Asking for a Friend - What if I buy a Long-Term Care policy after they enact the payroll tax?

October 17, 2022

Question:

I read your article the other day about State’s adding on a long-term care tax (NY, PA, CA). What does that actually mean and what if I buy a policy after they enact the payroll tax?

Answer:

Kate Welker (AKA our Tax Ninja) says:

  • This means that the state is going to create a state trust program for long term care benefits.

    • Workers will pay into this system through a mandatory payroll deduction. In turn, if they have paid the required contributions, they will be eligible for long term care benefits if they qualify for long term care services.

    • Under the current proposed New York State law, the definition to qualify for services is that an individual requires assistance with three activities of daily living (bathing, dressing, transferring, walking, continence, and eating)

  • According to what we know now, there may be a period to opt out of this payroll deduction if you can prove you currently have a long-term care policy.

  • If you purchase a policy after the deadline imposed by your state's law, you will not be exempt from the payroll deduction.

  • Even if you are covered by your state's plan you may still need an additional policy if the proposed coverage limits are not sufficient for your situation.

We also have a checklist you might be interested in:

What Issues Should I Consider When Purchasing Long-Term Care Insurance?


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