In New York, there appears to be a draft plan in the Senate that is similar to the Washington plan, with a tax on earned income giving the taxpayer $36,500 to pay for care and available five years after the plan becomes law. Again, until the legislation is finalized and ratified, it’s difficult to know how it will shake out. In the draft plan there is a proposed exemption if an employee owns long term care insurance prior to January 1st of the year in which the law is enacted. A link to the draft legislation can be found here.

Insurance Market Update:

• There are approximately 8,700,000 employees in New York or more than twice the number in Washington state.
• There are significantly fewer group and individual products and carriers in New York than Washington.
• BuddyIns expects capacity of individual products in New York to be extremely limited, but group products with streamlined underwriting may have more availability.

California continues its push towards a payroll tax model similar to Washington that would fund a minimum long-term care benefit. The California Long Term Care Insurance Task Force provided recommendations regarding the legislation. See the Insurance Market Update below.

The Task Force will recommend options for establishing a statewide long-term care insurance program. A presentation of the draft feasibility report is scheduled for October 6, 2022. A final report is expected to be presented on December 15, 2022.

Early indications are that a proposed tax would be on earned income for W-2 employees. It is unclear yet how an exemption would work if someone owns a qualifying long-term care insurance policy.

Insurance Market Update:

Per the California Long Term Care Insurance Task Force:

• May split the cost of the payroll tax between employer and employee
• May also allow an opt-out provision if the employee has a private LTCi policy
• No firm details on what the California payroll tax exemption will look like

Additional Information – See our CA Update for more information and updates

• There are approximately 16,500,000 employees in California or more than 4 times the number in Washington state.
• It’s important for employees to obtain meaningful LTCi coverage and to start the process before any final state announcements are made. This will help avoid the rush for long term care insurance coverage that we saw in Washington.
• There are slightly fewer group and individual products and carriers in California than in Washington mostly because product approvals from the state take longer. Carriers may accelerate new solutions to market depending on the results of the feasibility report
• BuddyIns expects the capacity of individual products in California to be limited, but group products with streamlined underwriting may have more availability

Known as the Washington Cares Fund, this legislation, signed into law in 2019, provides access to a lifetime benefit amount that can be used on a wide range of long-term services and supports. W-2 workers are expected to begin contributing to the fund in July 2023 with the first benefits available in July 2026.

• Contributions: Washington workers will likely pay $0.58 per $100 of earnings. Most employees will contribute, and employers are responsible for collecting the tax and remitting it to the Washington Cares Fund.
• Benefits: Starting in July 2026, each person who is eligible to receive the benefit can access care costing up to $36,500 (adjusted annually for inflation) over their lifetime.
• Eligibility: To be eligible to receive the benefit, you must meet contribution requirements and need help with at least three activities of daily living.
• State is considering a recertification process for those who chose to opt-out through the purchase of long term care insurance.
• Benefit portability (qualifying for the benefit if an employee moved out of state) is still an outstanding issue.
• Benefit qualifications may change from what was originally adopted.

Insurance Market Update:

• Approximately 480,000 out of the 3,800,000 employees (13%) opted out of the Washington Cares Fund through the purchase of group or individual LTC Insurance or Life Insurance with LTC riders. This was despite most carriers being overwhelmed by demand over a short period of time and exiting the marketplace. These carriers have since returned to the market.
• BuddyIns estimates that more policies were purchased through group solutions, but more premium was purchased from individual products.
• Despite only a limited time to purchase coverage and only in one state, the sales in Washington increased the LTC Insurance marketplace in the entire country by at least 200%. Premiums increased more modestly given the lower average premium per policy.

A proposed bill in Pennsylvania, HB 2779, was introduced on August 22, 2022 and is similar to the WA Cares Act. Obtaining meaningful LTCi coverage is an important conversation that should happen regardless of this legislation.

Highlights of the Pennsylvania House Bill 2779 include:

• Self-employed will be able to opt-in
• Funded through a payroll tax of 0.58%
• Benefit is $100/day up to a $36,500 maximum lifetime benefits
• To qualify for the benefit, the person must be at least 18 years of age and have worked a minimum of 500 hours per year in the state, irrespective of resident state
• Similar to WA, requires residency to receive benefits
• Benefit disbursements could begin on January 1, 2026
• Claim qualification is based on three activities of daily living (ADLs)

There may be an exemption to the long term care state payroll tax but there are few details on what that might look like. It’s important to have a conversation about meaningful coverage regardless of any state payroll tax or exemption.