California Long-Term Care Insurance

California's historic Partnership is closed to new sales

DHCS describes the California Partnership as a state program working with selected private insurers and offering Medi-Cal asset protection. But DHCS also states plainly that no Partnership-approved insurance companies are currently selling policies; non-Partnership LTC policies remain available (DHCS, California Partnership for Long-Term Care).

How existing Partnership asset protection works

DHCS says each dollar an eligible Partnership policy pays in benefits allows the policyholder to retain a dollar of assets if later applying for Medi-Cal, describing that feature as lifetime asset protection. The policyholder may still need to apply income toward care (DHCS, Partnership Policy Information).

This can matter even though California reinstated its non-MAGI asset test on January 1, 2026. It does not make the current asset test disappear for people without qualifying protected assets (DHCS ACWDL 26-02).

The program's history is older than the 1990s label suggests

GAO says the long-term-care Partnership demonstration was authorized in 1987 and identifies California as one of four original demonstration states. GAO lists California policies as first available in 1994; 1993 applies to Indiana and New York, not California (GAO-05-1021R).

Compare this closed-to-new-sales California program with Florida's long-term-care-insurance page, and request an insurer-specific illustration before evaluating any currently available non-Partnership policy.

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).

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.