NY LTC Trust Act improves on WA LTC Trust Act

by | Jul 9, 2022

New York Long-Term Care Trust Act improves on Washington Long-Term Care Trust Act

A bill in the New York Senate has proposed a new long-term care benefit program similar to the program enacted by the state of Washington.
 
The Washington Long-Term Care Trust Act had two big flaws:
  1. In order to be exempt from the payroll deduction, the law imposed a deadline for owning long-term care insurance of November 1, 2021. This wreaked havoc in the insurance industry causing most long-term care insurance companies to stop selling new policies due to excessive demand.
  2. Also, the law did not specifically state that the long-term care insurance policy must be kept in force in order for the exemption to remain.

New York has fixed both of these issues.

Senate Bill S9082 enacts the “New York Long Term Care Trust Act” and establishes the New York Long Term Care Trust Program. This bill will establish the New York Long Term Care Trust Program to provide long-term care benefits for eligible residents. New York residents who have paid the required payroll tax withholdings and are in need of assistance with at least three activities of daily living (ADLs) as determined by the department of health will be eligible for the program benefit of $36,500. A similar program that was enacted in the state of Washington required a payroll tax withholding of .58% for benefits similar to the New York Long Term Care Trust Act.

According to the bill, in order to be exempt from the New York Long Term Care Trust Act, you must own long-term care insurance before January 1st of the year in which the law becomes effective. For example, if the law becomes effective anytime in 2023, you must own long-term care insurance before January 1, 2023.

The bill summary explains the New York Long Term Care Trust Act this way:
“Provides for an optional exemption from the obligation to pay premiums (which exemption is coupled with a disqualification of the right to receive benefits) for individuals who have had in place private long-term care insurance continuously for at least the duration of the calendar year to date prior to the effectiveness of the law, for as long as they maintain those policies.”

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