interest of the person who receives a home by beneficiary deed is subject to any HCPF claim for recovery of medical assistance, enforced under C.R.S. § 15-15-103. A beneficiary deed does not keep a home out of Colorado estate recovery.2

Revocable transfers at death, including a living trust. C.R.S. § 15-15-103 makes the recipient of a nonprobate transfer liable to the probate estate for allowed claims when the probate estate is not large enough to pay them. A nonprobate transfer, for this purpose, is a transfer that takes effect at death and that the person, just before death, had the power to revoke acting alone. The statute expressly reaches the trustee of a trust that served as the person's main nonprobate instrument, which is how a revocable living trust is usually used. That liability can never exceed the value of what the recipient received or controls.2

This route has limits that matter to families. It applies only to the extent the probate estate falls short. The proceeding needs a written demand on the personal representative first, from the surviving spouse, a child, or a creditor, and it must be started within one year after the death. And section 15-15-103 does not apply at all to a few kinds of property.2

Whether a particular account or arrangement counts as a nonprobate transfer under section 15-15-103 depends on how it is set up, and that is a question for an elder law attorney who can read the documents.

Liens during life. The anti-lien statute, 42 U.S.C. § 1396p(a)(1), bars a state from placing a lien on a living Medicaid beneficiary's property on account of benefits paid, with two narrow exceptions: a court judgment for benefits incorrectly paid, and a lien on the real property of a nursing-facility or other institutional resident whom the state determines, after notice and an opportunity for a hearing, cannot reasonably be expected to return home. Even that second kind of lien cannot be placed on the home while a spouse, a child under 21, a blind or disabled child, or a sibling with an equity interest who lived there at least a year before the admission is lawfully living there, and it dissolves if the resident is discharged and returns home.3 Colorado follows the same pattern. HCPF may file a lien only against the real property of someone who is institutionalized and not expected to return home, only when none of those family members lives in the home, and only when later recovery is likely to be cost-effective, and it must dissolve the lien if the recipient comes home.2

Who Is Protected After a Death

Two kinds of protection apply after a recipient dies. One delays recovery from the whole estate. The other shields the home in particular.

A surviving spouse, a child under 21, or a blind or disabled dependent. HCPF's rule says it will not recover from the estate while there is a surviving spouse, a child of the recipient under age 21, or a blind or disabled dependent of the recipient. This is a matter of timing, not forgiveness. Colorado's program runs under federal law, and federal law allows recovery only after the surviving spouse has died, and only when there is no surviving child under 21 or blind or disabled.2

A sibling or caregiver child still living in the home. HCPF will not recover from the sale of the home, whether or not the home was ever liened, while either of these people has lived there continuously since the recipient was admitted to an institution:

• a sibling who lived in the home for at least one year immediately before that admission; or
• a son or daughter who lived in the home for at least two years before that admission and provided care that let the recipient live at home rather than in an institution.

In those cases HCPF may still recover from other assets in the estate, just not from the sale of the home.2

Colorado's protection here is broader than the federal minimum. Federal law ties the sibling and caregiver-child protection to a home the state liened during an institutional stay; whether a state extends it to a home it never liened is a question of that state's own law.3 Colorado's rule answers that question by applying the protection whether or not the home was liened.2

If any protection applies, tell HCPF in writing as soon as you learn of a claim, and keep copies. Documents that show the relationship, the disability, the years of residence or the care given are what the protection rests on.

When Recovery Can Be Waived, Settled or Paid Over Time

Federal law requires every state to have procedures to waive estate recovery when it would cause undue hardship.3 Colorado's statute lets HCPF compromise, settle or waive any recovery upon good cause shown. HCPF's rule then names three situations in which it must find good cause:

1. Without the proceeds from the estate, the heirs would become eligible for public assistance payments or medical assistance.
2. Receiving the inheritance would let the heirs stop relying on that assistance.
3. The home is part of a business, including a working farm or ranch, and recovery would cost the heirs their means of making a living.

HCPF may also agree to a payment plan for any debt owed under the estate recovery program.2

We could not confirm a filing deadline, a form or a contact for asking HCPF for a waiver or a compromise, so ask HCPF directly as soon as you receive any notice, and have an elder law attorney help frame the request.

How to Respond to a Colorado Medicaid Estate Recovery Claim

If a Health First Colorado member has died, the first thing to confirm is whether recovery can be made yet. Recovery may be made only after the death of any surviving spouse, and only when no surviving child is under 21 or is blind or permanently and totally disabled.3 Here is how to work through the rest, in order.

Planning Ahead: What Does and Doesn't Protect a Colorado Home

Much of the common planning advice about estate recovery assumes a state reaches only the probate estate. Colorado is not that state, and two tools that families often reach for work differently here.

• Beneficiary deed. It does not keep the home out of estate recovery. It can also cost an applicant the home's exemption: HCPF's eligibility rule says a home that is subject to estate recovery becomes a countable resource once a beneficiary deed is executed and recorded, and the exemption comes back only if a revocation of the deed is executed and recorded.2
• Revocable living trust. Property in it can still be reached through section 15-15-103 if the probate estate is not enough to pay HCPF's claim, up to the value the trust received.2

Two more rules shape any planning. First, transferring assets for less than fair market value within five years before applying for long-term care Medicaid can create a penalty period during which Medicaid will not pay for long-term care.5 Second, the caregiver-child exception under 42 U.S.C. § 1396p(c)(2)(A)(iv) lets a parent transfer the home during life to an adult child who lived there for at least two years immediately before the parent entered an institution and, as the state determines, provided care that kept the parent out of an institution, without triggering a transfer penalty.3 Because each of these rules interacts with the others, families should work with an elder law attorney well before a Medicaid application, not after.

Learn More

Find personalized help understanding Colorado Medicaid estate recovery at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.