Long-Term Care · Wisconsin
How Much Long-Term Care Insurance Do You Need in Wisconsin?
A long-term care insurance policy is not one number. It is four: the daily or monthly benefit it pays, the elimination period you cover yourself first, the benefit period that sets the size of the pool, and the inflation protection that decides what those dollars are worth decades from now. Getting "how much do I need?" right means sizing each of the four against a real cost figure — and in Wisconsin there is a published one. Wisconsin's Department of Health Services uses an average nursing home daily rate of $352.06 when it calculates Medicaid divestment penalties, a rate in effect since January 1, 2025. Here is how each of the four numbers works, what Wisconsin law requires your insurer to put in front of you, and what the 2026 tax rules do to the arithmetic.
TL;DR — Key takeaways
- Benefits are triggered by function, not diagnosis: inability to perform at least 2 of 6 activities of daily living for at least 90 days, or severe cognitive impairment (26 U.S.C. § 7702B(c)(2)).
- Wisconsin's published average nursing home daily rate is $352.06, in effect since January 1, 2025 — $128,501.90 over a full year (Wisconsin DHS).
- A 90-day elimination period at that rate is $31,685.40 you pay before the policy pays anything.
- Wisconsin requires insurers to offer inflation protection — 5% compound, CPI-U compound, or ≥80% of charges — and requires your application to record your acceptance or rejection (s. Ins 3.46(11)).
- Partnership policies have their own inflation rules keyed to your age at purchase: compound protection under 61, at least 3% simple at 61–75, none required at 76+ (s. Ins 3.465(5)).
- 2026 deductible premium limits run $500 to $6,200 per person by age, above a 7.5%-of-AGI floor — and Wisconsin separately allows a 100% state subtraction.
- Per-diem benefits above $430/day in 2026 can be taxable if your actual care costs are lower.
- You have 30 days after delivery to return the policy for a full refund (Wis. Stat. § 632.73(2m)).
What has to happen before the policy pays?
Before you size a benefit, it helps to know what actually turns the benefit on — because it is not a diagnosis, and it is not a doctor's opinion that you would be better off with help. Federal tax law defines the trigger for a qualified long-term care insurance contract, and essentially every policy sold today is written to it.
Under 26 U.S.C. § 7702B(c)(2)(A), a chronically ill individual is someone a licensed health care practitioner has certified as either:
- unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity; or
- requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.
The activities themselves are listed in § 7702B(c)(2)(B), and the list is closed — six items, no more:
| Cite | Activity | What it means in a claim file |
|---|---|---|
| (i) | Eating | Getting food from plate to mouth without hands-on help |
| (ii) | Toileting | Getting to and from the toilet and managing clothing and hygiene |
| (iii) | Transferring | Moving in and out of a bed, chair, or wheelchair |
| (iv) | Bathing | Washing in a tub or shower, or by sponge bath |
| (v) | Dressing | Putting on and taking off clothing, including braces or limbs |
| (vi) | Continence | Maintaining control, or managing a catheter or colostomy bag |
The statute adds a floor on which activities a contract may use: "A contract shall not be treated as a qualified long-term care insurance contract unless the determination of whether an individual is a chronically ill individual described in subparagraph (A)(i) takes into account at least 5 of such activities." Source: 26 U.S.C. § 7702B(c)(2)(B).
Why this matters for sizing. Two ADLs is a meaningful level of impairment, and the certification is a clinical one. People often assume the policy starts paying when care becomes inconvenient or expensive; it starts paying when function is gone. That pushes the money you need earlier in a care journey onto savings, and makes the elimination period a more consequential choice than most buyers realize. It also means the cognitive trigger is doing more work than people expect — dementia care frequently qualifies long before anyone has lost two physical ADLs.
The four numbers that define your coverage
Every long-term care policy quote you will ever see is a combination of the same four variables. Change any one and the premium moves; change two in opposite directions and the premium can stay flat while the coverage changes completely. Understanding which lever does what is most of the work.
| Lever | What it sets | What happens if you set it low |
|---|---|---|
| Daily or monthly benefit | The maximum the policy pays per day (or per month) of covered care | Every day of care creates a co-pay you fund from income or savings |
| Elimination period | How many days of care you pay for before benefits begin | A large, concentrated bill at the worst possible moment |
| Benefit period | Combined with the daily benefit, the total pool of dollars available | The pool runs out while care continues |
| Inflation protection | Whether the benefit grows between purchase and claim | A benefit sized for today's costs that meets tomorrow's |
Two structural notes that are easy to miss:
- A monthly benefit is usually more flexible than a daily one. A daily-benefit policy caps each individual day; a monthly-benefit policy caps the month, so a week of heavy care and a week of light care can average out. If you expect home care with variable hours, that difference is real money.
- "Benefit period" is usually a pool, not a calendar. On most modern policies a "three-year" benefit period means a pool equal to three years of the daily maximum. If you draw less than the daily maximum, the pool lasts longer than three years. Confirm which structure a policy uses before comparing two quotes as though they were the same product.
What does care actually cost in Wisconsin?
The honest answer is that it varies enormously by setting, by county, and by how many hours of help you need. But Wisconsin publishes one official figure that makes a useful starting anchor, and it is worth knowing where it comes from.
When someone transfers assets for less than fair market value and then applies for Medicaid long-term care, Wisconsin imposes a divestment penalty period. The Wisconsin Department of Health Services states the formula plainly: "The amount you divested divided by the current average nursing home daily rate = divestment penalty period (in days)." And it names the divisor: "The current rate, which took effect Jan. 1, 2025, is $352.06." The page was last revised January 5, 2026.
That is a state-published average nursing home daily rate, used for a regulatory purpose. It is not a quote for any particular facility, and skilled nursing sits at the expensive end of the care spectrum — assisted living and in-home care generally cost less per day. But as a reference point for "what is the worst realistic daily number," it beats anything you would otherwise have to guess at.
Wisconsin's published average nursing home daily rate, extended out
Source: Wisconsin Department of Health Services, "Medicaid: Divestment" — average nursing home daily rate of $352.06, in effect since January 1, 2025 (page last revised January 5, 2026). The 30-, 90- and 365-day figures are that published daily rate multiplied out; they are arithmetic on a state figure, not a quote for care at any specific facility, and actual costs vary by setting, county, and level of care.
Set that number next to your own income. A household with $5,000 a month of Social Security and pension income facing roughly $10,700 a month of skilled nursing care is short about $5,700 a month. That gap — not the total cost — is what a policy is usually sized to close.
How much is an elimination period really worth?
The elimination period is the lever that looks most painless when you are lowering a long-term care premium, which is exactly why it deserves a hard look. It is a deductible denominated in days.
Using Wisconsin's published $352.06 daily rate, a 90-day elimination period on skilled nursing care is $31,685.40 of care you fund before the policy pays its first dollar. A 30-day elimination period is $10,561.80. The difference between the two, in premium terms, is often modest — and in out-of-pocket terms it is more than $21,000 arriving during a month when a family is already dealing with a hospital discharge and a placement decision.
Three details in the policy language matter more than the number of days:
- Calendar days or service days? Some contracts count every calendar day once you are eligible. Others count only days on which you actually received paid, covered care. If you use home care three days a week, a "90-day" service-day elimination period can take seven months to satisfy.
- Once, or once per claim? A one-time elimination period is satisfied for the life of the policy. A per-claim elimination period restarts if you recover and later need care again.
- Does home care waive it? Some policies waive the elimination period entirely for home care benefits. That is a meaningful feature for anyone whose plan is to stay at home as long as possible.
A practical way to choose. Pick the elimination period whose dollar figure you could write a check for tomorrow without selling anything. If $31,685 is money you would have to liquidate an investment or a property to reach, you are not saving premium — you are financing a forced sale. Our elimination period calculator runs the same arithmetic against the waiting period and daily rate you enter.
What inflation protection must a Wisconsin insurer offer?
This is the lever people most often decline and most often regret, and Wisconsin has written a consumer protection directly into its insurance code because of it.
Wisconsin Administrative Code s. Ins 3.46(11)(a) provides that "No insurer may advertise, market or offer a long-term care policy or certificate unless the insurer has a form approved under s. 631.20, Stats., for the policy or certificate which adds inflation protection no less favorable than one of the following":
- "Benefit levels and maximum benefit amounts increase annually and are annually compounded at a rate of not less than 5%."
- "Benefit levels and maximum benefit amounts increase annually and are annually compounded at a rate equal to the increase in the consumer price index (urban) for the previous year."
- "Coverage of a specified percentage, not less than 80%, of actual or reasonable charges for expenses incurred."
The rule then closes the loopholes around that offer. Paragraph (c) prohibits an insurer or intermediary from contacting anyone to solicit a long-term care sale "unless, at the time of contact, the intermediary or insurer makes a clear and conspicuous offer" of the policy with inflation protection at the benefit level the person selected. Paragraph (d) prohibits accepting an application "unless it is signed by the applicant and the applicant has indicated acceptance or rejection of the inflation protection on the application." And paragraph (f) prohibits advertising a policy as including inflation protection unless it meets one of the three standards above.
The same subsection also requires, at (a)4., that the benefit triggers be spelled out where you can find them: "Activities of daily living and cognitive impairment triggers shall be described in the policy in a separate paragraph and shall be labeled 'Eligibility for the Payment of Benefits.'"
What the three options do over twenty years
The choice looks academic at the point of sale and decisive at the point of claim. Here is the arithmetic on a hypothetical $200 daily benefit held for twenty years.
An illustrative $200 daily benefit after 20 years, by inflation option
Illustrative only — request a quote. The $200 starting daily benefit and the 20-year horizon are hypothetical policy-design choices chosen to show the arithmetic, not quotes, recommendations, or benchmarks, and no carrier figure is implied. Compound values are $200 × (1 + rate)²⁰; simple is $200 × (1 + 20 × rate). The 5% compound and CPI-U compound structures are two of the three options a Wisconsin insurer must have available under s. Ins 3.46(11)(a); a CPI-linked option's actual path depends on future index values and cannot be projected.
The gap between the top and bottom bars — about $331 a day, in a world where Wisconsin's published nursing home rate is already $352.06 — is the entire argument for compound inflation protection at a young buying age. It is also why the premium difference is substantial: you are buying a much larger eventual benefit, not a feature.
How Partnership policies change the inflation rules
Wisconsin participates in the federal Long-Term Care Partnership Program, and a Partnership-qualified policy lets you protect assets from Medicaid spend-down equal to the benefits the policy paid. (We covered how that asset protection works in our earlier guide on what Medicare won't cover in La Crosse County.) What is less well known is that qualifying imposes its own inflation-protection requirements, and they are keyed to your age on the date you buy the policy.
Wisconsin Administrative Code s. Ins 3.465(5) sets three tiers:
| Age at purchase | Cite | What the policy must provide |
|---|---|---|
| Under 61 | (5)(a) | Compound annual inflation protection: a level premium with automatic annual compounded increases of at least 3%, or compounded increases based on changes in the consumer price index, or at least 3% compounded under the conditions in subd. 3. |
| 61 to 75 | (5)(b) | Either the protection required for those under 61, "or an inflation protection feature that provides at least 3% annual simple inflation protection." |
| 76 and older | (5)(c) | The policy "may provide inflation protection with terms no less restrictive than those identified in pars. (a) and (b), but inflation protection is not required." |
Source: Wis. Admin. Code s. Ins 3.465(5)(a), (b) and (c). Partnership qualification also depends on other requirements in s. Ins 3.465 beyond inflation protection.
Two consequences worth planning around. First, if Partnership asset protection matters to you and you are approaching 61, the inflation feature you must buy gets meaningfully cheaper to satisfy after that birthday — but the base premium rises with age, so the two effects pull in opposite directions and the net is a modeling question, not a rule of thumb. Second, buying at 76 or later removes the requirement entirely, which lowers premium and leaves the benefit flat for however long you hold it.
Note the different thresholds. The general Wisconsin offer rule at s. Ins 3.46(11)(a)1. references 5% compound; the Partnership qualification rule at s. Ins 3.465(5)(a)1. references at least 3% compound. They are separate requirements doing separate jobs — one governs what an insurer must offer you, the other governs what a policy must contain to earn Partnership status. A policy can satisfy one and not the other.
What happens if you stop paying?
Long-term care premiums are not contractually fixed the way a level term life premium is, and rate increases on older blocks of business are a well-documented feature of this market. That makes the lapse question a design question, not an afterthought.
Wisconsin Administrative Code s. Ins 3.46(19)(a) requires the offer: "No insurer may advertise, market or offer a long-term care, nursing home only or home health care only policy or certificate unless the insurer offers, at the time of sale, a shortened benefit period nonforfeiture benefit."
A shortened benefit period nonforfeiture benefit converts a lapsed policy into paid-up coverage: the benefit amounts in effect at lapse remain payable for a qualifying claim, but the pool is reduced and the amounts do not increase after that point. You stop paying; you keep something.
If you turn that offer down, you are not left with nothing. Section Ins 3.46(19)(b) provides that "If the offer required to be made under par. (a) is rejected, the insurer shall provide the contingent benefit upon lapse described in this section." The contingent benefit is triggered by cumulative premium increases that exceed thresholds tied to your issue age, combined with a lapse within a defined window after the increase — it is the state's answer to being rate-increased out of a policy you have paid into for twenty years.
What to ask for in writing. Whichever way you elect, get the carrier's illustration of what the shortened benefit period would actually be worth at five, ten, and twenty years of premium payments. "You keep paid-up coverage" is not a number, and the number is what tells you whether the nonforfeiture rider is worth its premium in your case.
What is deductible in 2026?
Premiums for a qualified long-term care insurance contract are treated as medical care expenses — but capped, per person, by attained age. Rev. Proc. 2025-32 sets the 2026 limits.
2026 eligible long-term care premium limits, per person, by attained age
Source: Internal Revenue Service, Rev. Proc. 2025-32, eligible long-term care premiums under § 213(d)(10) for taxable years beginning in 2026, published in Internal Revenue Bulletin 2025-45. The limit is per person; for comparison, the corresponding 2025 limits published in IRS Publication 502 were $480, $900, $1,800, $4,810 and $6,020.
Two qualifications keep most people from actually using the federal deduction. First, it is an itemized medical expense subject to a floor — IRS Publication 502 states that "You can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 7.5% of your AGI." Second, the age-based cap applies to each insured person separately, so a married couple has two limits, not one.
Wisconsin's state-level treatment is different — and broader
Wisconsin allows its own subtraction, and it is not capped by age. Wis. Stat. § 71.05(6)(b)26. applies "For taxable years beginning on or after January 1, 1998," to "an amount paid by a person for a long-term care insurance policy for the person and his or her spouse," and subd. a. sets the amount at "One hundred percent of the amount paid by the person for a long-term care insurance policy."
The statute defines the covered product too: a "long-term care insurance policy" means "a disability insurance policy or certificate advertised, marketed, offered or designed primarily to provide coverage for care that is provided in the insured person's home or in institutional and community-based settings and that is convalescent or custodial care or care for a chronic condition or terminal illness," and expressly excludes a Medicare supplement policy, a Medicare replacement policy, and a continuing care contract.
The subtraction is claimed on Wisconsin Schedule SB, and it is separate from the state's medical care insurance subtraction — the Department of Revenue's medical care insurance guidance expressly says not to include long-term care premiums there, because they have their own line. Neither the federal deduction nor the Wisconsin subtraction is available for premiums you elected to pay with tax-free distributions from a retirement plan.
Not tax advice. Whether either provision reduces your actual tax depends on whether you itemize, your AGI, your filing status, and what else is on the return. Bring the premium notice to your tax preparer rather than assuming the deduction into your affordability math.
Are the benefits taxable when you claim?
Generally no — with one limit that specifically affects indemnity or per-diem policies, the kind that pay a flat daily amount regardless of what you spent.
Under 26 U.S.C. § 7702B(d)(2), the per diem limitation for a period is "an amount equal to the excess (if any) of—(A) the greater of—(i) the dollar amount in effect for such period under paragraph (4), or (ii) the costs incurred for qualified long-term care services provided for the insured for such period, over (B) the aggregate payments received as reimbursements ... for qualified long-term care services provided for the insured during such period."
Paragraph (d)(4) fixes the statutory dollar amount: "The dollar amount in effect under this subsection shall be $175 per day (or the equivalent amount in the case of payments on another periodic basis)." That figure is indexed, and Rev. Proc. 2025-32 sets it at $430 per day for calendar year 2026.
Read the two together and the rule is: your benefit is excludable up to the greater of $430 a day or what your care actually cost. A reimbursement policy that pays your real expenses effectively never exceeds that. A flat $500-a-day indemnity policy paying during a month of $300-a-day home care can produce taxable income on the difference. That is not a reason to avoid indemnity designs — their flexibility is the point — but it is a reason to know which design you bought.
Already own a policy? Read this before switching
Replacing an in-force long-term care policy is one of the few insurance decisions where the old contract can be worth more than the new one purely because of time already served. Wisconsin's rules protect that.
Wisconsin Administrative Code s. Ins 3.46(14) governs replacement of long-term care, nursing home and home health care policies. Paragraph (a) requires the replacing policy to waive preexisting condition exclusions, waiting periods, elimination periods and probationary periods to the extent those were already satisfied under the policy being replaced. Paragraph (b) extends comparable protection to group certificate holders when a group policy is replaced. Paragraph (c) sets out the application and replacement-notice mechanics, including a requirement to notify the existing insurer within five working days. Paragraph (d) requires the agent to list every health insurance policy sold to the applicant, flagging which are in force and which lapsed within the past five years, and to submit that list with the application. Paragraph (f) requires the agent to make "reasonable efforts" to determine whether a purchase or replacement is appropriate.
And whichever policy you end up with, you get a real window to change your mind. Wis. Stat. § 632.73(2m) requires long-term care policies to carry a prominent notice stating "that the policyholder or certificate holder shall have the right to return the policy or certificate within 30 days of its delivery ... and to have the premium refunded to the person who paid the premium if, after examination of the policy or certificate, the policyholder or certificate holder is not satisfied for any reason." Note that this is longer than the general disability-policy rule: § 632.73(1) gives 10 days and says expressly that it "does not apply to medicare supplement policies, medicare replacement policies or long-term care insurance policies subject to sub. (2m)."
Use the thirty days. The delivered policy is the first document that shows you the actual elimination period definition, the actual benefit trigger language under its "Eligibility for the Payment of Benefits" heading, and the actual nonforfeiture election. If any of the three does not match what you were shown at the point of sale, that is what the return right is for.
Sizing a benefit, worked end to end
Here is the whole method applied once. Every dollar figure that is not a cited government number is a hypothetical planning choice.
- Start from a cost anchor. Wisconsin's published average nursing home daily rate is $352.06 — call it about $10,700 a month.
- Subtract the income that would keep arriving. A household with $5,000 a month of Social Security and pension income has a monthly gap of roughly $5,700, or about $187 a day.
- Pick a daily benefit against the gap, not the total. An illustrative $200/day benefit covers that gap today with a small margin. Insuring the full $352.06 would roughly double the premium to cover dollars the household's own income already covers.
- Choose an elimination period you can actually fund. At $352.06/day, 90 days is $31,685.40 and 30 days is $10,561.80. Choose the one you could write a check for without selling an asset.
- Convert the benefit period into a pool. On a pooled-benefit design, an illustrative $200/day with a 3-year benefit period is a pool of roughly $219,000 ($200 × 1,095 days) — which lasts longer than three years if you draw less than the daily maximum.
- Decide inflation protection with the 20-year chart in front of you. Buying at 55, you are insuring against costs in the 2040s and 2050s, not 2026 costs. That is the case for compound protection.
- Check the Partnership tier if asset protection matters. Under 61, s. Ins 3.465(5)(a) requires compound protection to qualify; 61 to 75 allows at least 3% simple; at 76 and older it is not required.
- Only then look at premium — and re-run steps 3 through 6 if it does not fit, rather than accepting a benefit design you did not choose.
Illustrative only — request a quote. The $5,000 monthly income, the $200 daily benefit, and the 3-year benefit period are hypothetical planning figures used to show the method; they are not quotes, recommendations, or benchmarks, and no premium for any policy is quoted or implied here. The $352.06 daily rate is a Wisconsin DHS published figure, in effect since January 1, 2025. Actual premium depends on age, health, underwriting, carrier, and the benefit design you select.
Want this run against your own numbers? We will start from your income, your assets, and the kind of care you would actually want, then model a daily benefit, elimination period, benefit pool, and inflation option against each other — including the case where the honest answer is that self-funding or a hybrid design fits better than a standalone policy. Call or text (608) 799-8434, or schedule a conversation. You can start on your own with our long-term care cost calculator or the elimination period calculator. By calling or texting you consent to be contacted at that number about your request; message and data rates may apply, and you can opt out at any time.
Eight questions before you sign
- Where is the "Eligibility for the Payment of Benefits" paragraph, and does it use both the two-ADL and the cognitive impairment trigger?
- Is the benefit daily or monthly, and if daily, does that fit the care pattern you actually expect?
- Is the benefit period a pool or a calendar? Two "three-year" policies can differ materially on this.
- Does the elimination period count calendar days or service days, is it once per lifetime or once per claim, and is it waived for home care?
- Which inflation option did I accept or reject, and is that election recorded on the application as s. Ins 3.46(11)(d) requires?
- Do I want Partnership qualification, and does this policy meet the s. Ins 3.465(5) inflation tier for my age at purchase?
- Did I take the shortened benefit period nonforfeiture offer, and have I seen what it would be worth at 5, 10, and 20 years?
- If I am replacing a policy, has the new carrier confirmed in writing which waiting and elimination periods carry over under s. Ins 3.46(14)(a)?
Frequently asked questions
How much daily benefit should a long-term care policy in Wisconsin provide?
Start from what care actually costs where you live, then decide how much of that cost you want the policy to carry. Wisconsin publishes one useful anchor: the Department of Health Services uses an average nursing home daily rate of $352.06 as the divisor when it calculates a Medicaid divestment penalty period, a rate in effect since January 1, 2025. Over a full year that is $128,501.90 of care. Most people do not insure the whole number — they pick a daily benefit that closes the gap between their own income and the cost, and plan to pay the rest from savings. Home care and assisted living generally cost less than skilled nursing, so a benefit sized to a nursing home stay covers more days of home care. The right figure depends on your income, your assets, and the kind of care you expect to want, so it is worth modeling rather than guessing.
What is an elimination period on a long-term care policy?
It is the waiting period between the day you become eligible for benefits and the day the policy starts paying — the long-term care equivalent of a deductible, measured in days rather than dollars. A 90-day elimination period means you pay for roughly the first three months of care yourself. Using Wisconsin's published average nursing home daily rate of $352.06, 90 days of skilled nursing care comes to $31,685.40 out of pocket before a dollar of benefit is paid. Elimination periods are the lever that moves premium the most for the least change in coverage, which is exactly why it is worth knowing the dollar figure you are agreeing to absorb. Read the policy language too: some contracts count calendar days and some count only days you actually receive paid care, and those two definitions can be weeks apart in practice.
Does Wisconsin require long-term care insurance to include inflation protection?
It requires the offer, not the purchase. Under Wisconsin Administrative Code s. Ins 3.46(11)(a), no insurer may advertise, market or offer a long-term care policy in Wisconsin unless it has an approved form adding inflation protection no less favorable than one of three options: benefit levels that increase annually and are compounded at a rate of not less than 5%; benefit levels compounded at a rate equal to the increase in the consumer price index (urban) for the previous year; or coverage of a specified percentage, not less than 80%, of actual or reasonable charges incurred. Section Ins 3.46(11)(d) then prohibits an insurer or agent from accepting an application unless the applicant has signed it and indicated acceptance or rejection of the inflation protection. So the decision is yours — but it is a decision you are required to make on the record, not one that can be quietly left out.
Are long-term care insurance premiums tax-deductible in 2026?
Premiums for a qualified long-term care insurance contract count as medical care expenses, but only up to an age-based dollar limit per person, and only to the extent your total medical expenses clear the floor. Rev. Proc. 2025-32 sets the 2026 eligible long-term care premium limits at $500 for attained age 40 or less, $930 for more than 40 but not more than 50, $1,860 for more than 50 but not more than 60, $4,960 for more than 60 but not more than 70, and $6,200 for more than 70. IRS Publication 502 states that you can deduct on Schedule A only the amount of medical and dental expenses that is more than 7.5% of your AGI. Wisconsin is more generous at the state level: Wis. Stat. § 71.05(6)(b)26.a. allows a subtraction of one hundred percent of the amount paid by the person for a long-term care insurance policy covering that person and their spouse, claimed on Schedule SB. Talk to your tax preparer about your own return.
Are long-term care insurance benefits taxable when I receive them?
Benefits from a qualified long-term care insurance contract are generally excluded from income, but periodic per-diem-style payments are excluded only up to a limit. Under 26 U.S.C. § 7702B(d)(2), the per diem limitation for a period is the greater of the statutory dollar amount or the actual costs incurred for qualified long-term care services, reduced by any reimbursements received from other sources. The statutory dollar amount is $175 per day under § 7702B(d)(4), indexed for inflation, and Rev. Proc. 2025-32 sets it at $430 per day for calendar year 2026. The practical consequence: if your policy pays a flat daily amount above $430 and your actual care costs are lower, the excess can be taxable. A reimbursement-style policy that pays actual expenses does not run into this the same way. This is general information, not tax advice — confirm your own situation with a tax professional.
What happens to my long-term care coverage if I stop paying the premium?
That depends on a choice you made when you bought the policy. Wisconsin Administrative Code s. Ins 3.46(19)(a) provides that no insurer may advertise, market or offer a long-term care policy or certificate unless the insurer offers, at the time of sale, a shortened benefit period nonforfeiture benefit. If you bought it, a lapse leaves you with paid-up coverage at a reduced benefit rather than nothing. If you rejected the offer, s. Ins 3.46(19)(b) requires the insurer to provide the contingent benefit upon lapse described in that section instead, which is triggered by cumulative premium increases above thresholds tied to your issue age. Neither is a substitute for keeping the policy in force, but it does mean that in Wisconsin a lapsed long-term care policy is not automatically a total loss. Check your own policy for which option you elected.
Sources
- Office of the Law Revision Counsel. 26 U.S.C. § 7702B — Treatment of Qualified Long-Term Care Insurance (see (c)(2)(A), (c)(2)(B), (d)(2) and (d)(4)). uscode.house.gov
- Internal Revenue Service. Rev. Proc. 2025-32 — 2026 eligible long-term care premium limits under § 213(d)(10) and the 2026 per diem limitation under § 7702B(d)(4), Internal Revenue Bulletin 2025-45. irs.gov
- Internal Revenue Service. Publication 502, Medical and Dental Expenses (long-term care; 7.5%-of-AGI floor; 2025 age-based limits). irs.gov
- Wisconsin Office of the Commissioner of Insurance. Wis. Admin. Code s. Ins 3.46(11) — Sale of long-term care and limited benefit policies; required offer of coverage with inflation protection. docs.legis.wisconsin.gov
- Wisconsin Office of the Commissioner of Insurance. Wis. Admin. Code s. Ins 3.46(14) — Replacement; long-term care, nursing home and home health care policies. docs.legis.wisconsin.gov
- Wisconsin Office of the Commissioner of Insurance. Wis. Admin. Code s. Ins 3.46(19) — Nonforfeiture benefit requirements for long-term care. docs.legis.wisconsin.gov
- Wisconsin Office of the Commissioner of Insurance. Wis. Admin. Code s. Ins 3.465(5) — Inflation protection requirements (qualifying partnership policies). docs.legis.wisconsin.gov
- Wisconsin Legislature. Wis. Stat. § 632.73 — Right to return policy (see (1) and (2m)). docs.legis.wisconsin.gov
- Wisconsin Legislature. Wis. Stat. § 71.05(6)(b)26. — Long-term care insurance subtraction. docs.legis.wisconsin.gov
- Wisconsin Department of Health Services. Medicaid: Divestment — average nursing home daily rate of $352.06, in effect since January 1, 2025; page last revised January 5, 2026. dhs.wisconsin.gov
- Wisconsin Department of Revenue. Individual Income Tax Medical Care Insurance Subtraction (confirming long-term care premiums are excluded from that subtraction and claimed separately). revenue.wi.gov
Important disclosures: This article is for general information only and is not insurance, financial, tax, or legal advice. Long-term care insurance is medically underwritten and state-regulated: benefits, riders, eligibility, issue ages, and pricing vary by carrier, by age, by health, and by state, and are determined by underwriting — nothing here is a quote, an offer of coverage, or a guarantee that any policy will be issued to you. The $200 daily benefit, the 3-year benefit period, the $5,000 monthly household income, and the 20-year projections above are hypothetical planning figures used to show arithmetic; they are illustrative only, are not benchmarks or recommendations, and no premium is quoted anywhere in this article. Request a quote for figures specific to you. The $352.06 average nursing home daily rate is a Wisconsin Department of Health Services figure published for Medicaid divestment penalty calculations and in effect since January 1, 2025; it is not the price of care at any particular facility, and costs vary by setting, county, and level of care. Tax figures reflect Rev. Proc. 2025-32 for 2026 and IRS Publication 502 for the 2025 tax year; federal and Wisconsin tax provisions, indexed limits, and insurance regulations change — consult a tax professional about your own return and an attorney about Medicaid or estate planning. Statutory and regulatory citations reflect the United States Code, the Wisconsin Statutes, and the Wisconsin Administrative Code as in force at the time of writing. Hougom Insurance Agency is a licensed independent insurance agency (NPN 20742808) and does not offer every plan or product available in your area.