The Partnership benefit is tied to a qualifying policy
The regulation says that if the Texas Long-Term Care Partnership Program were discontinued, people who bought a Partnership policy before discontinuation remain eligible for the dollar-for-dollar resource exclusion. That statutory treatment supports describing the program as available under its current rule, while policy qualification still matters (1 TAC section 358.355).
Partnership value: each dollar of benefits paid under a qualifying Texas Partnership policy can generate one dollar of Medicaid resource disregard. Ask the insurer and adviser to confirm that a specific policy is qualified before treating it as a Medicaid planning tool (
1 TAC section 358.355).
Filing and free-look protections matter at purchase
Texas requires insurers to file each Partnership policy or certificate for prior approval, including the Partnership insurer certification form. The filing requirement is set out in 28 TAC section 3.3873 (28 TAC section 3.3873).
Texas's required outline-of-coverage language must state that the buyer may return the policy within 30 days, or longer if the policy provides, for a full premium refund. Use the free-look period to check benefits, exclusions, inflation protection, elimination periods, and the policy's Partnership status (28 TAC section 3.3832).
Insurance is one funding layer, not an eligibility shortcut
A Partnership disregard can matter when a policyholder later applies for Medicaid, but income, medical eligibility, care need, and other Medicaid rules still apply. Texas's $2,982 individual special income limit is a separate 2026 Medicaid rule for the relevant institutional and waiver pathways (HHSC Appendix XII).
Compare Florida's long-term-care-insurance page, then see Traditional LTC Insurance. Review a current illustration and the actual policy form with a qualified insurance professional before purchase.
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).
Texas state incentive: Texas has no state income tax and offers no separate credit or deduction for LTC insurance premiums — only the federal incentives above apply (
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.
