Employee Benefits Compliance, State-Specific Information

Mandatory Long-Term Care Coverage Spreading to More States Following Washington State LTC Program & Similar California LTC Legislation. Washington Reporting on LTC Begins Oct 1st!

What is Long Term Care Insurance (LTC)?

Today, Medicare does not cover LTC. As a result, private health plans generally do not either. Most Group Health Plans (GHP) provide for in-hospital care, doctor visits and preventive care needs only. The average monthly cost for LTC or nursing home care is about $5,000, and rising. It is commonly forgotten that even the young may need LTC for injuries and disabilities impacting their ability to do basic life activities, although the aging population is destined to need LTC naturally as they age in many cases.

To address this financial burden caused by the lack of sufficient LTC coverage, states are beginning to consider and implement mandatory LTC coverage via a state-run fund. This process is similar to the one that already exists in many states for paid family leave state funds (e.g., California Paid Family Leave takes a percentage of taxation from employees paychecks to fund state family leave programs). GHPs may opt-out of the state program if purchasing a private LTC policy which often provides richer benefits,

States currently considering LTC fund legislation include (in order of when such legislation could become law and effective based on task force recommendations): Washington (became effective 2023) [see the prior Leavitt Group article Calling all Washington Employers and Employees: Employers will begin Collecting Washington Employee Long Term Care Premiums Starting July 1], California, New York, Colorado, Oregon, Utah, Pennsylvania, Hawaii, Michigan, Minnesota, North Carolina and Illinois.

Washington Cares Act

The WA Cares Fund is a state-run, long-term-care insurance program requiring employers to pay premiums through a mandatory payroll deduction. Employers were required to begin deducting the premiums tax on July 1, 2023, unless an employee demonstrated exemption. There was a limited window of time for employers and individuals to obtain their own private policy and avoid the state taxation of $.58 for every $100 earned. Other key elements include:

  • Employers are not required to contribute to employee premiums unless they failed to withhold premiums from employee wages.
  • Employers may not deduct premiums retroactively.
  • Employers must pay the missed premiums during regular quarterly reporting.
  • Benefits are not available until 2025.
  • Only paid out to  current Washington residents, even if a former resident paid into the fund.

Quarterly Reporting for Washington Cares Fund Starts October 1, 2023

Beginning October 1, 2023, employers who are collecting the 0.58% tax on gross wages for Washington Cares Fund premiums must begin reporting these withholdings and remitting the premiums. Along with the mandate comes state reporting. This reporting is part of the WA Paid Family and Medical Leave reporting. For full details on the WA Cares Act Fund, see the WACaresFund.wa.gov/employers. If an employer is exempt due to living outside of WA; spouse of active-duty military; non-immigrant work visa; or a veteran with a 70% service-connected disability or higher, see the exemption page for more details. It is now too late to apply to opt-out of the WA Cares Fund as the brief few months has passed.

California Assembly Bill 567 Long Term Care Fund Legislation

California Assembly Bill (AB) 567 was first introduced in January 2023 and is considering five potential pathways; all of which are being worked through by a task force, hoping to avoid challenges experienced by the WA Care Fund. See The Feasibility Report commissioned by the CA Department of Insurance for details on the five options. Task force recommendations include:

  1. Support benefits allowing drawing from the PTC fund $36,000 over two years for services like caregiver support, adult day care, meal delivery, transportation, durable medical equipment, and minor home modifications.
  2. Targeted benefits  provides $110,400 over two years covering the same services as the first option, plus home care and residential care facility benefits.
  3. Comprehensive benefits of $36,000 over a single year with the same coverage as option two.
    • This recommendation is  inspired by the WA Cares Fund design with some updates.
  4. Comprehensive benefits of $81,000 over 18 months for services covered in option three, with additional care in a skilled nursing facility.
  5. Comprehensive benefits amounting to $144,000 over two years, covering the same services as in option four.

The WA Cares Fund allows for opt-out if  employees obtain sufficient private LTC policies within a brief period of time prior to the start of the LTC program taxation paying into the state fund . The CA AB 567 may not have an annual opt-out at all; meaning employers and employees will be forced to take the additional taxation for a state-run program if missing the narrow window that the state may offer the opt-out period.


Whatever the outcome  in California (the next state likely to effectuate a LTC mandate) or other states, WA presented not only a roadmap, but one that highlighted troubled waters from inception. As a result, states are being more careful in the considerations for such programs. It is a good time nevertheless to begin having conversations with your Leavitt Group Trusted Advisor about LTC in order to be ahead of any potential mandates with brief opt-out windows to obtain individual or group health plan private LTC policies.