Can Medicaid Take a House Deeded More Than Five Years Ago?

Generally, no. Because Colorado is a “probate-only” state, property that passes automatically to a survivor via joint tenancy with right of survivorship (JTWROS) usually escapes estate recovery. However, there are two major “trap doors” involving beneficiary deeds and TEFRA liens that can change this outcome.

1. The “Aged Out” Transfer (The Five-Year Rule)

Since the transfer of the property interest occurred more than five years ago, it is outside the Medicaid lookback period.

• Eligibility: You do not have to worry about a “transfer penalty” (a period where Medicaid refuses to pay). The gift of the ownership interest has successfully aged out.

• Recovery: The five-year rule protects your eligibility, but it does not technically “protect” the home from Medicaid estate recovery if the home remains in your probate estate. That protection comes from the type of deed you use.

2. Why JTWROS Works in Colorado

Colorado is currently a “probate-only” recovery state. This means the Medicaid Estate Recovery Program (MERP) can only collect from assets that pass through a formal probate court process.

• Joint tenancy with right of survivorship: When you die, your interest in the home technically “extinguishes” and the survivor instantly becomes the 100 percent owner. Because this happens outside probate, there is no “estate” for Colorado to file a claim against.

• Tenants in common (The danger): If the deed says “tenants in common,” your 50 percent share does go to probate. In this case, Colorado can and will file a claim against your share of the home, even if the transfer happened 20 years ago.

3. The “Colorado Trap”: The Beneficiary Deed

While a beneficiary deed (transfer-on-death deed) also avoids probate, Colorado has a specific and harsh statute (C.R.S. § 15-15-403) that treats these differently:

• If a beneficiary deed is “in effect,” the applicant is disqualified from Medicaid.
• Medicaid considers the home a countable resource rather than an exempt primary residence if a beneficiary deed is recorded.
• The Takeaway: If you used a beneficiary deed to set up this “survivorship,” you may face eligibility issues during your next redetermination.

4. The TEFRA Lien Risk (The “Life” Lien)

Even if you avoid recovery after death, Colorado can place a Tax Equity and Fiscal Responsibility Act (TEFRA) Lien on the property while you are alive if you are institutionalized and not expected to return home.

• The lien attaches to your interest in the home.
• If the house is sold while you are alive, the state collects its share.
• If you die and the property passes to a joint tenant, the lien may still need to be satisfied depending on how it was recorded and the specific family members living in the home.