State-managed Long-Term Care (LTC) programs are a focus of many state legislatures, including California. In December 2022, California released the results of an LTC Task Force feasibility study and intends to release an actuarial study in January 2024. While no legislation has been introduced in California yet, employers and employees should be aware of its potential. Considering LTC as a voluntary benefit for employees can be an important value-add for employer-sponsored benefit packages.

On Aug. 23, 2023, the California Department of Insurance (CA DOI) released a statement confirming that, as of the present time, the state has not implemented a new payroll tax to fund a state-mandated Long-Term Care program. Additionally, the CA DOI warns consumers that communications from third parties about the necessity to purchase an individual Long-Term Care policy in the immediate future to avoid a payroll tax due to new requirements is both false and misleading.

Three Distinct Ways To Help Your Dealership Navigate LTC

1. The Human Perspective: Planning for LTC needs is an important component of a sound financial plan.
2. The Employer Perspective: Considering a voluntary benefit offering of LTC Insurance is a relevant benefit decision for a number of reasons. Many organizations have adopted a people-first culture, and end-stage care is a significant concern that employees are facing for themselves and often for their parents.

   Employer-sponsored LTC Insurance can be issued without the employee being subject to underwriting. Underwriting might preclude individuals with adverse health history from obtaining coverage.

   Employer-sponsored Long-Term Care Insurance is often less expensive than individually obtained coverage and is generally portable in the event of a change in employment. Employer-funded LTC Insurance is a low-cost, highly valued incentive that can be a differentiator in attracting and retaining valued employees.

3. The Legislative Perspective: While relatively low in cost, whether funded by the employer or employee, LTC Insurance may help employees and their families avoid a potential new payroll tax and improve their coverage for LTC needs as compared with state-provided benefits. California has established an LTC Task Force to investigate options for designing and implementing a public LTC option.

   At this juncture, the task force has completed its feasibility study. Legislation has yet to be introduced. We expect that we will see a bill introduced at some point in the future. If the state decides to move forward with a public option and if that legislation mirrors other state legislation, it will require a payroll tax and limited exemptions for opting out; however, actual details remain to be determined. No action is required by California employers at this time.

It is imperative to note that while EPIC provides updates on how legislative activity around LTC has transpired in each state as we are aware, in no way does that mean that legislation has passed, nor do we know if, how or when that will happen.

We are following developments with the CA LTC Task Force and any potential legislation. We recommend that you take the time to get educated about this sensitive topic.

If you would like more information, EPIC will provide details to members at no cost.