State Funded LTC Programs

Last week, I spoke with Jen Wagoner (my counterpart from the west coast) about state-sponsored long term care programs and pending legislation.

If you did not catch our conversation, take a few minutes to check it out.

For additional LTC Coffee Break episodes, you should go to the LTCCB Channel.

Remember, LTC Coffee Break is available on demand exclusively LTCcoffeebreak.com.

We discussed the impact that the Washington state CARES Fund has on a national scale.

You might be surprised to know that there are 12 other states considering a Washington style state-sponsored LTC insurance fund. The 3 that are anticipated to be the closed to launching are (in alphabetical order) California, New York, and Pennsylvania.

From what we have been able to determine, all programs are tax supported and provide an “opt-out” provision. Simply, if you own a long term care insurance policy, you can opt-out of paying the tax.

The tax to fund the programs all vary in how they are to be administered. Some are payroll tax while others are income taxes. And, the tax rate is not determined. What we have seen thus far is that there is a trending toward the 0.58% that Washington state approved.

The LTC benefits that these programs generate appear to be small in nature. Washington state is $36,500 and the others that we have seen are in that same ballpark. California has several options under consideration which include higher amounts.

Speaking of benefits … there are two distinct benefits approaches that we have seen for benefit payment/limits. Some states are electing for daily benefit limits ($100 a day for example) versus a monthly benefit. And, how they intend to handle inflation is wide-ranging as well.

Here is what we do know – Washington state has delayed their launch until July of 2023. New York and Pennsylvania are rumored to be the closest to a bill going to vote in their respective state houses. And, California’s task for has an end-of-year deadline for a recommendation loom.

What we do not know is the specifics of each state’s program AND that it appears that the opt-out provisions will not be as industry crippling as the Washington State CARES Fund when implemented.

BUT, some of the opt-out scenarios effectively could back you in the corner and require you to pay the tax if an individual policy is not in place when the legislation is passed.

The clock is ticking and if we learned one thing from the Washington state implementation, the idea of paying another tax will motivate people to buy insurance.

Pay attention to how things evolve – there will be vast populations impacted by these LTC programs.

As always, thanks for taking time for me.

You can contact me at kevin.fisher@oneamerica.com or you can call me at (678) 512-9627.

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For questions about the OneAmerica Consumer Survey, LTC product solutions from OneAmerica, or would like help developing an active case, please contact my internal Justin Fox at (844) 658-3725 or via email at justinfox.isp@oneamerica.com