California does not have a long-term care tax. No payroll deduction funds a state long-term care insurance program, and no such program exists. A state task force spent several years designing one, but the group was dissolved in 2024 without any bill becoming law. If you saw a paycheck deduction in Washington State or read national coverage about one, that is a different state’s program, not California’s.
That leaves the cost of care on you, your family, private insurance, or Medi-Cal. Here is where the proposal stands, what care actually costs in California, and the three realistic ways people plan for it.
Where the California Proposal Stands
In 2019, the legislature passed AB 567, which created the Long-Term Care Insurance Task Force inside the California Department of Insurance.1California Department of Insurance. Long Term Care Insurance Task Force A follow-up bill, SB 1255, extended the task force but set a sunset date of July 1, 2024. The task force was formally dissolved on that date.
Before disbanding, the group produced a feasibility report through the consulting firm Oliver Wyman. The design with the strongest consensus proposed a $144,000 maximum benefit, paid as $6,000 per month for up to two years, funded by a progressive payroll tax split between employees and employers, with self-employed workers paying an income-based contribution. Benefits would have grown with inflation, and spouses or domestic partners could share a pool.2California Department of Insurance. AB 567 Oliver Wyman Feasibility Report 2022 Workers already carrying qualifying private long-term care insurance could have opted out, a mechanism borrowed from Washington State.
As of mid-2026, no successor legislation has been introduced to revive the task force or enact its recommendations. The idea is not dead in Sacramento, but nothing is pending that would create a tax tomorrow.
Why Washington State Keeps Causing Confusion
Washington enacted the WA Cares Fund in 2019, the first mandatory state-run long-term care program in the country. Workers there pay 0.58% of wages with no cap, and benefits start July 1, 2026, with a lifetime maximum of $36,500 adjusted for inflation.3Center for Retirement Research. Washington State Establishes a Long-Term Care Program4WA Cares Fund. How the Fund Works Washington’s one-time opt-out window for people who bought private policies before November 2021 drove a wave of national coverage, and many Californians first heard the term “long-term care tax” then and assumed their own state had followed. It hasn’t. At least a dozen states have studied similar programs, including New York, Pennsylvania, Colorado, and Oregon, but Washington is still the only one with an active mandatory tax.
What Long-Term Care Costs in California
The reason this issue keeps resurfacing is price. Care in California runs well above the national average:
- Nursing home, private room: about $12,167 per month, roughly $146,000 per year.
- Assisted living facility: about $6,631 per month, roughly $80,000 per year.
- Home health aide: a full-time aide at $20 per hour runs over $40,000 per year.
Standard health insurance does not cover these costs. Medicare pays for short-term skilled nursing after a hospital stay, not the ongoing custodial care that makes up most long-term care needs.5Medicare.gov. Long Term Care Coverage That leaves three realistic ways to handle the bill.
Option 1: Qualifying for Medi-Cal
Medi-Cal is California’s Medicaid program and the primary public payer for long-term care in the state, covering most nursing home days.6Medi-Cal Policy Institute. Understanding Medi-Cal: Long-Term Care (Revised Edition) Qualifying is not simple, and treating Medi-Cal as a default plan carries real trade-offs.
Asset Limits
If you are 65 or older, have a disability, or need long-term care, Medi-Cal looks at both income and assets. As of 2026, the asset limit is $130,000 for an individual and $195,000 for a couple, with another $65,000 added per additional household member up to ten.7California Department of Health Care Services. Medi-Cal Help Center – Section: Asset Limits Your primary home and one vehicle are typically exempt. The rules get complicated enough that families often hire an elder law attorney.
The 60-Month Look-Back
You cannot give assets away shortly before applying to get under the limit. Federal law requires a 60-month look-back on all transfers. Anything you gave away for less than fair market value during the five years before applying triggers a penalty period of ineligibility, calculated by dividing the transferred value by the state’s average monthly nursing home cost.8Centers for Medicare & Medicaid Services. Transfer of Assets in the Medicaid Program – Deficit Reduction Act During that penalty window you pay full cost out of pocket.
Estate Recovery
After you die, the state can seek repayment from your estate for benefits received on or after your 55th birthday. For anyone who died on or after January 1, 2017, recovery is limited to assets subject to probate at death, and only for nursing facility services, home and community-based services, and related hospital and prescription drug costs.9California Department of Health Care Services. Estate Recovery Program If you own nothing at death, there is nothing to take. For families hoping to pass on a home, this matters.
Option 2: Private Long-Term Care Insurance
Without a state program, many Californians who can afford it buy private coverage. The federal tax code gives some help, and California follows the federal rules.
Premiums for a tax-qualified policy count as a medical expense, up to an age-based annual limit. For 2026:
- Age 40 or younger: $500
- Age 41 to 50: $930
- Age 51 to 60: $1,860
- Age 61 to 70: $4,960
- Over age 70: $6,200
Limits apply per person, so each spouse claims their own. The catch is that long-term care premiums get lumped with other unreimbursed medical expenses, and only the amount above 7.5% of your adjusted gross income is deductible.10Internal Revenue Service. Publication 502, Medical and Dental Expenses For most working-age adults with moderate medical bills, the deduction amounts to little. It gets more useful in retirement, when premiums are higher and medical costs climb.
Benefits are treated more generously. Reimbursements from a tax-qualified policy for actual care costs are excluded from gross income.11Office of the Law Revision Counsel. 26 U.S. Code 7702B – Treatment of Qualified Long-Term Care Insurance Policies that pay a flat per-diem amount instead of reimbursing expenses have an IRS cap ($175 per day adjusted for inflation), but amounts above the cap are taxed only if they exceed what care actually cost.
What Makes a Policy “Tax-Qualified”
Not every policy qualifies. To be tax-qualified under federal law, a policy must only cover long-term care services, be guaranteed renewable, and carry no cash value you can borrow against.11Office of the Law Revision Counsel. 26 U.S. Code 7702B – Treatment of Qualified Long-Term Care Insurance Benefits are triggered when you need substantial help with at least two of six activities of daily living — bathing, dressing, eating, toileting, transferring, and continence — or when a severe cognitive impairment like Alzheimer’s sets in.12Administration for Community Living. Receiving Long-Term Care Insurance Benefits
Watch the Elimination Period
Most policies include an elimination period before benefits start. It functions as a deductible measured in time. Common choices are 30, 90, or 100 days, during which you pay out of pocket.13California Department of Insurance. Long Term Care Insurance Policy Comparisons Definitions A shorter window raises premiums; a longer one lowers them but exposes you to more upfront cost. At California nursing home rates, a 90-day elimination period means covering around $36,000 before the policy pays anything.
Option 3: The California Partnership for Long-Term Care
The California Partnership for Long-Term Care, run by the Department of Health Care Services with select private insurers, offers a hybrid worth knowing about. Partnership policies meet strict state requirements and carry an unusual benefit: Medi-Cal asset protection.14California Department of Health Care Services. California Partnership for Long-Term Care
If you buy a Partnership policy and eventually exhaust its benefits, you can apply for Medi-Cal while protecting an amount of assets equal to what your policy paid out. A policy that paid $200,000 in benefits before running out lets you keep an extra $200,000 in assets above the normal Medi-Cal limit and still qualify. For people who want both private coverage and a Medi-Cal safety net, it is one of the stronger planning tools available in the state.