Keenan Briefings

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Update on California's Statewide Long-Term Care Program | Keenan

August 16, 2023

Since the passage of AB 567 (Chapter 746, Statutes of 2019), we have followed the work of California’s Long Term Care Insurance Task Force (Task Force) with keen interest. As detailed in our April 2023 briefing, the Task Force recommended establishing a Long-Term Care Program (Program) that would include a statewide comprehensive benefit, funded by a progressive payroll tax split between employees and employers. That payroll tax burden could be lessened by allowing individuals who already have long-term care insurance coverage to opt out of the state program and payroll tax, but the ability to do so could be time-limited. The Task Force seems to strongly favor an opt-out deadline that will pre-date the enactment of the Program. Put another way, if the recommendations are adopted, by the time legislation is enacted, it may be too late for an employer to put in place a benefit that allows it to limit the payroll tax burden.

Legislation to enact the program has not yet been drafted. Right now, the Actuarial Subcommittee of the Task Force is working on an Actuarial Report, which will provide a more detailed analysis of certain choices regarding benefit eligibility age and vesting criteria, portability and divesting criteria, benefit maximums and elimination periods, as well as revenue sources, contribution limits, investment strategy and other program design considerations. One of the most important topics that the Actuarial Report will discuss is the differing impacts of different opt-out dates.

As of now, the timeline for enactment seems to be as follows:

September 14, 2023

Last day for California legislature to pass bills

September 21, 2023

Task Force Meeting

October 3, 2023

Actuarial Subcommittee Meeting—Draft Actuarial Update and Input

October 13, 2023

Actuarial Subcommittee feedback on draft due

October 14, 2023

Last day for Governor to sign or veto bills passed by the Legislature on or before Sept. 14 and in his possession after Sept. 14

November 2, 2023

Presentation of Draft Actuarial Report to Task Force

November 14, 2023

Task Force Feedback on Draft Actuarial Report due

December 14, 2023

Presentation of Final Actuarial Report to Task Force

January 1, 2024

  • Presentation of Final Actuarial Report to Legislature
  • Statutes enacted in 2023 take effect
  • Potential deadline for obtaining long-term care coverage that qualifies for payroll tax opt-out

January 3, 2024

Legislature reconvenes

January 1, 2025

Target effective date for the Program

We will continue to update employers on the work of the Task Force as it nears conclusion and hands its work over to the Legislature. Meantime, if you have questions about enacting a Long-Term Care insurance benefit option in your workplace, please contact your Keenan employee benefits consultant.

Keenan is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities, and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.