How Vermont Families Can Plan for Long-Term Care Costs

As life expectancy rises, we all face a greater chance of needing assistance with daily living at some point in our lives. That reality carries serious financial implications given that long-term care services can last for months or years, and the expense can quickly consume savings that you intended to preserve for a spouse or pass along to children. Thoughtful preparation within your Vermont estate plan can reduce uncertainty, protect assets, and give you more control over how care is delivered. With that in mind, the Essex Junction attorneys at Unsworth LaPlante, PLLC discuss how Vermont families can plan for long-term care costs.

What Is Long-Term Care?

Long-term care refers to a broad spectrum of supportive services. You may picture nursing home care first, but many people begin with help at home. Assistance with bathing, dressing, meal preparation, mobility, and medication management often becomes necessary long before full-time facility placement. Chronic illness, cognitive decline, injury, or general frailty can gradually increase your dependence on others. When you recognize that care needs often develop in stages, early planning becomes far more practical than waiting for an emergency.

Long-Term Care Costs

The cost of these services in Vermont can be substantial. Skilled long-term care nursing facilities in Vermont average over $125,000 a year in Vermont (as of 2025).  While less costly than nursing home care, assisted living communities and in-home care can also be costly, averaging about $70,000 and $75,000 respectively in Vermont. Even part-time home health assistance can strain a fixed retirement income. Without a strategy, you may be forced to draw down investment accounts, liquidate property, or reduce financial security for a surviving spouse. Proactive planning gives you time to evaluate options while you remain capable of making informed, deliberate decisions.

Is Long-Term Care Insurance Right for Me?

Insurance designed specifically for long-term care is one option you may wish to consider when planning for the high cost of long-term care. Traditional health insurance and Medicare generally do not pay for long-term care or nursing home facilities. Long-term care insurance policies are separate policies that are structured to cover services such as home health aides, assisted living arrangements, and nursing facility care. Purchasing coverage while you are younger and in good health often results in more favorable premiums and broader benefits. Waiting until health problems arise can make coverage unaffordable or unavailable.

When you review a long-term care policy, you need to look closely at several features. The daily or monthly benefit amount determines how much the insurer will pay toward your care. The benefit period establishes how long payments may continue. Elimination periods function like deductibles, requiring you to pay out of pocket for a set number of days before benefits begin. Inflation protection riders can help your coverage keep pace with rising costs over time. Some Vermont residents also explore hybrid products that combine life insurance or annuities with long-term care benefits. These arrangements may provide a death benefit to heirs if you never require extended care, which can make the premiums feel more purposeful.

Paying Out-Of-Pocket for Long-Term Care

Self-funding is another approach, particularly for individuals with significant savings or investment assets. You might designate retirement accounts, brokerage portfolios, or other reserves to cover future care expenses. This method offers flexibility, though it carries real risks. Care needs can last much longer than anticipated, and costs can exceed projections. Market downturns may reduce portfolio values at the same time withdrawals increase. Drawing heavily from assets can leave a surviving spouse in a vulnerable financial position. Many families combine personal resources with insurance or public benefit planning to spread risk across multiple strategies.

Medicaid Planning for Long-Term Care

For many seniors, Medicaid is the best, or only, option for help with the high cost of long-term care. A joint federal and state program, Medicaid covers nursing home care and certain home-based services for individuals who meet strict financial and medical criteria. Medicare, by contrast, provides only limited short-term skilled care after hospitalization and does not pay for ongoing custodial assistance. Understanding this distinction is essential because many people mistakenly assume Medicare will handle most long-term care expenses.

In Vermont, Medicaid eligibility for long-term care depends heavily on your income and assets. The program imposes low limits on countable resources, although certain property is excluded, such as a primary residence under specific equity thresholds, one vehicle, and personal belongings. Even with these exemptions, many retirees hold savings, investment accounts, or additional real estate that exceed the allowable limits. If your assets are too high, you must reduce them before qualifying. That process, often called spending down, can rapidly deplete wealth if not handled carefully.

Timing is a critical factor in Medicaid planning because of the five-year look-back rule. When you apply for long-term care benefits, the state reviews financial transactions made during the previous sixty months. Transfers of property for less than fair market value, including gifts to family members, can trigger a penalty period during which Medicaid will not pay for your care. The penalty does not begin until you are otherwise eligible and have applied, which can create a difficult gap in coverage. Early planning gives you more flexibility to reposition assets without violating these rules.

Medicaid Planning Tools and Strategies

Irrevocable trusts are sometimes used as part of a broader asset protection plan. When structured correctly and funded more than five years before a Medicaid application, assets placed in such a trust may not count toward eligibility limits. You give up direct control over those resources, and a Trustee manages them according to the trust terms. This strategy requires careful legal guidance because mistakes can cause assets to remain countable or create unintended tax consequences. For families who plan well in advance, this approach can preserve a home or savings for the next generation while still allowing access to essential care.

Vermont also offers programs designed to help older adults receive services outside of institutional settings. The Choices for Care program, operated through the state’s Medicaid system, provides support to eligible residents who require a nursing facility level of care but prefer to remain at home or in community-based environments. Services may include personal care assistance, homemaker support, meal preparation, and certain nursing services. Clinical and financial criteria must both be satisfied, and waiting lists or service limits may apply. Still, this option reflects a growing emphasis on helping individuals age in place rather than moving immediately into nursing homes.

Coordinating long-term care planning with your broader estate plan is equally important. You want your Will, trusts, beneficiary designations, and powers of attorney to work together. A durable financial power of attorney allows a trusted person to handle asset transfers, insurance claims, and Medicaid applications if you become incapacitated. Without this document, your family may need to seek a court-appointed guardian or conservator, which adds expense and delay. Health care directives and medical powers of attorney ensure that someone you trust can make treatment decisions consistent with your preferences.

When you address long-term care planning early, you create more choices for yourself and your family. You reduce the likelihood of crisis-driven decisions, protect resources for those you care about, and improve the odds that you will receive care in the setting you prefer. By integrating these considerations into your Vermont estate plan, you take meaningful steps toward preserving both your financial stability and your personal dignity in later life.

Can We Help You Plan for Long-Term Care Costs in Vermont?

For more information, please attend one of our upcoming FREE webinars. If you would like assistance planning for long-term care costs in Vermont, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.