Colorado DD PETI Cost Sharing and Caregiver Hour Limits 2026

What Changed: PETI on the DD Waiver

Starting August 1, 2026, Colorado's Department of Health Care Policy and Financing (HCPF) applies Post-Eligibility Treatment of Income (PETI) cost-sharing rules to residential services under the HCBS-DD waiver. This affects members receiving Individual Residential Services and Supports (IRSS) and Group Residential Services and Supports (GRSS) with certification start dates on or after July 1, 2026.

PETI isn't new to Medicaid — it's the standard method for determining how much of a member's personal income goes toward residential care costs after protected deductions. What's new is its application to the DD waiver in Colorado, where residential members previously didn't face this calculation.

How the PETI Formula Works

The monthly cost share follows a straightforward subtraction:

Monthly Cost Share = Gross Monthly Income − (Personal Needs Allowance + Room & Board + Tax Allowance + Housing Expenses + Uncovered Medical Expenses)

Here's what each deduction looks like in 2026:

Personal Needs Allowance (PNA): The amount a member keeps for personal expenses — clothing, transportation, phone, social activities. The PNA ranges from a minimum of $184 to a maximum of $435.46 per month, depending on income level.

Standard Room and Board: Set at $810 per month in 2026. This is paid directly to the residential provider for rent and meals. Every residential member pays this regardless of PETI.

Standard Tax Allowance: Up to $300 per month for documented federal, state, and payroll taxes, applicable only if the individual is employed.

Household Expense Allowance (HEA): If the member holds their own lease or mortgage, actual housing costs (rent, utilities, property taxes, insurance) are fully deducted.

Non-Covered Medical Expenses: Out-of-pocket costs for medical, dental, or vision services not covered by Medicaid — glasses, specialty dental work, hearing aids — are deducted in full.

A Worked Example

Say your adult child receives $994 per month in SSI and lives in a group home under the DD waiver:

• Gross monthly income: $994
• Subtract PNA ($184 minimum): $810
• Subtract standard Room & Board ($810): $0

In this scenario, the entire income is consumed by the PNA and Room & Board deductions, leaving a PETI cost share of $0. The member keeps $184 for personal expenses, $810 goes to the provider for room and board, and Medicaid covers the balance of residential care costs.

The numbers shift when income is higher — say, $1,600 from DAC/CDB benefits plus a part-time job. At that level, the cost share becomes real, and tracking each deduction matters.

Three Ways to Be Exempt from PETI

HCPF provides clear exemptions. Members are entirely exempt from the cost share if they are:

1. Enrolled in the WAwD program — the Medicaid Buy-In for Working Adults with Disabilities
2. Engaged in ongoing competitive employment — working in the community at competitive wages
3. Receiving supported employment services limited to job coaching

Exempt members still pay standard Room and Board ($810/month) to their residential provider. They just don't owe anything beyond that.

This creates a practical incentive: if your family member works even one hour per month and enrolls in WAwD, they can bypass PETI entirely. The WAwD program has no asset limit and allows countable income after disregards at or below 450% of the federal poverty level ($5,985/month in 2026).

Caregiver Hour Limits: The Phase-Down

Separate from PETI, HCPF introduced phased limits on how many hours a single caregiver can work per week:

These are soft caps with an exception process — if your family member's medical necessity justifies higher hours, your CMA can submit an exception request to HCPF. The request requires a comprehensive justification narrative.

The Legally Responsible Person (LRP) homemaker cap is different — and harder. Parents or spouses providing homemaker services (meal prep, laundry, housekeeping) face a strict 7-hour-per-week limit with no exceptions permitted. This cap was implemented through HCPF Operational Memo 26-042.

What This Means for Paid Parent Caregivers

If you're a parent being paid through Medicaid to provide personal care to your adult child, you're affected by both the caregiver hour phase-down and the LRP homemaker cap:

• Personal care hours fall under the single-caregiver limit (84 hours/week now, dropping to 56 by mid-2027). Exception requests are available.
• Homemaker hours face the 7-hour hard cap if you're the LRP. No exceptions.

The combination can significantly reduce total paid hours for families where a parent is the sole caregiver. If your current care plan authorizes more than the new limits, work with your CMA case manager to review the plan before the limits take effect. Document medical necessity thoroughly — the exception process for personal care hours depends entirely on the quality of the justification.

Protecting Your Family's Position

Three concrete steps:

Run the PETI numbers now. Don't wait for the first cost-share notice. The Colorado SSI at 18 & Adult Disability Benefits Guide includes a PETI cost-of-care worksheet that walks through the formula with your family member's actual income and deductions.

Explore the WAwD enrollment path. If your family member does any paid work — even one hour per month — enrolling in WAwD eliminates PETI entirely. The premium is income-based and often lower than the cost share would be.

Request the caregiver exception early. If the 84-hour (or future 70/56-hour) limit will disrupt your family member's care, don't wait for the cap to hit. Submit the exception request through your CMA with current medical documentation and a detailed justification of why the standard limit is insufficient. Earlier requests give HCPF more time to process.

These changes are part of HCPF's broader LTSS Sustainability effort to control Medicaid costs while preserving community-based services. They're significant, but they come with documented processes for families who need to exceed the standard limits. The key is knowing those processes exist and starting them before the deadlines arrive.

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