Colorado LTC rules packet

This appendix translates the proposal’s Colorado pilot idea into a source-of-truth rules packet. The point is not to prove that one state pilot solves long-term care modeling. The point is to show that a serious first pilot can be scoped, sourced, and validated using official materials rather than informal policy summaries.

Colorado is a good pilot state for three reasons.

• It has a visible and evolving LTSS ecosystem spanning nursing facilities, HCBS waivers, Community First Choice, PACE, and disability-related pathways (Colorado Department of Health Care Policy & Financing 2026f, 2026g, 2026c).
• The state publishes member-facing and operational guidance that is detailed enough to support a real first-pass rules layer (Colorado Department of Health Care Policy & Financing 2026e, 2024a, 2026a).
• The design challenge is large enough to be meaningful but still narrow enough to fit into an adjacent pilot rather than a full national LTSS build.

Source hierarchy

The pilot should treat sources in descending order of authority.

1. Federal floor

These sources define the national legal and parameter environment that Colorado must operate within.

• Medicaid eligibility policy pages for spousal impoverishment, trust treatment, and transfers of assets (Centers for Medicare & Medicaid Services 2025b, 2023).
• Annual CMS bulletins on SSI, spousal impoverishment, and home-equity standards (Centers for Medicare & Medicaid Services 2025a).
• Federal estate-recovery guidance (Centers for Medicare & Medicaid Services 2025c).
• Federal HCBS authority guidance (Centers for Medicare & Medicaid Services 2025d).
• Federal PACE program guidance (Centers for Medicare & Medicaid Services 2025e).

These are not enough to decide an individual case. They are the floor under the state-specific implementation.

2. Colorado program pages

These sources identify the live program pathways a household can actually enter.

• LTSS program hub page (Colorado Department of Health Care Policy & Financing 2026f)
• Elderly, Blind, and Disabled waiver page (Colorado Department of Health Care Policy & Financing 2026c)
• PACE page (Colorado Department of Health Care Policy & Financing 2026g)
• Case Management Agency directory (Colorado Department of Health Care Policy & Financing 2026a)
• Buy-In for Working Adults with Disabilities page (Colorado Department of Health Care Policy & Financing 2026d)
• Trust Policy and Recoveries page (Colorado Department of Health Care Policy & Financing 2026e)
• Health First Colorado member handbook for member-facing policy implications, including estate recovery context (Colorado Department of Health Care Policy & Financing 2024b)

These pages are especially valuable for product design because they show how the state itself explains pathway differences to applicants and families.

3. Colorado operational memos and rules

This is where the pilot moves from a navigation prototype to a real rules layer.

• HCPF OM 24-044 on income trusts and eligibility-site responsibilities (Colorado Department of Health Care Policy & Financing 2024a)
• Department program rules and regulations, especially the sections of 10 CCR 2505-10 governing long-term care medical assistance, post-eligibility treatment of income, transfers of assets, and estate recovery (Colorado Department of Health Care Policy & Financing 2026b)

Operationally, this is the minimum layer needed to turn a general “Medicaid LTSS” description into coded rules.

Minimum rule blocks for a credible pilot

The first pilot does not need to solve every edge case in long-term care law. It does need to solve the blocks that determine whether outputs are useful.

Intake and pathway selection

The engine should first identify which broad program path is being tested.

• Nursing facility or institutional long-term care
• HCBS / EBD waiver
• PACE
• Community First Choice-adjacent home-care path
• Working disabled buy-in path

This sounds trivial, but it is not. Different pathways imply different income handling, service packages, assessment requirements, and post-eligibility payment rules (Colorado Department of Health Care Policy & Financing 2026f, 2026c, 2026g, 2026d).

Financial eligibility

The pilot should encode:

• income-cap logic tied to SSI-based standards
• countable versus exempt resources
• separate handling of home equity and other major exempt assets
• pathway-specific resource tests where they differ

Colorado’s EBD waiver page is enough to establish the first-pass member rules for the waiver pathway: income below three times the current SSI limit, countable resources below $2,000 for a single person and $3,000 for a couple, plus nursing-facility-comparable level of care (Colorado Department of Health Care Policy & Financing 2026c).

The working-disabled buy-in path should be modeled separately. It uses a different income frame and premium schedule and is not just a variant of the same institutional/HCBS test (Colorado Department of Health Care Policy & Financing 2026d).

Spousal impoverishment

Any serious state LTSS pilot has to encode spousal impoverishment rather than treating “married” as a footnote.

At minimum, the pilot should include:

• community spouse resource allowance logic
• minimum and maximum monthly maintenance needs allowance logic
• housing-allowance components
• treatment of spousal income transfers in post-eligibility payment calculations

The parameter values change over time and should come from the annual CMS standards bulletins, not hard-coded prose (Centers for Medicare & Medicaid Services 2025a).

Income trusts

Colorado is a good pilot precisely because income-trust logic is real, visible, and codifiable.

HCPF OM 24-044 states that for long-term care medical assistance eligibility, an individual under the 300 percent institutional special income category must establish an income trust if gross income exceeds 300 percent of the current individual SSI benefit level. The memo also states that the Department must review each income trust and describes eligibility-site responsibilities, monthly funding expectations, and closure procedures (Colorado Department of Health Care Policy & Financing 2024a).

This implies that the pilot should answer more than “trust required: yes/no.” It should be able to return:

• whether a trust is required for the selected pathway
• whether the household appears within the plausible state rate window
• what monthly funding or distribution logic applies
• what maintenance and closure obligations exist

Post-eligibility treatment of income and patient liability

This is one of the easiest areas to omit and one of the most important for user value.

The pilot should include:

• personal-needs-allowance handling
• spousal income payments where applicable
• patient liability or member contribution logic
• pathway-specific treatment for institutional versus HCBS cases

Colorado’s trust memo is explicit that, for long-term care institution clients, the allowed deductions from monthly trust distribution include personal-needs allowance, spousal income payments, and approved PETI payments, with the remainder paid toward the cost of care up to the medical assistance reimbursement rate (Colorado Department of Health Care Policy & Financing 2024a).

Transfers, look-back, and penalties

A credible pilot also has to recognize when the right answer is “probably ineligible for now because of a transfer penalty.”

The engine should therefore be able to flag:

• five-year look-back relevance
• transfers for less than fair market value
• probable penalty period questions requiring additional fact gathering

Federal Medicaid eligibility policy makes clear that LTSS applicants can be denied coverage when assets were transferred for less than fair market value during the five-year period preceding application (Centers for Medicare & Medicaid Services 2025b).

Functional eligibility and local entry points

The pilot should not pretend financial rules alone determine access.

The state-facing operational layer should therefore identify:

• whether nursing-facility-comparable level of care is required
• whether the relevant entry point is a Case Management Agency
• whether pathway-specific assessment or care-management steps are triggered

Colorado’s EBD waiver page and CMA directory are enough to show that financial screening and case-management routing are inseparable in real operations (Colorado Department of Health Care Policy & Financing 2026c, 2026a).

Estate recovery and trust recovery

Estate recovery is a required part of any honest user-facing output in this space.

Federal law requires states to seek recovery for certain LTSS-related services for enrollees age 55 or older, subject to survivor protections and hardship provisions (Centers for Medicare & Medicaid Services 2025c).

Colorado’s Trust Policy and Recoveries page also makes clear that the state separately reviews trust submissions and recovers certain trust or annuity balances after termination or death (Colorado Department of Health Care Policy & Financing 2026e).

The pilot therefore should at least be able to say:

• whether estate recovery is potentially in scope
• whether trust balances may be subject to state recovery
• whether home preservation is being evaluated under incomplete information

Parameter inventory for phase 1

The first coded version should include, at minimum, the following parameter groups.

Parameter group	Why it matters	Primary official sources
SSI-based income cap and resource standards	Determines baseline LTSS financial screening	medicaid2026spousal, colorado2026ebd
EBD waiver member-facing thresholds	Fast initial waiver screening and scenario output	colorado2026ebd
Working-disabled buy-in thresholds and premium schedule	Alternative path for working disabled adults	colorado2026buyin
CSRA, MMMNA, housing allowance, home-equity limits	Spousal impoverishment and home treatment	medicaid2026spousal, medicaid2025eligibility
Income-trust rules and workflow	Cases above the income cap	colorado2025incomeTrustMemo, colorado2026trusts
Post-eligibility deductions and member contribution logic	Patient liability / affordability outputs	colorado2025incomeTrustMemo, colorado2026programrules
HCBS, PACE, and nursing-facility pathway definitions	Pathway routing and service context	colorado2026ltssprograms, colorado2026pace, colorado2026ebd
Case-management routing	Operational entry to real programs	colorado2026cma
Transfer and estate-recovery rules	Risk flags and downstream household implications	medicaid2025eligibility, medicaid2025estate, colorado2026trusts

Maintenance requirements

This pilot only stays credible if the update burden is acknowledged upfront.

• Federal SSI and spousal impoverishment standards update annually (Centers for Medicare & Medicaid Services 2025a).
• State waiver pages, program pages, and buy-in schedules change over time (Colorado Department of Health Care Policy & Financing 2026c, 2026g, 2026d).
• Operational memos can change workflow or form requirements even when the basic legal structure is stable (Colorado Department of Health Care Policy & Financing 2024a).
• Colorado’s LTSS system is actively changing, including Community First Choice and related program transitions (Colorado Department of Health Care Policy & Financing 2026f).

That means the first pilot should be designed like a maintained rules product, not like a one-off memo.

What the pilot should return

If the pilot is worth funding, it should answer better questions than a simple binary eligibility calculator.

At minimum, a useful household-facing or analyst-facing output should return:

• likely pathway or pathways worth investigating
• eligible now, potentially eligible after spend-down or trust setup, or likely ineligible under current facts
• major missing facts needed to finish the determination
• likely spousal-protection implications
• likely patient-liability or member-contribution implications
• estate-recovery or trust-recovery flags

That output is ambitious for a state pilot, but it is still much more tractable than a national dynamic LTSS microsimulation. That is exactly why Colorado is a credible adjacent work package.

Centers for Medicare & Medicaid Services. 2023. Further Extension of Spousal Impoverishment Rules for Married Applicants and Recipients of Home and Community-Based Services. https://www.medicaid.gov/federal-policy-guidance/2023-08-15/152006.

Centers for Medicare & Medicaid Services. 2025a. 2026 SSI, Spousal Impoverishment, and Medicare Savings Program Resource Standards. https://www.medicaid.gov/federal-policy-guidance/2025-12-09/186926.

Centers for Medicare & Medicaid Services. 2025b. Eligibility Policy. https://www.medicaid.gov/medicaid/eligibility-policy.

Centers for Medicare & Medicaid Services. 2025c. Estate Recovery. https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html.

Centers for Medicare & Medicaid Services. 2025d. Home & Community Based Services Authorities. https://www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-authorities.

Centers for Medicare & Medicaid Services. 2025e. Program of All-Inclusive Care for the Elderly (PACE). https://www.cms.gov/medicare/medicaid-coordination/about/pace.

Colorado Department of Health Care Policy & Financing. 2024a. HCPF OM 24-044 Income Trusts - Revised Forms and Additional Guidance. https://hcpf.colorado.gov/sites/hcpf/files/HCPF%20OM%2024-044%20Income%20Trusts%20-%20Revised%20Forms%20and%20Additional%20Guidance.pdf.

Colorado Department of Health Care Policy & Financing. 2024b. Health First Colorado Member Handbook. https://hcpf.colorado.gov/sites/hcpf/files/Health-First-Colorado-Member-Handbook_accessible.pdf.

Colorado Department of Health Care Policy & Financing. 2026a. CMA and CCB Agency Directory. https://hcpf.colorado.gov/case-management-agency-directory.

Colorado Department of Health Care Policy & Financing. 2026b. Department Program Rules and Regulations. https://hcpf.colorado.gov/department-program-rules-and-regulations.

Colorado Department of Health Care Policy & Financing. 2026c. Elderly, Blind, and Disabled Waiver (EBD). https://hcpf.colorado.gov/elderly-blind-disabled-waiver-ebd.

Colorado Department of Health Care Policy & Financing. 2026d. Health First Colorado Buy-in Program for Working Adults with Disabilities. https://hcpf.colorado.gov/buy-in-program-working-adults-disabilities.

Colorado Department of Health Care Policy & Financing. 2026e. Health First Colorado Trust Policy and Recoveries. https://hcpf.colorado.gov/medicaid-trusts.

Colorado Department of Health Care Policy & Financing. 2026f. Long-Term Services and Supports Programs. https://hcpf.colorado.gov/long-term-services-and-supports-programs.

Colorado Department of Health Care Policy & Financing. 2026g. Programs of All-Inclusive Care for the Elderly (PACE). https://hcpf.colorado.gov/program-all-inclusive-care-elderly.