The New York Long Term Care Trust

Today I reached out to my NY State Senator and asked him not to vote for New York Senate Bill S9082.  This bill would create the New York Long Term Care Trust.  I URGE YOU TO CONTACT YOUR STATE SENATOR AND ASK THAT THEY NOT VOTE FOR THIS PROPOSAL. 

IF YOU THINK THAT THIS IS A NEW YORK ISSUE, other states like California, Alaska, Colorado, Hawaii, Oregon, Illinois, Michigan, Minnesota, York, North Carolina, and Utah – are currently considering state-sponsored long-term care programs. The Washington State already has it in place.

New York Senate Bill S9082, would create the New York Long Term Care Trust.
The New York Long Term Care Trust would operate very similarly to New York State Paid Family Leave. Employees who are working would pay a payroll tax in order to receive long-term care benefits when they retire.

The New York Long Term Care Trust Program would provide a benefit of $100 per day for a limit of 365 days, or $36,500 of lifetime benefits. In Washington State, where a similar program was enacted but postponed until 2023, the payroll tax for the Long Term Care Trust Program amounted to $0.58 out of every $100 in wages. Or $290 for someone earning $50,000. In order to receive the benefit, employees must have worked for at least ten years and prove that they need assistance with at least three activities of daily living (such as bathing, eating, dressing, and toileting) in order to be eligible.

Since the Long Term Care Trust Program would be similar to the New York State Paid Family Leave Program, let’s see how New York State Paid Family Leave has done.

In 2018 New York enacted the New York State Paid Family Leave Act. This gives employees paid time off to take care of family members when they are ill. In 2018 the maximum premium that an employee would pay was $85.56.
With so many employees taking off to take care of loved ones, the maximum annual premium jumped to $107.97, a mere 26% increase. However, in 2020, when more people started taking off from work to be with sick family members, premiums increased 82%. In 2021 premiums increased 96% from the year before.

Realize that premiums for this program have jumped almost 500% since they first started in 2018. New York State Paid Family Leave currently covers up to 12 weeks of benefits. It did not always cover that many weeks. In 2019 it only paid for ten weeks of benefits at a maximum of $8,407. That year premiums went up by 82%. In the following year, benefits increased to 12 weeks, at a maximum of 11,659. That year benefits went up by 96%.

Now we want to cover Long Term care costs for $100 per day up to 365 days, or $36,500. If New York State Paid Family Leave increased by almost 500% just to cover almost $12,000 of benefits for 12 weeks, how much will Long Term Care Premiums have to increase to cover $36,500?

All of this assumes that everyone is going to pay the Long Term Care Payroll Tax. The proposal states that people with long-term care policies could file for an exemption from this tax. People who make hundreds of thousands of dollars per year already have this type of coverage and could file for an exemption. That means that the poor and the middle class will have to shoulder the burden for this tax.
Following the inflation patterns seen in Paid Family Leave, a Long Term Care premium of a mere .58 cents per $100 of pay could cost $2.90 per $100 of pay in just three years. Considering we are looking to provide three times the amount of benefits and that only the poor and middle class will be paying this tax, the premium in a few years could be closer to $8.7 per $100.

There is a reason why more than 80 insurance companies dropped out of the Long Term Care Insurance market in the early 2000s; premiums were low, and claims were to high.

Speaking of claims, according to the 2020 Cost of Long-Term Care study, by New York Life, the National Average Cost for a home care aide is $204.96 per day. Thus the Long Term Care Trust benefit of $100 per day, doesn’t even cover the cost of an average home care aide. According to a New York State’s website, the average cost of home health care in New York State in 2011 was $20 per hour. Assuming 40 hours of care per week, this represents average home health care costs throughout the State reach of $114.28 per day. Again the Long Term Care Trust benefit of $100 per day doesn’t even cover the cost of an average home care aide, according to New York State’s own research.

New York has already forced employees to pay for Paid Family Leave, promising the same thing- that premiums would be low. This time with The New York Long Term Care Trust Program, we need to learn from our previous mistakes. If Fortune 500 companies could not stay in the Long Term Care Market due to expenses being higher than premiums, then how does New York Expect to make this work?
New Yorkers already live Paycheck to Paycheck; forcing this program on them and forcing them to pay the double and triple-digit premiums increases that will come- is wrong.