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California LTC Mandate -- Act Now Before the Exemption Window Closes
Watch Time: 2 Mins Reading Time: 3 Mins Presented by Hollowtree Updated April 27, 2026
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California is finalizing long-term care payroll tax legislation. If your company has employees in California -- and with the largest W-2 workforce of any state in the country, most multi-state employers do -- this is not a future problem. It's an imminent one.
Here's what we know about California's approach.
The California LTC task force has recommended a payroll tax structure modeled closely on Washington's WA Cares Fund. The estimated rate is approximately one percent of wages with no income cap. For a California employee earning $200,000, that's $2,000 a year. For an employee earning $500,000, it's $5,000. For a company with 200 California employees at an average wage of $120,000, the total annual exposure is $240,000 in new payroll deductions.
Like Washington, California's structure will almost certainly include an opt-out mechanism for employees who have qualifying private LTC coverage. That opt-out window will open before the mandate becomes effective.
The employers who win here are the ones who implement a qualifying plan before that window opens -- so they can offer employees a day-one opt-out path rather than scrambling to respond after the fact.
Implementation takes four to six months. The window for acting ahead of the California mandate is open now. It won't stay open indefinitely.
Hollowtree is already working with employers on California-compliant LTC plan structures. We know what the state will require and we're designing around it.
Request an impact assessment. We'll model your California exposure and walk you through what a qualifying plan looks like for your workforce.
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Hollowtree
Insurance Specialists