Is there a California long-term care tax?
I recently spoke with a woman in California who wants her husband to buy long-term care insurance.
I asked, “What prompted you to look into long-term care insurance.”
She replied, “The California Long-Term Care Tax”.
I explained to her that California has not yet passed a “Long-Term Care Tax.” She was surprised by my answer.
Then she asked, “What kind of benefits must my husband buy to be exempt from the California long-term care tax?”
I said, “Since there has not been any law passed to create a public long-term care program, we have no way of knowing how someone might be exempt from a ‘California long-term care tax’ or what kind of long-term care insurance benefits they might need to buy to be exempt from the tax.”
She then asked, “Then why is everyone talking about a California long-term care tax?”
I told her that “everyone is talking about a California long-term care tax” because of the feasibility report published by the California Long-Term Care Insurance Task Force.
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
After another conversation and exchanging some emails, she and her husband decided to apply for a long-term care insurance policy. They applied for a policy with slightly richer benefits than the benefits recommended in the feasibility report written by the Task Force.
They decided to buy a policy, not just because of a possible public LTC program, but because long-term care insurance made sense for their financial situation (i.e., they have enough income and/or assets to protect from the risk of long-term care to justify the cost of owning long-term care insurance.)
When one of your friends, relatives, or co-workers asks you, “Is there a California long-term care tax?”, please send them a link to this page.
Lastly, the #1 question I am asked daily is, “How much does long-term care insurance cost?” You’ve spent a couple of minutes reading this post, so why not take another 60 seconds and answer a few questions in the form below? We’ll email you a detailed long-term care insurance quote within 24 hours.
No name required.
No phone required.
No agent will call.
Curious about how much long-term care insurance costs?
No phone required.
We guarantee your information will never be sold, transferred, or distributed to any other entity for commercial purposes. Click here to read our full privacy statement.