Updated August 27, 2026. Quick answer: Colorado’s income trust rule is written from both ends. Going in, the trust must consist of “A trust consisting only of the individual’s pension income, social security income, and other monthly income”. Coming out, the list is closed: “The only deductions from the monthly trust distribution to the Long Term Care institution are the allowable deductions” — and anything not distributed does not vanish, because “Any excess income which is not distributed shall accumulate in the trust.”
What Colorado requires
| What the state sets out | What it says |
|---|---|
| What the trust may consist of | “A trust consisting only of the individual’s pension income, social security income, and other monthly income” |
| What may be deducted | “The only deductions from the monthly trust distribution to the Long Term Care institution are the allowable deductions” |
| First named allowable deduction | Personal need allowance |
| Undistributed income | “Any excess income which is not distributed shall accumulate in the trust.” |
| The rule package | Rule Number: MSB 24-10-15-C |
How it works in practice
- The composition rule is a limit on what you may fund the trust with: “A trust consisting only of the individual’s pension income, social security income, and other monthly income”. Income, in other words — not savings, not a car, not the proceeds of a sale.
- The distribution rule is the one that surprises families. Colorado does not let an income trust unlock deductions an ordinary applicant could not take: “The only deductions from the monthly trust distribution to the Long Term Care institution are the allowable deductions”. The trust changes the eligibility arithmetic, not the list of things the money may be spent on.
- Accumulation is expressly contemplated: “Any excess income which is not distributed shall accumulate in the trust.” That is a double-edged provision — the balance is not a disqualifying resource, but it also has a destination fixed by the trust’s payback terms.
The mechanism itself — why an income cap exists and what the trust must contain — is explained on the income-cap and Miller trust page. This page is the Colorado record.
See how the income side fits the rest of the money
Where income sits relative to a state limit changes what happens to savings, to a spouse’s position and to the order things are best done in, and an adviser can look at the whole picture rather than one rule at a time.
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What this page does not settle
- The personal needs allowance is the first allowable deduction named, which is why a trust never leaves someone with nothing for personal spending.
- This page reads one source: Colorado HCPF, Medical Assistance Act rule package MSB 24-10-15-C (Sections 8.100). It is the state’s own publication on this rule, but no state puts its whole treatment of excess income in a single document, and a detail that decides your case may sit in one this page did not read.
- A trust fixes an income problem and nothing else. The asset test, the level-of-care test and the transfer-of-assets look-back are separate hurdles, each decided on your own file, and meeting this rule does not clear any of them.
- Every quotation here was read against the source on August 27, 2026. States revise these rules, and a figure or a section number can move without the page around it changing. Open the source before you rely on a detail.
Eligibility is decided by the state agency on the whole file, not by one rule on one page. Nothing here is legal advice, and no one should move, retitle or assign income on the strength of a web page.
Sources
The source above was retrieved and read against the state text on August 27, 2026. Every quotation on this page was checked against those bytes.
Income is only the first of the two Medicaid questions a family in Colorado faces. The second is what the state can recover after death: Medicaid estate recovery in Colorado (probate estate only).
Spending down to the income limit is only half of what Colorado Medicaid can do for a household that is already providing the care itself, and getting paid as a family caregiver in Colorado names the Colorado program that pays one and answers the family-member and the spouse question separately.
Related: Colorado’s Medicaid home equity limit for a single applicant with no spouse or dependent child at home.