How New York State’s Controversial Proposed Long-Term Care Plan Could Impact You
Between the aging of baby boomers and increasing life expectancies, there is a growing demand for Long Term Care (“LTC”) throughout the United States. At the same time, we are facing a shortage of skilled workers, increased costs of care, and new regulatory requirements which make it more difficult to secure LTC.
New York State previously proposed legislation which aimed to address the need for additional LTC support for aging New Yorkers. New York State Senate Bill S9082, or the “New York Long Term Care Trust Act” (“NYS LTC”) proposed a state-run LTC program, which would have impacted most working New Yorkers. In light of the recent momentum of statewide LTC programs, NYS may approve its own in the future. Because many recent statewide LTC programs include a small window of opportunity to decline participation, people who might want to opt out of a statewide program should consider their LTC plan now.
Who did S9082 benefit?
If it had been passed, the NYS LTC bill would have benefitted individuals who require assistance with three or more activities of daily living and who have paid the requisite New York State payroll tax for either: (1) three of the six years immediately preceding their application for NYS LTC benefits, or (2) ten total years during their lifetime, but “without an interruption of five or more consecutive years.”
Individuals who were disabled before the age of eighteen would not have been eligible. Unlike Medicaid benefits eligibility, the NYS LTC proposal did not impose any income or resource limits for eligibility.
The NYS LTC program would have paid benefits retroactively to the date a claim was filed. Further, the NYS LTC program provided benefits to any eligible individual, even if they were to receive care outside of New York State. Benefits would have begun five years after the effective date of the law (on January 1st of that year).
What benefit would this program have provided?
New York State Senate Bill S9082, or the “New York Long Term Care Trust Act,” would have initially provided a daily $100 benefit, to be adjusted annually. There would have been a lifetime benefit limit of 365 total payments per person.
How was the proposed program funded?
This bill would have been funded by payroll deductions, beginning on January 1st two years after the law’s adoption. The amount of these deductions was to be the “lowest amount necessary to maintain the actuarial solvency” of the plan, which was estimated to be less than .1% of total wages earned. Because the payroll tax was a small percentage of earned wages, high-earning individuals might have paid more than their eventual benefits would have been worth.
Was there an option to opt out of this program?
This bill would have taken effect immediately if it were signed into law, though some New Yorkers would have had a (time-limited) opportunity to opt out of the law and avoid incurring the payroll tax funding the program. Self-employed individuals would have been able to opt in or out of this program.
Individuals who owned an LTC insurance policy with an effective date of no later than January 1st of the year the law was passed would have been eligible to opt out of the proposed New York State LTC program.
Do any other states have similar laws?
There is similar legislation in at least two other states. The State of Washington’s “WA Cares” plan will begin collecting a payroll tax to fund its similar program in July 2023. Pennsylvania House Bill 2779, or the “Aging and Older Adult Services Act,” is similar to WA Cares and has not yet been passed by the Pennsylvania state legislature. California also created a Long Term Care Insurance Task Force, which presented a Feasibility Report in late 2022 with different suggestions for a statewide California LTC Program. Given the recent popularity of statewide LTC programs, New York is likely to follow suit.
How might a NYS LTC program impact my current estate plan and long-term care plan?
The potential enactment of a NYS LTC program should lead many individuals to consider their own LTC planning now. The majority of statewide LTC bills and legislation across the country have included a very narrow window for individuals with pre-existing LTC insurance policies to opt-out of these LTC programs and their associated payroll taxes.
If you are now, or are likely to be, a high-income earner in the coming years, it might be advisable to consider purchasing a small LTC policy now so that you might retain the ability to opt out of a potential New York State LTC program and a payroll tax that could be a percentage of your income.
Regardless of whether a NYS LTC bill is passed, Falcon Rappaport & Berkman is here to help you navigate these changing laws and plan for future LTC. Please contact FRB at (516) 599-0888 to discuss your LTC planning and other elder law needs.
DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.