12/16/2025
📢 Update for Colorado Caregivers 📢
Colorado’s Community First Choice (CFC) program began July 1, 2025, moving some services from Medicaid waivers into CFC. Families have been waiting to know whether these payments would still qualify as Difficulty of Care (DOC) and be tax-exempt.
🎉 Good news: on December 12, 2025, the IRS confirmed that certain CFC payments to live-in caregivers qualify as Difficulty of Care payments and are not subject to federal income tax.
Because the ruling was pending, some agencies temporarily withheld income taxes. With this decision, income tax should no longer be withheld from DOC-qualifying CFC wages.
HCPF will share more guidance soon and we will be awaiting further info. For further clarification or any questions that arise, please reach out to your tax professional.
This is an important win for caregiving families. 💛