Colorado PERA Retirees and Medicare Savings Programs: Pension Income, Social Security Fairness Act, and Eligibility
PERA Income Counts — But It's Not the Whole Story
Colorado Public Employees' Retirement Association (PERA) pensions are counted as unearned income by county eligibility workers when calculating Medicare Savings Program eligibility. A PERA retirement check is treated the same as Social Security or a private pension: gross amount, before any withholdings, gets added to the income total.
That means a retired Colorado teacher receiving $1,800/month from PERA and $400/month from Social Security has $2,200 in combined gross unearned income. After the $20 standard disregard, that's $2,180 in net countable income — above all three individual limits ($1,350 for QMB, $1,616 for SLMB, and $1,816 for QI-1), but below the QI-1 couple limit of $2,455 if the income is evaluated for a married couple.
For PERA retirees, the income math often puts QMB out of reach unless the pension is small. But SLMB and QI-1 may still be available, and those programs pay the full $202.90/month Part B premium — $2,434.80 a year back in your pocket.
What the Social Security Fairness Act Changed
The Social Security Fairness Act (H.R. 82, signed January 5, 2025) repealed both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These provisions had reduced Social Security benefits for people who also received a government pension from work not covered by Social Security — which described a large portion of Colorado's PERA retirees.
The repeal means:
- WEP repeal: PERA retirees who also qualify for Social Security retirement benefits based on other employment now receive their full Social Security amount, without the WEP reduction that previously clawed back part of the benefit.
- GPO repeal: PERA retirees who would have received Social Security spousal or survivor benefits now get the full amount. GPO had previously reduced (and often eliminated) those benefits by two-thirds of the government pension.
SSA implemented the changes retroactively to January 2024, with adjustments paid out starting February 2025.
How This Shifts the Eligibility Math
For PERA retirees who previously had no Social Security or a reduced benefit, the repeal creates a new income stream — or a larger one. That higher gross unearned income changes the Medicare Savings Program calculation in both directions.
New income may push some retirees over the threshold. A retired teacher who previously qualified for SLMB on PERA income alone might now exceed the $1,616 individual limit once their restored Social Security benefit is added. Before the repeal, WEP might have reduced their Social Security check to nothing; now it could be $300-$600/month.
But new income may also create eligibility where none existed. Some PERA retirees who never applied for Social Security because GPO zeroed out their spousal or survivor benefit should now file a claim with SSA. The restored benefit, combined with their PERA pension, needs to be evaluated against MSP thresholds — they might land in the QI-1 range ($1,816 individual, $2,455 couple) even with the additional income.
Lump-sum retroactive payments from SSA (covering the period back to January 2024) are treated differently from ongoing monthly income. Under standard SSI-related rules, lump-sum back-payments are excluded as countable resources during the month of receipt and for the following 9 months. They won't disqualify a current MSP application during that window, but they will affect the resource calculation afterward if the money is still sitting in a bank account.
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PERA Benefits Are Separate from the Federal Offsets
The federal WEP and GPO are repealed. Colorado PERA says the Social Security Fairness Act does not affect PERA retirement benefits. For most PERA members, the PERA plan substitutes for Social Security; WEP and GPO reduced the separate Social Security benefit, not the PERA pension.
Conditional Part A for PERA Retirees Without 40 Quarters
Some PERA retirees spent their entire career in public employment that was exempt from Social Security and never accumulated the 40 quarters needed for premium-free Medicare Part A. They face a Part A premium of up to $518/month.
Colorado is a Part A group-payer state, which means QMB covers the Part A premium through a conditional enrollment process. The retiree files a conditional Part A application at SSA citing POMS HI 00801.140, then applies for QMB through the county. If QMB is approved, the state assumes the Part A premium.
This is particularly relevant for PERA retirees who now have restored Social Security that keeps their total income under the QMB threshold.
Running Your Numbers
The interplay between PERA pension income, restored Social Security benefits, the $20 disregard, and Colorado's resource limits creates a calculation that looks different for every retiree. Our Colorado Medicare Savings Programs & Extra Help Guide walks through multiple pension scenarios with worked examples — including how to handle retroactive SSA payments during the 9-month exclusion window and how to evaluate whether the conditional Part A path applies to your situation.
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