Can Medicaid Take Your House in Colorado?

Your parent needs Medicaid to pay for nursing home care, and the first thing you want to know is whether the state is going to take the family home. It's the question that keeps adult children up at night — and the answer in Colorado is more nuanced than a simple yes or no.

The short version: Colorado cannot take your parent's home while they're alive and receiving Medicaid. But after they die, the state's Medicaid Estate Recovery program can file a claim against the home through probate to recoup what it paid for care. And there's a uniquely Colorado trap involving beneficiary deeds that can disqualify your parent from Medicaid entirely if you don't catch it before applying.

The Primary Residence Is Exempt — With Conditions

During your parent's lifetime, the primary residence is generally an exempt asset for Medicaid eligibility purposes. That means it doesn't count against the $2,000 countable asset limit. But the exemption has conditions:

If a spouse, minor child (under 21), or blind/disabled child of any age lives in the home, it's automatically exempt regardless of equity value.

If none of those relatives live there, the home remains exempt only if two conditions are met: your parent's equity interest is under $1,130,000 (Colorado's elected maximum for 2026), and they sign a statement of "Intent to Return" — even if realistically they'll never go home.

Colorado does not place liens on the home during the Medicaid recipient's lifetime. Your parent won't be forced to sell while they're alive.

The Beneficiary Deed Trap

This is the most dangerous pitfall in Colorado Medicaid planning, and most families have never heard of it.

Many Colorado families record beneficiary deeds (also called transfer-on-death deeds) on the family home to avoid probate. The idea is simple: when your parent dies, the house transfers automatically to the named beneficiary without going through court.

Under C.R.S. § 15-15-403, an active beneficiary deed on the home destroys the primary residence exemption. The statute treats the home as a countable resource — meaning its full equity value counts against your parent's $2,000 asset limit. A $400,000 home with a beneficiary deed recorded? Your parent is immediately disqualified from Medicaid.

The fix: before submitting the Medicaid application, execute a formal Revocation of Beneficiary Deed, get it notarized, and record it with the County Clerk and Recorder in the county where the property is located. Recording fees are typically $13 to $20 for the first page plus $5 per additional page.

If your parent has lost cognitive capacity, their Power of Attorney agent can execute the revocation — but only if the POA document contains express "hot powers" authority to revoke beneficiary deeds. Without that specific clause, the family must petition the probate court for a conservatorship with authority to revoke the deed.

Other Exempt Assets

Beyond the home, Colorado exempts several other asset categories from the $2,000 countable limit:

• One vehicle (regardless of value)
• Household goods and personal effects (furniture, clothing, appliances)
• Irrevocable prepaid burial contracts and burial trusts
• Term life insurance (no cash value) and life insurance policies with combined face value under $1,500
• Property essential for self-support (tools of trade, income-producing property under certain limits)

Assets that are not exempt and catch families off guard: all retirement accounts (IRAs, 401ks) are countable in Colorado regardless of whether they're distributing income. Certificates of deposit, savings bonds, mutual funds, stocks, cryptocurrency, and any real estate where the parent does not reside are all countable.

Medicaid Estate Recovery: What Happens After Death

While the home is protected during your parent's lifetime, Colorado's Medicaid Estate Recovery program can pursue reimbursement after death. The state files a claim against the "probate estate" to recover the cost of Medicaid-funded care.

The critical detail: Colorado only recovers from the probate estate — assets that pass through probate court. Assets that transfer outside of probate are not subject to estate recovery. This includes:

• Property held in joint tenancy with right of survivorship
• Accounts with payable-on-death (POD) or transfer-on-death (TOD) designations
• Assets in a properly structured revocable living trust
• Life insurance proceeds paid to a named beneficiary

However, there's an important tension here: you just learned that beneficiary deeds must be revoked to qualify for Medicaid. But revoking the beneficiary deed means the home goes through probate when your parent dies — making it subject to estate recovery. This is the core strategic dilemma in Colorado Medicaid planning.

Exemptions from estate recovery: The state cannot recover if a surviving spouse, a child under 21, or a blind/disabled child of any age is alive. A "caretaker child" exemption may also apply if an adult child lived in the home and provided care that delayed the parent's nursing home placement by at least two years.

Protecting the Home: What You Can Do

Start by revoking any beneficiary deed before the Medicaid application. Then work with the understanding that the home is safe during your parent's lifetime but potentially exposed to estate recovery after death.

Strategies families use to minimize estate recovery exposure include establishing the caretaker child exemption (if applicable), ensuring joint tenancy is structured correctly, and coordinating spend-down strategies that convert countable assets into home improvements (ramps, walk-in showers, roof repairs) — which increases the exempt home's value while reducing countable assets.

The Colorado Medicaid Long-Term Care & Asset Protection Guide includes the complete asset protection playbook: the beneficiary deed revocation process, the exempt vs. countable asset checklist, estate recovery defense strategies, and the exact spend-down methods that are safe under Colorado's 60-month lookback rules.

See more Colorado guides →