URGENT: PA is moving to state LTC and NY is not far behind!
“If you want something you have never had, you must be willing to do something you have never done”
-Thomas Jefferson
Breaking news updates out of PA!
Pennsylvania (PA) has proposed a state LTC program. The bill was introduced this week (8/22/2022) and is remarkably similar to the Washington Cares Act and contains similar gaps (unlike New York’s proposal). Here are the important headlines:
- Current effective date is 1/1/2023 — an unbelievably short window for employees to obtain private LTC coverage
- Opt out for those with private LTC coverage as of the bill’s effective date — exempt from premium collection (details surrounding what will qualify are not yet known)
- Fund to provide up $100/day up to a $36,500 maximum in lifetime benefits
- Payroll tax of 0.58%
- Any employee 18 years+, working 500+ hours per year in PA, irrespective of resident state
- Must reside in PA to be an eligible beneficiary
- Claim qualification based on three activities of daily living (ADLs)
- Employer must collect payroll tax and remit to PA Department of Revenue
- Collectively bargained groups temporarily exempt, if the agreement takes place within 24 months; once reopened, payroll tax applies
- Self-employed can opt-in
- Provision that PA Department of Revenue (NOT employer) will notify individuals of future payroll tax increase and the rationale of those increases
Gaps:
- No requirement to maintain private LTC coverage after opt out, but rules expected to be developed
- Similar to Washington, the bill requires residency to receive benefits, leaving out-of-state employees paying for a benefit they can never claim
New York is not far behind!
The State of New York is seriously investigating if it should establish a “New York Long Term Care Trust Act” in order to provide limited LTC services to residents of New York state.
Washington State was a pioneer by passing legislation in 2021, offering very limited LTC to their residents, funded by a payroll tax.
New York State is looking to go down a similar path with a potential payroll deduction collected by employers. However, the “premium contribution” amount has not yet been decided. The State of Washington collected a 0.58% payroll tax.
One of the salient points of this proposed legislation is that there will be NO “Fire Sale” like Washington State had happen. The NY current legislation being proposed states that New York will revert to January 1, of the year the legislation is passed, and someone would need to have had a qualifying LTC policy inforce at that point. i.e. if the legislation is passed on June 1, 2023. Residents of New York with a qualifying LTC policy purchased no later the January 1, 2023, would be exempt from the proposed payroll tax.
Don’t let your clients get caught without coverage!!
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– Norman Vincent Peale