Several States Consider Long-Term Care Tax For Those Who Do Not Own LTC Insurance.

Washington State surprised many residents as they were given limited time to get a qualified Long-Term Care Insurance policy. Without private LTC insurance, people will be taxed 58 cents on every $100 earned. It is still unclear how much other states considering this new tax will charge and if they will give adequate notice for residents to get their own LTC coverage before implementing this new tax.

For those without private LTC insurance, the new LTC payroll tax will provide a state-supplied Lifetime Benefit of $36,500 for long-term care needs. Considering that Washington State has some of the country's highest long-term health care costs, $36,500 does little to protect an individual from long-term care costs. To put this in perspective, Washington State’s average annual cost for Nursing Home care is over $125,000 and is projected to be over $225,000 in 20 years. Even a Home Health Aide for in-home care is almost $80,000 (44 hours per week) and is projected to cost over $140,000 in 20 years.* 

Enrolling in private life insurance with long-term care can protect your assets, give you the freedom to choose the care you prefer, and can protect your family from any burden.

*Long-Term Care Tax Coming to Your State by LTC Insurance Consultants

Currently, seven states are actively considering legislation to address the high cost of long-term care potentially through a long-term care state payroll tax, with two of the most populous states, California and New York, among them. The reason these states are important:

• Both are actively moving toward a legislative solution
• The cost of care in these states is higher than average
• We don’t expect that either state will be able to provide a substantial benefit to pay for long-term care services, which speaks to the greatest challenge in trying to legislate a long-term care benefit: overall cost.

If states follow Washington then you must purchase private LTC coverage prior to the tax being implemented. Once the tax is implemented and you have not enrolled in coverage then you are required to pay this new tax your entire working life. 

California:

Recommendations include multiple plan designs, a payroll tax of up to 3% with no income cap, the possibility of both employer and employee contributions, and a 12-month lookback for private coverage to apply for tax exemption.

Recent public opinion research indicates that Californians, regardless of political party or income level, are worried about the costs of growing older. Two-thirds of respondents in the research said that they are apprehensive about being able to afford long-term care. Sixty-three percent of respondents worry as much about paying for long-term care as they do for their future health care.

Hawaii

NEW! During the 2024 legislative session, HI passed H 2224 which requires the creation of a long-term care plan to achieve policy goals to ensure the availability of LTC services. Watch this state for additional movement in 2025.

• 12 Senate seats up for election in 2024
• All 51 House seats up for election 

New York

NEW! Long term care bill introduced for 2025 legislative session. Both the Senate and Assembly must pass a bill before the Governor can consider it for signature (approval) or veto (rejection). This new bill (S1179) is an identical version of A1499 in the Senate. A bill with a “same as” in the alternate house is an important early sign that a bill could pass both the Senate and Assembly. It indicates that individual lawmakers in each house are supportive of the bill.

According to the state, the committee may amend the bill to satisfy the concerns of committee members, leave it as is, or refer it to another committee for further deliberation. The bill may be reported to the full Senate chamber for consideration if a majority share of the committee members support it.