Committee hears walkthrough of H-120, which would direct study of a Vermont long-term care trust fund

The House Health and Welfare Committee on 2025-10-12 heard a walkthrough of H-120, a bill that would direct the Secretary of Administration to study and design a long-term care trust fund and return a written report to policy committees by January. Katie McGlenn of the Office of Legislative Council told the panel the bill "doesn't create a trust fund, but it asks the secretary of the administration to come up with a plan" and outlines items the study should address.

The nut graf: supporters and committee members said the study is intended to examine funding and design options — including whether the structure would resemble a social-insurance model — and to provide concrete legislative language if a fund appears viable. Representative Iacovone, the bill sponsor, described the historical context and policy goals, saying the proposal seeks to spread the cost of long-term care so families are not forced to "spend down" into Medicaid and lose assets.

Committee members and witnesses discussed specific design questions that appear in H-120's text. The bill asks the Secretary to study a trust fund based on a social-insurance model, a funding plan starting 07/01/2026 with a minimum three-year collection period before benefits would begin, collection from Vermont residents with taxable income over 150% of the federal poverty level, creation of a governing committee to administer the fund, portability of benefits for people who leave Vermont, the possibility of vesting after two years of contributions, and the transfer of funds or resources to Medicaid for use in long-term care services. McGlenn read language that the Secretary "shall submit a written report on its findings to the policy committees, and the report shall include any necessary proposed legislation to implement the creation of the fund." The bill text sets an effective date of 07/01/2025.

Discussion at the meeting ranged from technical questions about which office should run the study to policy options for funding. Several members asked that the treasurer's office and tax department be consulted about voluntary versus mandatory funding mechanisms and about existing state law that can limit Medicaid recapture. Representative Iacovone recalled a prior, similar effort in the 1990s that modeled contributions on Social Security and said the earlier work had broad support from nursing homes and home- and community-based providers. He warned against voluntary-only designs, citing adverse selection: "You either pay through broad based general taxes or, a diminution of other essential government services ... Pay me now or pay me later," he said.

Committee members asked staff to gather background information on two specific gaps mentioned in testimony: (1) revocable trusts and life-estate transfers that currently limit Medicaid recoupment in Vermont and (2) how long-term-care insurance and federal tax rules have affected asset preservation. Members also signaled interest in having the treasurer's office weigh in on plan design and on possible administrative requirements for tracking contributions and portability.

The committee did not take a vote on H-120 at the hearing. Members said they expect follow-up briefings, including consultation with the Treasurer and the tax department, and requested background materials on the revocable-trust and life-estate issues raised in discussion.

The committee moved on to other pending items after the H-120 walkthrough; members said they would return to H-120 for additional testimony and to discuss the written study plan before advancing any bill text to the floor.