Financial Considerations
Navigating the financial landscape of disability services can be overwhelming. As a family-run PASA, we prioritize transparency and education to ensure your family maximizes every available benefit.
Tax-Free Income for Live-in Caregivers (IRS Notice 2014-7)
If you are a family caregiver or host home provider living in the same residence as the person receiving care, your Medicaid payments may be completely exempt from federal and state income tax. * The “Difficulty of Care” Exclusion: Under IRS Notice 2014-7, these payments are treated as “hardship payments” rather than taxable wages.
- The Benefit: This allows you to keep 100% of your take-home pay, effectively increasing your household’s usable income without increasing your tax bracket.
Early Application for SSI (Supplemental Security Income)
- Early Application for SSI (Supplemental Security Income)
For individuals with IDD, Supplemental Security Income (SSI) provides essential monthly financial assistance once they turn 18.
- Why Apply Early? We recommend starting the application process as soon as a loved one turns 18. Benefits are not retroactive to your birthday; they are only paid starting the month after you file your application.
- Asset Limits: Remember that to qualify, the individual generally cannot have more than $2,000 in assets.
Maximizing Benefits with Written Lease Agreements
A common pitfall for families is the “One-Third Reduction” rule. If an adult child lives at home for free, the SSA may reduce their SSI check by one-third because they are receiving “In-Kind Support and Maintenance” (food and shelter).
- The Solution: By having a formal Written Lease Agreement in place, the service member pays their “fair share” of rent to the household using their SSI funds.
- The Result: This often triggers the full monthly SSI payment, ensuring the service member contributes to the household budget while maintaining their maximum benefit.
Colorado ABLE Accounts—Save Without Penalty
Until recently, people with disabilities couldn’t save more than $2,000 without losing Medicaid or SSI. Colorado ABLE accounts changed that.
- Save up to $100,000: Funds in an ABLE account (up to $100k) do not count toward the SSI/Medicaid asset limit. Note in 2026, a total of $20,000 can be deposited.
- Tax Advantages: Contributions may be tax-deductible on your Colorado state return, and growth is tax-free when used for qualified disability expenses (housing, transport, health).
- Flexibility: Anyone—parents, friends, or the individual themselves—can contribute to the account.
