Planning for the possibility of needing long-term care is essential to securing your financial future and ensuring that you receive the proper care when needed. Long-term care includes services like nursing home care, in-home care, and assisted living facilities. These services can be costly, and without a solid plan, they may quickly deplete your assets. To help you get started, the Essex Junction attorneys at Unsworth LaPlante, PLLC discuss why long-term care planning should be part of your Vermont estate plan.
Assessing Your Long-Term Care Needs
The first step in planning for long-term care is understanding what type of care you may need. Long-term care can range from occasional assistance with daily activities to round-the-clock care in a nursing facility. While it is impossible to predict exactly what level of care you will require, certain factors can increase your likelihood of needing long-term care, including chronic health conditions, family history, and age. Moreover, everyone stands about a 70 percent chance of needing some type of long-term care (LTC) services once they reach retirement age, making it even more important to plan accordingly given that the average cost of a year of nursing home care in Vermont was almost $180,000 as of 2025.
Long-Term Care Insurance
Because neither Medicare nor most health insurance plans cover LTC services, one option to help cover the costs of long-term care is long-term care insurance which is specifically designed to pay for services like nursing home care, assisted living, and in-home care. The earlier you purchase a long-term care insurance policy, the lower your premiums are likely to be. If you wait until you are older or have existing health conditions, the cost of coverage may be significantly higher, and you may not even qualify. When shopping for long-term care insurance, consider factors like the daily benefit amount, the length of coverage, and any inflation protection options. Some policies also offer hybrid products that combine life insurance or annuities with long-term care benefits, which may offer more flexibility for some individuals.
Setting Aside Personal Savings
Another approach to long-term care planning is to set aside personal savings to cover future care expenses. This can be done through retirement accounts, such as IRAs or 401(k) plans, or by establishing a dedicated savings or investment account for long-term care costs. The key to this strategy is ensuring that you have saved enough to cover the potentially high costs of long-term care. Keep in mind that relying solely on personal savings may not be sufficient for everyone, especially if you require long-term care for many years. This is where Medicaid planning becomes important.
Medicaid Planning
Medicaid is a federal and state program that provides healthcare coverage for individuals with limited financial resources, and it can be a crucial part of long-term care planning. Medicaid covers long-term care services, such as nursing home care, but it is needs-based, meaning that you must meet certain income and asset limits to qualify. Because of these strict eligibility requirements, many people engage in Medicaid planning to protect their assets while still qualifying for benefits. Medicaid planning involves structuring your finances in a way that allows you to qualify for Medicaid without depleting your entire estate. There are various strategies for doing this, including:
- Asset Transfers: Transferring assets to family members or a trust can help reduce your countable assets for Medicaid purposes, however, Medicaid has a five-year âlook-backâ period, meaning that any asset transfers made within five years of applying for Medicaid could result in a penalty period during which you are ineligible for benefits.
- Creating a Medicaid Asset Protection Trust: A Medicaid Asset Protection Trust (MAPT) is an irrevocable trust that allows you to transfer assets out of your name and still qualify for Medicaid. By placing assets into a MAPT, you can protect them from being spent down for long-term care costs, as they are no longer considered part of your estate for Medicaid purposes. Again, the five-year look-back period applies.
- Spending Down Assets: Another option is to spend down your assets on allowable expenses, such as paying off debts, making home improvements, or purchasing exempt assets like a primary residence or a prepaid funeral plan.
Medicaid planning is a complex process, and it is important to work with an experienced estate planning attorney to ensure that you are using the correct strategies and complying with Medicaid regulations because mistakes in planning can result in penalties or ineligibility.
Do You Need Help with Long-Term Care Planning in Vermont?
For more information, please attend one of our upcoming FREE webinars. If you need help incorporating long-term care planning into your Vermont estate plan, contact the experienced Essex Junction estate planning attorneys at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.
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