What is California AB567

by | Aug 23, 2023

What is the California AB567?

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. These individuals compiled several plans for a new California long-term care tax to impact every working person. Similar actions are being investigated for different areas of the country, with Washington State being the first to implement such a program. This is due to the federal government’s inactivity in helping or encouraging people to purchase coverage for themselves. In other words, these additional taxes will be imposed on the state’s population unless they opt-out of it. With this in mind, it’s crucial to understand what these programs offer and their impact on you.

Potential CA Long-Term Care Programs

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. Workers of California will be required to contribute towards a selected and signed program unless mentioned otherwise in its specific layout. 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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Actuaries are pricing out each program and preparing a report for the Legislature by January 1, 2024. Once this report is received, the Legislature may or may not choose to proceed with legislation to establish a public program. If the Legislature chooses to proceed with a public long-term care program, some, all or none of the recommendations of the Task Force may be adopted.

In a recent communique to all insurance agents, the California Insurance Commissioner said this: 

“… the (California Long-Term Care Insurance) Task Force recommended various possible structures for a public LTC program, including different funding mechanisms. One potential means of funding such a program is by instituting a payroll tax on California employees. The Task Force has recommended that consideration be given to allowing residents who have a qualifying private LTC policy to opt out of the public program, which would mean they would not be subject to a payroll tax. It is possible that only policies purchased prior to a certain date would qualify to allow a resident to opt out of the program.” — California Insurance Commissioner Ricardo Lara, Agent & Broker Alert, August 23rd, 2023