Why a qualified Partnership policy is different
Maryland’s Medicaid recovery regulation says the Department may not seek recovery from an estate to the extent of the value of LTC Partnership policy benefits furnished to the individual up to death. That is a Maryland-specific recovery protection for qualifying Partnership benefits; it does not mean that every long-term-care policy receives the same treatment or that a policy eliminates the need for a Medicaid eligibility analysis (COMAR 10.09.24.15).
The Partnership rules also place specific disclosure duties on carriers. A buyer should retain the policy schedule, certification information, benefit-payment history, inflation-protection terms, and every insurer notice. Those records are useful if the person later applies for Medicaid or an estate representative needs to identify the portion of recovery protected by qualifying benefits (COMAR 31.14.03.08; COMAR 10.09.24.15).
Shopping and planning remain individualized
A long-term-care policy is a contract with eligibility, underwriting, benefit triggers, exclusions, premiums, and inflation provisions that can differ across products. Maryland’s current regulations govern the carrier and required policy standards; they do not make a particular person eligible for Medicaid, waive the 60-month transfer review, or turn a home into a nonrecoverable asset (Maryland long-term-care insurance regulations; Maryland institutionalized-persons manual).
Maryland’s regulations describe Partnership coverage as a product issued or delivered by regulated carriers to Maryland residents. They do not support describing the state program as closed or legacy-only; actual carrier participation and sale availability must be confirmed with the carrier and the Maryland Insurance Administration at the time of purchase (COMAR 31.14.03.05).
Maryland Partnership point: Partnership policies are regulated through the Maryland Insurance Commissioner, require certification and disclosures, and receive a specific estate-recovery protection up to the value of qualifying benefits furnished (
COMAR 31.14.03.05;
COMAR 10.09.24.15).
For the general insurance framework, see Traditional LTC Insurance. Before buying or replacing coverage, obtain the current carrier materials and a Maryland-specific review of the policy’s Partnership status.
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).
Maryland state incentive: Maryland offers a one-time credit equal to 100% of eligible premiums (capped at $500 per insured), plus a separate employer credit of 5% of costs (capped at $5,000 or $100 per covered employee) — on top of 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.
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The
Journey Assessment ranks all ten pillars against your specific situation and
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