Wisconsin Long-Term Care Insurance

What a qualifying Partnership policy protects

Wisconsin DHS states that a person with a qualifying Long-Term Care Insurance Partnership policy receives a resource exclusion equal to the benefits received under that policy when Wisconsin Medicaid determines resources. DHS also states that the same benefit-paid amount is excluded when determining what may be recovered from the person's estate if the person later receives Wisconsin Medicaid benefits (Wisconsin DHS Partnership Program).

This is dollar-for-dollar protection tied to actual benefits paid under a qualifying policy, not an exclusion for the face amount of every long-term-care policy. The historical OCI Partnership bulletin states that a policy intended to qualify must be filed with and approved by the commissioner before use and use the state's qualifying-policy certification form; a policyholder should preserve the insurer's qualification documentation (Wisconsin OCI Partnership bulletin).

Insurance does not eliminate every Medicaid issue

Even a qualifying Partnership policy does not remove the need to satisfy Wisconsin's other eligibility rules. The current handbook separately applies asset, income, home-equity, transfer, and long-term-care-service rules, including the 60-month divestment review and $352.06 2026 daily penalty divisor (Wisconsin Medicaid Eligibility Handbook 26-03).

A buyer should ask whether the actual policy is intended to be Partnership-qualified, whether it meets current inflation-protection and other requirements applicable to that buyer, and how the insurer documents paid benefits. Those confirmations are especially important where the future plan anticipates Medicaid eligibility or Wisconsin estate recovery.

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.