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.1
New York State has pending legislation which aims 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"), if passed into law, would establish a state-run LTC program, which would impact most working New Yorkers.2
Who would this bill benefit?
If passed, this bill would benefit individuals who require assistance with three or more activities of daily living and who paid the 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 will not be eligible. Unlike Medicaid benefits eligibility, the NYS LTC bill does not currently impose any income or resource limits for eligibility.
The NYS LTC program would pay benefits retroactively to the date a claim is filed. Further, the NYS LTC program would pay benefits to any eligible individual, even if they will receive care outside of New York State. Benefits would begin to be issued five years after the effective date of the law (on January 1st of that year).
What benefit would this program provide?
New York State Senate Bill S9082, or the "New York Long Term Care Trust Act," would initially provide a daily $100 benefit, to be adjusted annually. There will be a lifetime benefit limit of 365 total payments per person.
How would the program be funded?
This bill would be funded by payroll deductions, beginning on January 1st two years after the law's adoption. The amount of these deductions has not been determined but will constitute the "lowest amount necessary to maintain the actuarial solvency" of the plan, which is currently estimated to be less than .1% of total wages earned. Because the payroll tax will be a small percentage of earned wages, high-earning individuals may pay more than their eventual benefits might be worth.
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 2023.3 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.4 California has also created a Long Term Care Insurance Task Force, which is currently studying different long term care benefits options for individuals in its state.5
Will I be able to opt out of this program?
This bill will "take effect" immediately if it is signed into law, though some New Yorkers will have a (time-limited) opportunity to opt out of the law and avoid incurring the payroll tax funding the program.
Self-employed individuals will be able to opt in or out of this program. Therefore, if you are self-employed, you should begin to consider whether you would choose to opt into the New York State payroll tax and LTC program.
Individuals who own an LTC insurance policy with an effective date that is no later than January 1st of the year the law is passed will be eligible to opt out of the New York State LTC program.
How might this program impact my current estate plan and long term care plan?
The potential enactment of this bill will force many individuals to consider their own LTC planning now. While NYS LTC benefits will be guaranteed to those who pay into the program, when a person chooses to file a claim under the program will be up to the individual.
As you consider your own LTC planning, you may consider using NYS LTC benefits to cover your LTC costs leading up to your potential Medicaid application. 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 (or prior to the end of 2023) so that you can retain the ability to opt out of the New York State LTC program if it is enacted on or after January 1, 2024.
Regardless of whether this bill is passed, Falcon Rappaport & Berkman is here to help you navigate these changing laws and plan for your future LTC needs. Please contact FRB at (516) 599-0888 to discuss your LTC planning and other elder law needs.
Footnotes
1. Cost of Long Term Care by State | Cost of Care Report | Genworth
2. NY State Senate Bill S9082 (nysenate.gov); s9082 (nysenate.gov)
3. WA Cares Fund - Long-Term Care Benefits; Washington State Legislature; ESDWAGOV - Update on Changes to WA Cares
4. 35 P.S. 10225.101 et seq.pdf (pa.gov)
5. Bill Text - AB-567 Long-term care insurance.
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