Preparing Your Group Clients for the Coming Wave of Long-Term Care Payroll Taxes


The landscape of long-term care in the United States is on the cusp of significant change. Many states are actively evaluating and implementing legislation to create Long-Term Care (LTC) payroll taxes, following the precedent set by the State of Washington. This shift impacts how long-term care is funded and presents a unique opportunity for brokers and insurance professionals to guide their clients through these changes. In a recent webinar hosted by The VB Shop in collaboration with Trustmark Companies, we delved into the nuances of this emerging legislation and discussed strategies to prepare your clients.

Understanding the Legislative Shift

The trend initiated by Washington is gaining momentum. Washington State’s Long-Term Care Trust Act, effective from January 2022, introduced a payroll tax on employees to fund long-term care benefits. Similar legislative actions are being considered in states like California, New York, and Pennsylvania. These changes indicate a significant shift in long-term care approaches, moving from primarily private funding to a more public, tax-based solution.

Impact on Employers and Employees

The introduction of LTC payroll taxes directly impacts both employers and employees. For employees, a portion of their salary is allocated to a state fund, regardless of whether they will use the services. While the tax is employee-funded, employers bear the administrative burden of compliance. This includes adjustments in payroll systems, employee education, and handling opt-out provisions where applicable.

Preparing for the Change

Educate Your Clients: Knowledge is power. Ensure that your clients are aware of the legislative changes in their state and provide them with updates on how these laws will impact their businesses and employees.

Evaluate Private Insurance Options: In some states, like Washington, employees can opt out of the state program if they have a qualifying private long-term care insurance policy. Discussing these options with your clients can save their employees from unnecessary taxation and provide better coverage.

Assess the Market Opportunities: The changing landscape opens new avenues for offering private LTC insurance products. This is an opportunity to introduce innovative solutions, such as hybrid LTC products that combine life insurance with long-term care benefits.

Focus on Compliance and Administration: Assist your clients in understanding the new legislation’s administrative requirements. This includes understanding the payroll tax process and employee opt-out provisions and ensuring their systems are equipped to handle these changes.


The wave of Long-Term Care payroll taxes is not just a legislative change; it’s a call to action for brokers and insurance professionals. By staying informed, educating clients, and exploring private insurance options, you can turn this legislative shift into a valuable opportunity. The VB Shop is committed to providing the tools and information to navigate this evolving landscape successfully.

Contact The VB Shop for more information on preparing your clients for these changes or exploring innovative long-term care solutions. We’re here to help you make the most of this pivotal moment in long-term care insurance.