Texas Long-Term Care Partnership Program
Protect your life's savings from long-term care expenses with a State-Approved Partnership Policy. Learn how dollar-for-dollar Medicaid asset protection works, age-based inflation requirements, and eligibility rules in Texas.
Watch: Carolyn Olson, CLTC®, LTCCP®, explains how Partnership policies protect your savings.
What is the Texas Long-Term Care Partnership Program?
The Texas Long-Term Care Partnership Program is a partnership program between Medicaid and private long-term care insurers designed to encourage individuals to purchase private long-term care insurance. Texas long-term care partnership policies are tax-qualified (a portion of premiums paid may be claimed as a tax deduction) under federal law; provide policyholders with inflation protection; and most importantly, provide dollar-for-dollar asset protection in the event the policyholder needs to apply for long-term care Medicaid assistance. For every dollar that a Texas long-term care partnership policy pays out in benefits, a dollar of assets can be protected from Medicaid spend-down requirements.
Texas Long-Term Care Partnership Mandatory Inflation Rules
To qualify for dollar-for-dollar Medicaid Asset Protection under Senate Bill 22 and 28 TAC § 3.3872, a Texas Long-Term Care Partnership policy must satisfy age-tiered inflation protection rules established by the Texas Department of Insurance (TDI).
| Applicant Issue Age | Mandatory TDI Inflation Protection Rule | Does 1% Compound Qualify? |
|---|---|---|
| Under Age 61 | Mandatory automatic annual compound inflation. Insurers must offer 5% compound first, but applicants may elect 1% to 4% compound or CPI-U growth in writing. Must be retained until age 61 or claim status. | Yes (If 5% is declined in writing) |
| Age 61 to 75 | Mandatory inflation protection (1% to 5% simple or compound, or CPI-U). Must be retained until attaining age 76 or entering claim status. | Yes |
| Age 76 & Over | Optional. Insurers must offer inflation protection during application (28 TAC § 3.3820), but purchase and retention are discretionary. | Yes |
What happens to Partnership qualification status if inflation growth stops at age 76 in Texas?
Under 28 TAC § 3.3872(a)(2)(A)(iv), a policyholder who reaches age 76 has the statutory right to request an amendment to freeze or remove further automatic inflation increases. If inflation growth halts or is capped at age 76:
- 100% Retained Partnership Status: The policy does not lose its certification and remains a fully qualified Texas Long-Term Care Partnership policy under TDI and HHSC rules.
- Preserved Asset Disregard: All dollar-for-dollar Medicaid asset protection earned prior to age 76—and any benefit payouts disbursed after age 76—remains fully active.
- Permanent Estate Recovery Exemption: Assets protected through policy benefit payouts remain permanently exempt from claims by the Texas Medicaid Estate Recovery Program (MERP).
- Stabilized Benefit Pool: Daily, monthly, and lifetime maximum benefit pools freeze at the dollar amounts attained when the inflation rider was capped.
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How Asset Disregard & Reciprocity Work in Texas
How does the Texas Dollar-for-Dollar Asset Protection work?
For every dollar your qualified Texas Partnership policy pays out in long-term care benefits, Texas Medicaid disregards one dollar of your personal assets if you ever apply for Medicaid. This allows you to shield savings above the standard Medicaid asset limit without needing to impoverish yourself.
Does Texas participate in Interstate Reciprocity?
Texas is a member of the National Reciprocity Compact. If you relocate to another participating state, your asset protection earned under your Texas Partnership policy will be honored under the recipient state's Medicaid rules.
Tax-Qualified Status: Federal & State Tax Advantages in Texas
All Texas Long-Term Care Partnership policies are mandatory Tax-Qualified (TQ) contracts under Section 7702B(b) of the Internal Revenue Code. This federal status provides major tax advantages that hybrid life insurance policies cannot match.
1. Tax-Deductible Premiums
Premiums paid for a qualified Partnership policy are treated as medical expenses under IRC Section 213(d). Individual policyholders who itemize deductions may deduct their premiums up to age-based statutory limits. Self-employed business owners can generally deduct 100% of eligible premiums for themselves and their spouses as a self-employed health insurance deduction.
2. 100% Tax-Free Care Benefits
Benefits paid out by a Tax-Qualified Partnership policy for home health care, assisted living, or nursing home facility care are excluded from gross income. Reimbursements received for qualified long-term care services are 100% tax-free under federal law.
3. HSA Premium Payment Eligible
Because Partnership policies meet federal standards, you can utilize tax-free dollars from a Health Savings Account (HSA) to pay for your long-term care insurance premiums up to annual IRS age-based limits, providing immediate pre-tax savings.
Verify Your Texas Partnership Eligibility
Not all Long-Term Care plans sold in Texas carry legal Partnership protection. Request an independent, multi-carrier comparison tailored to your exact age and inflation requirements.
Compare Texas Qualified Partnership Plans
Regulatory & Editorial Disclosure: Information on this page is compiled by Carolyn Olson, CLTC®, LTCCP®, and LTCShop.com from official state insurance statutes, including the Texas Department of Insurance (TDI) and Health and Human Services Commission (HHSC) guidelines