Section 1634(c) Medicaid Disregard in Colorado for DAC Recipients

When DAC (Disabled Adult Child) benefits kick in, they almost always push an individual off SSI because the payment exceeds the SSI income threshold. Losing SSI normally means losing automatic Medicaid. In Colorado, that would mean losing Health First Colorado — the coverage that pays for therapies, prescriptions, waiver services, and everything else the medical system provides.

Section 1634(c) of the Social Security Act exists specifically to prevent this. It's a federal protection that tells Colorado's county Departments of Human Services to ignore the DAC income that caused the SSI loss when determining Medicaid eligibility. Under this rule, the individual keeps Health First Colorado for life, provided they remain otherwise eligible.

How the Disregard Works

The mechanics are straightforward in principle: HCPF (Colorado's Medicaid agency) requires county caseworkers to disregard the DAC income entirely during Medicaid eligibility determinations and renewals. The individual is treated as if they were still receiving SSI for Medicaid purposes.

In practice, this disregard frequently fails. County caseworkers may not recognize the 1634(c) provision. The automated eligibility system can flag the DAC income and generate a Medicaid termination notice. When the SSA reports that SSI cash payments have stopped, the state's systems treat it as a loss of categorical eligibility — and the termination letter goes out.

Families who know about 1634(c) can catch the error and request a manual override. Families who don't end up without Medicaid coverage for weeks or months while the bureaucratic correction works its way through.

The Sequential Dependency Trap

Here's the part that trips up even informed families: the 1634(c) disregard only applies if the individual was actively receiving SSI cash payments immediately before DAC benefits began. The sequence has to be:

1. Individual is on SSI → 2. Parent retires/becomes disabled/dies → 3. DAC benefits start → 4. SSI stops → 5. 1634(c) protects Medicaid

If the parent retires, becomes disabled, or dies before the individual has been established on SSI, the disregard doesn't apply. The individual would need to qualify for Medicaid through another pathway — either a waiver program, the Medicaid Buy-In for Working Adults with Disabilities (WAwD), or standard income-based Medicaid.

This dependency is why every transition planning timeline in Colorado should prioritize getting the SSI application filed at 18, regardless of whether the family expects DAC benefits in the near future. The SSI eligibility needs to be established first.

What to Do When the System Gets It Wrong

If your adult child receives a Health First Colorado termination notice after DAC benefits begin:

1. Call your county Department of Human Services immediately — identify yourself, reference "Section 1634(c) of the Social Security Act," and explain that the DAC income must be disregarded
2. Provide documentation: the SSA award letter showing the DAC benefit, proof that SSI was active immediately prior, and the SSI cessation notice
3. Request a manual override of the automated eligibility determination
4. File a state fair hearing request if the county doesn't correct the record — follow the termination notice; for a Health First Colorado eligibility termination, the Office of Administrative Courts generally must receive the request within 60 days of the Notice of Action, and a current member who requests it before coverage ends may continue coverage pending a final decision

The Colorado SSI at 18 & Adult Disability Benefits Guide includes a printable 1634(c) override script card designed to hand to a county caseworker when the automated system generates an incorrect termination — plus the appeal deadline tracker to make sure nothing slips during the correction process.

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