Colorado turned on PETI for DD-waiver homes. Here's who pays what now.

What happened

On August 25, Colorado Medicaid (HCPF) issued Operational Memo OM 26-059, its updated instructions for a change that took effect August 1: PETI now applies to residential services under the DD waiver — host homes (the state calls them IRSS) and group homes (GRSS) — for people whose certification period starts July 1, 2026 or later. So it doesn’t hit everyone at once; it arrives with each person’s paperwork cycle.

PETI is not new math invented for this waiver — Colorado already uses it on the EBD, BI, and CMHS waivers. What it does is take a person’s income — only their income, not the family’s — subtract a set of protections, and call what’s left their contribution toward the cost of their residential care. The protections: a Personal Needs Allowance they always keep, applicable taxes, certain housing costs, and medical expenses nothing else covers. HCPF’s own memo says the result “may result in little or no contribution” for some people.

Three details from the August 25 update deserve more attention than they’ll get:

Job coaching is an exemption. Job development is not. A person who is employed, enrolled in the Working Adults with Disabilities program, or receiving Supported Employment job coaching is exempt from PETI. But HCPF drew the line narrowly: job development, pre-vocational services, and sitting on the DVR waitlist do not count (OM 26-059). Two people in the same employment program can land on opposite sides of that line.

Exempt does not mean free. A person exempt from PETI still owes standard room and board, and the residential agreement still has to say so (HCPF provider guide).

The housing paperwork is now load-bearing.For a person to get housing costs deducted, their financial responsibility has to be in writing — a lease, a mortgage, or a residential agreement. A guardian can sign on their behalf. During the rollout, case managers can accept up to six months of bank statements while families get the formal agreement in place (OM 26-059).

Why it matters to you

If you’re a provider, you’re now part of the billing machinery: the case management agency sends you a PETI worksheet within 10 calendar days of the care-plan meeting, and it tells you three numbers — what the resident pays you, what you bill Medicaid, and what the resident keeps. You collect the resident’s share and bill the rest at an individualized daily rate that may not match the fee schedule you’re used to (HCPF provider guide).

If you’re a family or a case manager, the thing to hold onto is that the worksheet is the only number that counts. Not the number a Facebook group calculated, not the number a seminar scared you with. And the paperwork you may have treated as a formality — the residential agreement — is now the document that determines a real deduction.

And here’s the reading we hold at Grace Mountain: contributing toward the cost of your own home is one of the most ordinary adult things there is — most of us do it every month without ceremony. A PETI worksheet, for all its paperwork, treats a person’s income as their own and their contribution as real. The exemption structure points the same direction: the math now recognizes a person’s movement toward work. The people we serve keep teaching us that growth counts — and this change, handled well, is one more place it gets counted.

That’s also worth asking about wherever your person lives. At Grace Mountain, every home runs on a written residential agreement that spells out room and board — which is exactly the document PETI leans on. It’s a fair thing to ask any agency you’re considering: show me the agreement.

One more thing you should know: Grace Mountain is beginning the process of becoming benefits specialists — building the expertise to help the people we serve use their Social Security benefits more effectively and navigate changes exactly like this one. Bring us your PETI questions as this rolls out; where we don’t have the answer yet, we’ll find it with you.

What to actually do this week

1. Bring three questions to the next care-plan or monitoring visit:Does PETI apply to my person, or does an exemption? When will the completed worksheet arrive (the CMA owes it within 10 days of the meeting)? What’s the Personal Needs Allowance number?
2. Get housing responsibility in writing now. A lease or residential agreement that names who pays what. A guardian can sign. If the agreement isn’t done yet, six months of bank statements can stand in during the rollout.
3. Send one comment email by September 4. Colorado’s fall amendments to nine waivers — DD, SLS, and CES among them — are open for public comment through September 4 (HCPF IM 26-004). One plain email to HCPF_LTSS.PublicComment@state.co.us counts.

One thing to skip

Skip the paid “Medicaid planning” webinars and the panic income-restructuring — at least this month. HCPF’s own memo says some people will contribute little or nothing, the worksheet is individualized, and the state’s FAQ, desk aids, and training materials are free. Read the free version, get your person’s actual worksheet, and only then decide whether you need help.

Researched with AI assistance; edited by Ian Thomson.