California Long-Term Care Tax

by | Jun 17, 2023

Is California considering a long-term care tax?

Maybe one day soon. 

What is the California long-term care tax?

Assembly Bill 567 established the Long Term Care Insurance Task Force, simply known as “Task Force,” to assess the implementation and feasibility of a culturally adequate statewide insurance care program. This group has 15 members across government agency representatives and volunteers with expertise in the LTC industry. The Task Force has recommended five plans for a state-wide long-term care program. Included in the recommendations is a possible payroll tax that could affect employees, employers, and the self-employed. Similar programs are being considered in 15 different states, with Washington State being the first to implement such a program. One cause has been the federal government’s inactivity in helping or encouraging people to purchase coverage for themselves. It is crucial to understand what these programs offer and their impact on you.

Recommended CA Long-Term Care Program Designs

There are five possibilities for long-term care programs designed by the Task Force, varying in age groups, funding, and covered services. Each one has certain Long-Term Services & Support (LTSS) benefits for its population, with some having less than others. They’re ranked from lowest to highest in anticipated tax cost, meaning the first is low, with the final being high. If enacted, workers of California could be required to contribute. Due to the above information, review the designs below to learn more about them.

Program 1

The first design for this is Supportive Long-Term Care Benefits, which focuses on building general to specific assistance for people in California. Throughout two years, $36,000 will be towards the state’s adult population over 18 years old. The benefits of this program are caregiver support, adult day care, meal delivery, transportation, durable medical equipment, home assessment, and minor home modifications. However, home and facility care is not covered in this program design. This is the lowest anticipated tax cost plan out of this list.

Program 2

Following the possible designs, the second creates an emphasis on Home Care and Residential Care Facility (RCF) Senior Benefits. Over two years, $110,400 is towards the same benefits as Program 1 with home and facility care in an RCF, but only for those above the age of 65 years old in California. This design won’t have lower-income individuals contribute to its efforts or obtain vesting credits, thereby attempting to limit duplication with Medi-Cal. Although, LTSS benefits from Medi-Cal may be granted to these low earners if qualified.

Program 3

Continuing forward, the third program focuses on Lower-range Comprehensive LTSS Benefits inspired by the WA Cares Fund Act. Over the course of one year, $36,000 will be dedicated to California’s 18+ age population for extensive benefits. Similarly, these covered services are the same as Program 2. However, its age group and allocated time are the only differences.

Program 4

This fourth design looks at Mid-range Comprehensive LTSS Benefits, covering services in Program 3 with an addition of being cared for in a Skilled Nursing Facility (SNF). This plan has $81,000 over 18 months in these benefits for California’s adult population (ages 18+). Keep note of the time and money for this design, as the Task Force is leaning toward this program.

Program 5

The last remaining program revolves around Higher-range Comprehensive LTSS Benefits, which contain the same covered services as Design 4. Although, this option has $144,000 available for two years for California’s 18+ age group. This means that most needs are met but with the highest anticipated tax cost. The Task Force is also leaning toward this design in addition to the fourth program.

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