The Pennsylvania Partnership Program
Pennsylvania established its Long-Term Care Partnership Program through a Medicaid State Plan Amendment effective July 1, 2007. Pennsylvania Bulletin, Partnership State Plan Amendment notice The state consumer guide describes dollar-for-dollar Medicaid asset protection: each dollar paid by a qualifying policy may allow retention of an equivalent additional amount of otherwise-countable resources when applying for MA long-term care. Pennsylvania Insurance Department, LTC Insurance Guide
Current-status caution: Pennsylvania's current consumer guidance describes the Partnership Program in active terms and no closure notice was found in the research, so it appears to remain open; that is an inference from current guidance, not an explicit current-enrollment confirmation.
Pennsylvania Insurance Department, Long-Term Care Insurance
Qualifying-policy details matter
The state guide says a Partnership policy must have been issued on or after February 8, 2006 and include inflation protection. Pennsylvania Insurance Department, LTC Insurance Guide A policy's Partnership status should be confirmed from its actual contract and carrier documentation rather than inferred from a general long-term-care policy label. Pennsylvania Insurance Department, LTC Insurance Guide
Insurance is one part of a funding plan
Partnership asset protection does not replace MA's care, income, transfer, and application requirements. PA DHS, Medicaid Payment for Long-Term Care Compare Florida's long-term-care insurance page and review current policy language, pricing, and state guidance before buying, changing, or surrendering coverage.
Federal Tax Incentives for LTC Insurance Premiums (2026)
Beyond any state-level benefit, a tax-qualified LTC insurance contract (one meeting IRC § 7702B)
carries several federal tax benefits, and a number of the relevant limits increased for 2026:
- Age-based premium deduction: eligible premiums count as a medical expense on
Schedule A (to the extent total unreimbursed medical expenses exceed 7.5% of AGI), up to 2026 limits
of $500 (age 40 or younger), $930 (41–50), $1,860 (51–60), $4,960 (61–70), and $6,200
(over 70) — all increased from 2025 (IRS Revenue Procedure 2025-32, § 4.27).
- Self-employed and business deductions: self-employed individuals can deduct 100%
of eligible premiums up to the same age-based limits without itemizing, and C-corporations can generally
deduct LTC premiums paid for employees as an ordinary business expense under IRC § 162, uncapped by
the individual age-based limits.
- Tax-free benefits: benefits from a tax-qualified contract are generally excluded
from income under IRC § 7702B(d); per-diem/indemnity contracts are tax-free up to $430/day (about
$13,079/month) for 2026 (IRS Revenue Procedure 2025-32, § 4.62).
- HSA-funded premiums: HSA funds can be withdrawn tax-free to pay eligible LTC
premiums, up to the same age-based limits above.
- New for 2026 — penalty-free retirement withdrawals: SECURE 2.0 Act § 334
lets eligible 401(k), 403(b), and governmental 457(b) participants under 59½ withdraw funds to pay
premiums on a certified LTC contract without the usual 10% early-withdrawal penalty, up to the least of
the actual premium paid, 10% of the vested account balance, or a statutory cap of $2,600 for 2026. The
distribution itself is still fully taxable as ordinary income and is not available from IRAs
(IRS Notice 2026-33).
Pennsylvania state incentive: Pennsylvania offers no separate state credit or deduction for LTC insurance premiums beyond the federal incentives above (
Got LTCi, State Tax Incentives).
State tax rules change frequently and the credit/deduction summary above is not exhaustive —
confirm current eligibility, forms, and amounts with your state department of revenue or a tax
professional before relying on any figure here.
Not mutually exclusive. Most families combine two or three funding pillars — this one rarely stands alone.
The
Journey Assessment ranks all ten pillars against your specific situation and
recommends the top three.
