Most Americans assume Medicaid is a single program. In Vermont, Medicaid LTC is delivered through Choices for Care, a Section 1115 demonstration waiver coordinated between the Department of Vermont Health Access (DVHA) and the Department of Disabilities, Aging and Independent Living (DAIL).1Vermont was an early adopter of the “money follows the person” framework, which is why Choices for Care looks different from neighboring states’ LTC programs.
The two functional-eligibility tracks
Choices for Care eligibility is organized into two tracks based on functional and clinical need:
Highest Need
Reserved for people with the most significant functional impairments — typically those needing extensive help with multiple ADLs, those with significant cognitive impairment, or those with combinations of needs that would clearly require nursing-facility care without supports. Highest Need carries no enrollment limits and is the traditional “entitlement” tier of Choices for Care.2
High Need
For people with substantial functional needs that don’t quite meet the Highest Need threshold. High Need enrollment may be subject to capacity limits, depending on Vermont’s waiver budget and federal authorization period.
Moderate Need / supports for elders
Vermont also operates a Moderate Need program serving older adults with less acute functional needs — the supports are more limited (case management, homemaker services, respite) and serve to keep people in the community before Choices for Care becomes appropriate.
Three eligibility tests, in order
1. Functional eligibility
Before financial review, your parent needs a functional- eligibility determination through the Long-Term Care Clinical Eligibility Unit (LTCCEU) or through their local Area Agency on Aging. The assessment evaluates activities of daily living, cognitive status, medical needs, and the availability of informal supports. Assessments are coordinated through DAIL.3
2. Income
Vermont uses the federal SSI-based income cap of roughly $2,829/monthin 2026 (300% of the federal benefit rate). If your parent’s gross monthly income from all sources exceeds that cap, they’re not disqualified. They’ll need a Qualified Income Trust (QIT, sometimes called a Miller Trust).
3. Assets
The applicant’s countable assets must be at or below $2,000 at the moment of application.
Not counted (in most cases):
- The primary residence, up to ~$752,000 in equity (the federal home-equity ceiling)
- One vehicle of any value
- Personal effects and household goods
- A burial plot and a modest amount of pre-paid burial arrangements
- The cash value of certain small life-insurance policies
Counted:
- Checking, savings, money-market, and CD accounts
- Brokerage accounts and most retirement accounts in payout phase
- Cash surrender value of larger whole-life insurance
- Second properties, vacation homes, investment properties
- A second vehicle
The five-year look-back
Vermont applies the standard federal 60-month look-back. Any uncompensated transfer of assets — gifts to children, below-market sales, charitable contributions above modest levels — made in the 60 months before application generates a penalty period during which the applicant is otherwise eligible but Vermont Medicaid will not pay for nursing-home or Choices for Care services.
The penalty math is straightforward: the value of the transfer divided by Vermont’s penalty divisor (set annually and approximating the average private-pay nursing- home rate). A $100,000 gift becomes roughly a 10-to-14 month penalty depending on the divisor. The clock on the penalty does not start until your parent is otherwise eligible— meaning they’ve spent down to $2,000 and are receiving (or have applied for) covered services. So the penalty hits exactly when the family needs Medicaid most.4
Setting flexibility under Choices for Care
One of the distinctive features of Choices for Care is that once a recipient is approved, the funding can support care in a range of settings:
- Nursing facility. Traditional skilled nursing care.
- Enhanced Residential Care (ERC). Residential care home with Medicaid-funded additional services for higher-needs residents.
- Adult Family Care.Living in another person’s home (often a relative’s) with Medicaid-funded supports.
- Home with supports.Living in the recipient’s own home with Medicaid-funded personal care, homemaker, respite, and related services. Includes consumer/family-direction options.
The flexibility is meaningful because it allows family decisions to drive setting choice — rather than forcing a nursing-facility placement when home with supports could work.
The community-spouse situation
If one spouse needs care and the other doesn’t, the rules become more favorable. The well spouse (the “community spouse”) keeps:
- A monthly income allowance (MMMNA): ~$3,948 in 2026
- A protected asset amount (CSRA): up to ~$157,920 in 2026
- The homestead, vehicle, and personal effects as exempt
Most one-spouse-needs-care situations can be planned to a non-catastrophic outcome with 12–24 months of lead time. Talk to a Vermont elder-law attorney before doing anything — DIY in this scenario is where we’ve seen the most expensive mistakes.
What to do this month
- Gather the documents. Five years of bank statements, tax returns, real-estate records, brokerage statements, and life-insurance policies.
- Stop any “creative” transfers. If gifting has happened recently, document it carefully; do not continue it.
- Talk to a Vermont elder-law attorney.The consultation typically runs $300–$500. Cheap insurance against a five- or six-figure mistake — and in Vermont, where the state estate tax adds complexity for some families, the conversation is particularly worth having.
- Contact your local Area Agency on Aging to start the functional-eligibility assessment process and to access Aging and Disability Resource Center (ADRC) options counseling.
For the broader context on Medicaid eligibility nationally, see our Medicaid pillar overview. For the Vermont-specific legal and estate-planning side, see Legal & Financial in Vermont.