What Can an Income Trust Pay For in Colorado?
For a nursing-facility resident, Colorado's Income Trust form directs the trustee to pay the facility the member's patient payment and to pay the member their personal needs allowance plus any listed adjustments, up to that month's deposit. For someone on HCBS or PACE, the trustee pays the member up to the 300% income level each month. Up to $20 a month may be kept for actual trust expenses such as bank charges, and nothing else may be paid, trustee fees included. Every item below is cited to HCPF's own published rules; where HCPF says nothing about an item, this page says so instead of filling the gap. This guide is informational only and is not legal or financial advice.
Income goes into a Colorado Income Trust each month, and the trustee may pay it out only for the purposes HCPF allows. Paying for anything else can put eligibility at risk. Here is the list, with the HCPF source for each item.
What HCPF's rules allow
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Patient payment to the facility
For a nursing-facility resident, an amount equal to the member's patient payment, paid to the facility from each month's deposit.
Source: HCPF Income Trust Form, section 5.01(b)
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Personal needs allowance and listed adjustments
The member's personal needs allowance as set annually by HCPF, plus listed adjustments: the Monthly Income Allowance for a community spouse, Family Dependent Allowance, Home Maintenance Allowance, mandatory income tax withheld, mandatory garnishments repaying federal assistance overpayments, Medicare Part B in the first two months in the facility, Medicare late-enrollment penalties, ongoing Medicare Part D premiums, and Nursing Facility PETI-approved expenses.
Source: HCPF Income Trust Form, section 5.01(b)
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HCBS and PACE members
Up to the 300% income level each month, reduced by income kept outside the trust, paid to or for the member.
Source: HCPF Income Trust Form, section 5.01(a)
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Alternative Care Facility (assisted living)
A maintenance allowance based on the Old Age Pension standard to the member, and the client payment (PETI) to the facility.
Source: HCPF Income Trust Form, section 5.01(a)
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Trust expenses
Up to $20 a month may be kept and paid out for actual expenses the trust is expected to have, such as bank charges.
Source: HCPF Income Trust Form, section 5.01(c); 10 CCR 2505-10 § 8.100.7
The order payments are made in
When a month's income isn't enough to cover everything, it goes first to the patient payment (nursing facility) or to the PETI amount (Alternative Care Facility) (HCPF Income Trust Form, section 5.01). Colorado's regulation lists the nursing-facility deductions more narrowly (personal needs allowance, spousal income payments, approved PETI payments); HCPF's 2024 form adds the other adjustments listed above.
Trustee and bank fees
Not allowed. Apart from the $20 monthly allowance for actual trust expenses, the trustee is not entitled to compensation or reimbursement (HCPF Income Trust Form, section 6.03). The regulation lets trustee fees ordered before April 1, 1996 continue.
What the trust can't be used for
The form bars every other deduction, naming trustee fees, attorney fees and costs (including those for setting up the trust), accountant fees, court fees, guardian ad litem fees, funeral expenses, past-due medical bills and other debts (section 5.01(c)). For HCBS members, the trust may not pay room and board, which comes out of the member's maintenance allowance. A nursing-facility member's distributions can't exceed that month's deposit, and the member's resources may not be added to the trust.
Timing, and money left over
Excess income that isn't distributed stays in the trust (HCPF Income Trust Form, section 5.01; 10 CCR 2505-10 § 8.100.7).
Keeping the monthly record
The trustee is the one who has to show that the trust paid only these items. A month-by-month record of every deposit and every payment, checked against the bank statement, is what makes that easy to show when HCPF asks.
Related: who can be the trustee in Colorado, what happens to the money at death, and the Miller Trust trustee guide for how the monthly cycle works in every state.
Trust not open yet? The account comes first
None of these payments can start until the trust account exists, and most branches have never opened one. Free one-pager: the questions to ask before you drive to a branch, emailed now. Then 4 more short emails over the next 10 days — then we stop.