Vermont Medicaid: Your Guide to the Basics (2025)

Navigating Medicaid, just like many government programs, can often feel overwhelming. It's easy to get lost in the paperwork and rules when all you really want is a clear path forward for yourself or a loved one.

This article is meant to give you a basic, clear understanding of some key Vermont (Green Mountain Care) eligibility rules. Because the financial limits and allowances change regularly, much of the information available online is often outdated and wrong. While this guide outlines the essentials, please be advised that these rules have complicated layers of exceptions and details that we cannot cover here. For personalized advice and to ensure you have the most up-to-date dollar amounts, it is highly advisable that you speak with an attorney who specializes in Medicaid planning.

Here is a look at the essentials:

Money the Applicant Can Keep (Income)

If you are the applicant entering long-term care, Medicaid rules limit how much income you get to keep each month.

• Personal Needs Allowance (PNA): The applicant can keep $79.93 a month for personal needs. We call this the PNA. This money is intended to cover small, personal expenses like clothing, haircuts, or greeting cards. Everything the applicant earns or receives above this amount—including Social Security payments and retirement withdrawals—will go toward paying for their care.

• Income for the Spouse (Community Spouse): If the applicant is married and their spouse (called the “community spouse”) is not in long-term care, that spouse’s own income has no limit. Additionally, if the community spouse’s income is below $2,643.75 a month, the institutionalized spouse can divert some of their income to the community spouse to bring their total up to that minimum threshold. This is designed to ensure the community spouse has enough to live on.

Assets and Property Limits

This is where the planning truly matters. Assets are what you own (investments, cash, property).

• Applicant’s Asset Limit: A single applicant can have up to $2,000 in countable assets. This includes money in checking and savings accounts, non-retirement investment accounts, and stocks.

• Spouse’s Protected Assets: If the applicant is married, their spouse gets to keep a protected amount of assets, currently up to $157,920 (in their name or a joint account). This is often called the Community Spouse Resource Allowance (CSRA).

• Retirement Accounts: Accounts like IRAs and 401(k)s are exempt (not countable assets) as long as they are in "payout status." This simply means you are actively taking withdrawals based on your life expectancy (similar to but not the same as Required Minimum Distributions, or RMDs). If you aren't actively drawing money from the account, it's considered a countable asset subject to the $2,000 limit.

• Primary Residence: Your main home is typically exempt under Vermont rules, provided you intend to return to it if you no longer need long-term care. Keep in mind there is a Home Equity Limit (currently $730,000). If the equity in the home exceeds this amount, the home may become a countable asset. It is also critical to ensure the house passes outside of probate to fully protect it. If the home passes through probate, Medicaid is entitled to (and likely will file) a claim against the property for reimbursement of long-term care costs.

• Other Property: Second homes, rental properties, camps, and other non-primary residences are generally not exempt and are counted toward the asset limit.

• Vehicles: A motor vehicle is exempt if it's necessary for the transportation of the applicant or spouse. The vehicle also must be suitable for the applicant's use, meaning things like motorcycles may not qualify.

• Burial Fund: The applicant (and their spouse) can each set aside up to $10,000 for funeral and burial expenses. This money must be placed in a separate account and cannot be used for anything other than funeral or burial costs.

The Five-Year Look-Back Rule

This is an essential provision to understand, and it's why early planning is so important.

Medicaid has a five-year “look back” period. This means that when you apply, they review all gifts or significant transfers of money you (or your spouse) made in the 60 months leading up to the application date.

If non-exempt assets were gifted or transferred for less than fair market value during this time, Medicaid assesses a penalty. This results in a period of ineligibility (a penalty period) during which Medicaid won’t pay for care. 

So, What Is Medicaid Planning?

Medicaid planning is about being proactive. A knowledgeable planner, like an attorney or financial professional, can "crunch the numbers" and help you legally rearrange assets so that you meet the eligibility rules without losing everything you've worked for.

They can help you utilize specific legal tools—like annuities, specialized trusts (Medicaid Qualified Trusts), or reverse mortgages—to protect excess assets and convert countable assets into non-countable ones.

An attorney can also help you keep assets from probate to avoid Medicaid’s claims for reimbursement against your estate when you pass away, which often results in the loss of those assets.

Because some of the most effective asset protection steps must be taken to avoid that five-year look-back penalty, it’s always advisable to meet with a Medicaid planning professional well in advance of the time you anticipate needing long-term care. 

That said, Medicaid planning and asset protection are still possible even when already receiving care in a nursing home. So don’t despair if you haven’t done advance planning–there’s still time.

Life is unpredictable, but aging is not. Let's plan!