Kentucky's Partnership program is publicly described as open
The latest Kentucky consumer guide located for this research is dated 2024. It describes the Long-Term Care Insurance Partnership Program as an incentive for Kentuckians to buy qualifying long-term-care insurance and says purchasers who use Partnership-policy benefits may receive a Medicaid spend-down exemption equal to benefits the policy paid (Kentucky 2024 long-term-care insurance guide).
That public 2024 description uses present-tense consumer-purchase language rather than calling the program closed or legacy-only. Because the source is not a 2026 sales bulletin, availability of a newly issued qualifying policy should be confirmed with the insurer and Kentucky Department of Insurance before purchase (Kentucky 2024 long-term-care insurance guide).
How the asset-disregard concept works
The Department's guide gives an example: if a qualifying Partnership policy paid $200,000 in benefits, $200,000 in assets could be exempt from Medicaid spend-down requirements. The guide's point is dollar-for-dollar resource protection, not a promise that the person will satisfy every other Medicaid requirement (Kentucky 2024 long-term-care insurance guide).
Kentucky's estate-recovery regulation separately says recovery is not made from resources protected from consideration in eligibility because of payment under a long-term-care Partnership insurance policy. That protection is tied to the actual protected resource and does not eliminate recovery or eligibility issues unrelated to the Partnership exclusion (907 KAR 1:585 estate-recovery rule).
Partnership coverage does not erase Kentucky's other LTSS rules
A Partnership policy does not remove the need to meet Kentucky's long-term-care income, resource, level-of-care, and transfer rules. In 2026, the special income standard is $2,982 per month, the individual resource allowance is $2,000, and the transfer review is 60 months for relevant post-2006 transfers (CHFS Volume IVA policy manual; 907 KAR 20:030).
The policy also does not guarantee a particular care setting or waiver slot. Kentucky's HCB waiver has a current waitlist, and nursing-facility Medicaid uses the KLOCS and PASRR workflows, so an insurance decision should be coordinated with a realistic care plan (Kentucky HCB waiver page; Kentucky nursing-facility services).
Questions to ask before buying or relying on a policy
Ask the carrier whether the offered policy is a Kentucky Partnership policy, which benefits and riders qualify, how inflation protection is structured, what benefits have actually been paid, and what proof Kentucky will require. Keep the policy, benefit statements, correspondence, and any state Partnership disclosures with Medicaid-planning records (Kentucky 2024 long-term-care insurance guide; Kentucky Department of Insurance regulations page).
For a future Medicaid application, the resource disregard, estate-recovery protection, QIT need, community-spouse analysis, and care setting are separate questions. Current Kentucky agency policy and the actual policy contract should control rather than a generic example (907 KAR 1:585 estate-recovery rule; CHFS Volume IVA policy manual).
Partnership status: Kentucky's publicly posted 2024 consumer guide describes a Partnership program that can provide dollar-for-dollar Medicaid spend-down protection for benefits paid; confirm new-sale availability and qualification with DOI and the carrier (
Kentucky 2024 long-term-care insurance guide).
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).
Kentucky state incentive: Kentucky's LTC insurance premium deduction was eliminated effective January 1, 2018 (House Bill 487). Only the federal incentives above currently 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.
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