Vermont Medicaid Estate Recovery
After someone who received Medicaid long-term care dies, Vermont can file a claim against their estate. This guide explains what is recovered, who is protected, and how to ask for relief.
Based on 33 V.S.A. § 1906a (recovery against the estate, and the homestead exemptions for a lineal heir or sibling below 300 percent of the federal poverty level or who gave care that delayed or avoided nursing home placement); Medicaid Covered Services Rules 7108.3 and 7108.3.1 through 7108.3.5 (the operating estate recovery rule: the age 55 and long-term care limits, the probate-inventory estate definition, the exemptions, and the homestead hardship test); 14 V.S.A. § 1203(d) (a Vermont Medicaid claim must be presented within four months of the first publication of notice to creditors); 14 V.S.A. § 1205 (classification and payment order of claims); 33 V.S.A. § 1908a (Vermont Partnership for Long-Term Care); 14A V.S.A. § 505(a)(3) (property of a trust that was revocable at the settlor's death answers the settlor's creditors when the probate estate is inadequate); 27 V.S.A. § 654 (enhanced life estate deeds); federal baseline 42 U.S.C. 1396p.
What Vermont recovers
Vermont recovers only what Medicaid paid for long-term care, and only out of the probate estate.
Covered services and programsThe full list of care and waiver programs the claim can include
Vermont recovers only what Medicaid paid for long-term care, and only out of the probate estate. Medicaid Covered Services Rule 7108.3 directs the Department of Vermont Health Access to seek adjustment or recovery from the estates of people who died on or after January 1, 1994 and who were 55 years of age or older when they received long-term care services paid for by Medicaid, meaning nursing facility services, home-and-community-based waiver services, and the hospital and prescription drug services paid while the person was living in a nursing facility or enrolled in a waiver program. Recovery also takes in money left in a personal needs account. Ordinary Medicaid spending outside that long-term care window is not recovered at all. The Department files its claim with the Probate Division as a creditor of the estate, and rule 7108.3.3 defines that estate as all real and personal property and other assets listed on an inventory filed in the probate court. Under 14 V.S.A. § 1203(d) a claim the State files on behalf of Vermont Medicaid must be presented within four months after the date of first publication of notice to creditors, no matter when the person died or when the executor or administrator opened the estate. The Department then takes its place among the creditors: rule 7108.3.3 says the probate court prioritizes the debts and prorates each claim according to law, and 14 V.S.A. § 1205(a) sets that order, paying costs and expenses of administration first, then reasonable funeral, burial, headstone and perpetual care expenses up to $3,800.00 exclusive of governmental payments together with reasonable and necessary medical and hospital expenses of the last illness, then wages earned in the three months before death up to $300.00 per claimant, then all other claims.
Vermont recovers only from the probate estate. Assets that pass outside probate, such as joint property with survivorship, life estates, living trusts, and transfer-on-death or pay-on-death accounts, are generally beyond recovery.
Important: Vermont reaches only the probate estate, and one common plan is not the shield it looks like. Under 14A V.S.A. § 505(a)(3), after the settlor dies the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors, the costs of administering the estate, funeral and disposal expenses, and the statutory allowances to a surviving spouse and children, to the extent the probate estate is inadequate to satisfy them. The Department files as a creditor of the estate, so a revocable living trust does not by itself put the home beyond that claim. Medicaid Covered Services Rule 7108.3.1.A points the same way: it grandfathers homes held in revocable trusts only for people who received Medicaid payment for long-term care before December 1, 1997, which leaves later trust homes inside the picture. Property that passes by joint tenancy with right of survivorship, by a life estate, by a Vermont enhanced life estate deed under 27 V.S.A. chapter 6, or by a transfer-on-death or pay-on-death beneficiary designation is named nowhere in Vermont's estate recovery rule, and 27 V.S.A. § 654 creates no creditor-claim liability for property passing under an enhanced life estate deed, so those routes sit outside the probate inventory the rule defines. Medicaid transfer-penalty rules during the look-back period are a separate question from recovery and still apply. Confirm your own situation with a Vermont elder-law attorney.
55 and older. Medicaid Covered Services Rule 7108.3 lets the Department seek recovery only from the estates of people who died on or after January 1, 1994 and who were 55 years of age or older when they received the long-term care services Medicaid paid for. That matches the federal floor at 42 U.S.C. 1396p(b)(1)(B). Vermont adds nothing on top of it: there is no recovery from the estate of someone younger than 55, and no recovery of ordinary Medicaid spending outside long-term care at any age.
Who is protected from recovery
Surviving spouse: rule 7108.3 lets the Department file its claim only after the death of the person's surviving spouse, if there is one.
Surviving child under age 21: rule 7108.3 blocks the claim while the person has a surviving child under 21.
Surviving child who is blind or permanently and totally disabled as the Social Security Administration defines those terms, at any age (rule 7108.3).
Sibling living in the home: rule 7108.3.2.A exempts the homestead when a sibling has lived there continuously for at least one year immediately before the date the decedent began receiving long-term care services. Vermont's rule as written turns on residence and states no equity-interest requirement, which is narrower reading than the federal lien protection at 42 U.S.C. 1396p(b)(2).
Caregiver child: rule 7108.3.2.B exempts the homestead when a son or daughter has lived in the home continuously for at least two years immediately before the date the decedent began receiving long-term care services and provided care that allowed the decedent to remain at home.
Lineal heir or sibling with household income below 300 percent of the federal poverty level: 33 V.S.A. § 1906a bars recovery against a homestead that would pass to such an heir, and rule 7108.3.2.C applies the same test with a $250,000.00 fair market value condition and a table setting out whose income counts in the heir's household.
An heir whose help kept the decedent out of long-term care: 33 V.S.A. § 1906a covers an heir who contributed significantly, in money or otherwise, so the decedent could delay or avoid nursing home placement, and rule 7108.3.2.C.3.b asks that the services or financial support have avoided long-term care or delayed it by at least six months.
Undue hardship on an income-producing asset: rule 7108.3.1.B.1 waives recovery where the asset can be reached only by selling it and the sale would end the sole income of the decedent's spouse, parents, children or siblings, or would qualify them for public assistance.
Holders of a qualified long-term care partnership policy: rule 7108.3.5 exempts assets equal to the insurance benefits paid under the policy without an heir having to request it, and 33 V.S.A. § 1908a establishes the Vermont Partnership for Long-Term Care behind it.
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Property that may be exempt
- Anything outside the probate estate. Rule 7108.3.3 defines the estate the Department can reach as all real and personal property and other assets listed on an inventory filed in the probate court, so property that never reaches that inventory is outside the definition. Read this alongside the scope caveat below, because a revocable living trust is the one route that does not behave the way that sentence suggests.
- Medicaid spending that is not long-term care. Rule 7108.3 limits recovery to nursing facility services, home-and-community-based waiver services, and the hospital and prescription drug services paid while the person lived in a nursing facility or was enrolled in a waiver program.
- Care received before age 55, and any death before January 1, 1994. Rule 7108.3 conditions recovery both on the person being 55 or older when Medicaid paid for the long-term care and on a death on or after that date.
- An estate whose probate inventory holds only personal property worth $2,000.00 or less, such as home furnishings, apparel, personal effects and household goods (rule 7108.3.1.C).
- Assets that already cost the person coverage. Rule 7108.3.1.C says the Department will not seek to recover assets for which it imposed a penalty period of ineligibility for Medicaid coverage of long-term care because those assets were transferred.
- The homestead, in whole or in part, when an heir meets the undue hardship conditions of rule 7108.3.2 and 33 V.S.A. § 1906a. Where those conditions are met, rule 7108.3.2.C.1 exempts the first $250,000.00 of the homestead's fair market value and leaves only equity value above $250,000.00 subject to recovery. With two or more heirs the full value is exempt only if every heir qualifies; otherwise the share belonging to each heir who does not qualify stays subject to recovery.
- An income-producing asset that can be reached only by selling it, where the sale would take away the sole source of income of the decedent's spouse, parents, children or siblings, or would leave them qualifying for public assistance such as Reach Up, SSI or AABD, general or emergency assistance, or another state's TANF benefits (rule 7108.3.1.B.1).
- An amount equal to the benefits paid under a qualified State long-term care insurance partnership policy. Rule 7108.3.5 exempts that amount whether or not an heir asks for it, and 33 V.S.A. § 1908a(f)(2) defines the Program's Medicaid extended coverage as eligibility without regard to estate recovery and liens, with the single exception of assistance that was incorrectly paid.
- The costs and expenses of administration, and the funeral, burial, headstone and perpetual care expenses up to $3,800.00 exclusive of governmental payments, which 14 V.S.A. § 1205(a) pays before general claims.
Undue-hardship waiver
Vermont can waive recovery when it would cause an undue hardship for the heirs. Contact Department of Vermont Health Access, Coordination of Benefits Unit at 802-241-9343 to request the waiver and confirm deadlines.
Hardship waiver informationFrequently asked questions
Who is protected from Medicaid estate recovery in Vermont?
What does Vermont Medicaid recover after death?
Can I apply for an undue-hardship waiver in Vermont?
Who handles Medicaid estate recovery in Vermont?
Agency and statute sourcesOfficial references used for this page
- 33 V.S.A. § 1906a, the Vermont statute limiting Medicaid recovery against a homestead: no recovery of medical expenses under the Medicaid subchapter against a homestead that would pass to one or more lineal heirs or siblings of the decedent who either have income below 300 percent of the federal poverty level or who contributed significantly, monetarily or otherwise, so the decedent could delay or avoid nursing home placement; and the contingent State general fund payment of recoveries due to the U.S. Department of Health and Human Services on homesteads valued between a federal maximum and $125,000.00 where the probate estate was opened after June 30, 2000. Enactment line read at the section: (Added 1999, No. 62, § 125; amended 1999, No. 152 (Adj. Sess.), § 117a, eff. May 29, 2000; 2013, No. 131 (Adj. Sess.), § 42, eff. May 20, 2014.)
- Department of Vermont Health Access, Medicaid Covered Services Rules (7100-7700), the adopted rule collection that carries Vermont's operating estate recovery rule at 7108.3 and its subparts 7108.3.1 Exemptions from Estate Recovery, 7108.3.2 Hardship Exemptions for Homesteads, 7108.3.3 Adjusting Claims Against Homesteads, 7108.3.4 Retroactive Homestead Exemptions, and 7108.3.5 Long-Term Care Insurance Partnership Exemption, each stamped (02/01/2003, 02-33). This is the source of the age 55 limit, the January 1, 1994 death date, the long-term care service list, the probate-inventory estate definition, the $2,000.00 personal-property floor, the $250,000.00 homestead fair market value condition and the 300 percent federal poverty level income test. The filename carries the 06/01/25 issue date and changes when the rules are reissued; the stable landing page that always links the current file is https://humanservices.vermont.gov/rules-policies/health-care-rules/health-care-administrative-rules-hcar under the heading Current Medicaid Covered Services (7100-7700).
- Department of Vermont Health Access, Estate Recovery (the agency's public estate recovery page: the homestead hardship conditions restated from rule 7108.3.2, the three request forms DVHA 13 Homestead Exemption Request Form, DVHA 14 Caregiver Exemption Request Form and DVHA 15 Household Income Below 300 percent of the Federal Poverty Level Exemption Request Form, the link out to the Health Care Administrative Rules, the mailing address at the Coordination of Benefits Unit, 280 State Drive, NOB 1 South, Waterbury, VT 05671-4020, and the contact phone 802-241-9343). Note the page mis-states one clause of the rule it reproduces and cites a nonexistent rule 7018.3; the adopted rule text governs.
- Department of Vermont Health Access, Standard Operating Procedure, Estate Recovery, issuance date September 21, 2023 (the procedural detail used here: that Medicaid Covered Services Rule 7108 is what enforces the Department's right to seek recovery, that the process starts from Tax Notice of Estate forms received from probate, that the Attorney General's office files the claim through the Odyssey online court system and sends denial letters with appeal rights, the four-month post-publication claim window and the one-year fallback where no notice was published, and the rehabilitation carve-out for stays under 30 days). Its internal probate notes are not used here: its "Small Estates - Assets of no more than $30,000" line is stale against 14 V.S.A. § 1901.
- 14 V.S.A. § 1203, the Vermont creditor-claim bar. Subsection (a) excepts claims filed by the State on behalf of Vermont Medicaid from the general bar and otherwise runs four months from the first publication of notice to creditors, or one year from death where notice was never published. Subsection (d) is the Medicaid rule used here: claims filed by the State on behalf of Vermont Medicaid must be presented within four months after the date of first publication of notice to creditors if notice is given in compliance with the Rules of Probate Procedure, regardless of the date of the decedent's death or when the executor or administrator opens the estate. Enactment line read at the section: (Added 1975, No. 240 (Adj. Sess.), § 7; ... amended 2023, No. 113 (Adj. Sess.), § E.307.1, eff. July 1, 2024.)
- 14 V.S.A. § 1205, the order in which a Vermont executor or administrator pays claims when the applicable assets are insufficient: costs and expenses of administration; reasonable funeral, burial, and headstone expenses and perpetual care not to exceed $3,800.00 exclusive of governmental payments together with reasonable and necessary medical and hospital expenses of the last illness; wages earned within three months before death, not to exceed $300.00 per claimant; then all other claims. Subsection (b) gives no preference within a class and prorates where the assets fall short. Enactment line read at the section: (Added 1975, No. 240 (Adj. Sess.), § 7; amended 2003, No. 128 (Adj. Sess.), § 1, eff. May 24, 2004.)
- 33 V.S.A. § 1908a, the Vermont Partnership for Long-Term Care. Subsection (f)(2) is the provision used here: Medicaid extended coverage means eligibility for medical assistance without regard to the resource requirements of the Medicaid program and without regard to the recovery of medical assistance from the estates of individuals and the imposition of liens pursuant to the requirements of the Medicaid program, except that nothing in the section prevents a lien or recovery on account of medical assistance incorrectly paid. Enactment line read at the section: (Added 2003, No. 124 (Adj. Sess.), § 4; amended 2005, No. 174 (Adj. Sess.), § 98; 2009, No. 156 (Adj. Sess.), § I.50.)
- 14A V.S.A. § 505, the Vermont Trust Code provision on a creditor's claim against the settlor. Subdivision (a)(3) is the basis of the scope caveat recorded here: after the death of a settlor, and subject to the settlor's right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the settlor's death is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains, and statutory allowances to a surviving spouse and children, to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses, and allowances. Enactment line read at the section: (Added 2009, No. 20, § 1; amended 2025, No. 7, § 1, eff. April 24, 2025.)
- 27 V.S.A. § 654, execution and recording of an enhanced life estate deed under the Vermont Enhanced Life Estate Deed Act, 27 V.S.A. chapter 6. Subsection (a) says a validly executed and recorded enhanced life estate deed does not affect the ownership rights of the grantor or the grantor's creditors, transfer any present interest to the grantee, or subject the grantor's property to process from the grantee's creditors; subsection (c) vests the stated interest in the grantee on the grantor's death, subject to encumbrances of record. The section creates no liability of the transferred property for claims against the grantor's estate, which is why an enhanced life estate deed is recorded here as passing outside the probate inventory. Enactment line read at the section: (Added 2019, No. 145 (Adj. Sess.), § 1, eff. July 13, 2020; amended 2021, No. 179 (Adj. Sess.), § 1, eff. January 1, 2022.)
- 42 U.S.C. 1396p, the federal Medicaid estate recovery baseline: the age 55 rule and the covered service list at subsection (b)(1)(B), the surviving spouse and child bars and the sibling and caregiver-child lien protections at subsection (b)(2), the undue hardship waiver at subsection (b)(3), the mandatory probate-estate definition at subsection (b)(4)(A), and the optional wider definition at subsection (b)(4)(B) covering joint tenancy, tenancy in common, survivorship, life estate and living trust, which Vermont did NOT adopt.
Information current as of August 4, 2026
Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in Vermont can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.