Sponsor spotlight: What you should know about public long-term care insurance

You may just be hearing about the WA Cares Fund. As an insurance agent, we have been hearing about this since earlier this year. This is a state program that will use employee paid payroll taxes to fund a public long-term care (LTC) insurance program for workers. How does the plan work?

Employees will pay a payroll tax of $5.80 per $1,000 of gross payroll to fund the program. The tax will be collected by employers and remitted to the state along with the employer’s other payroll taxes. Unlike Social Security, where there is a cap on the payroll subject to tax, there is not a payroll cap for this tax.  However, regardless of the taxes you pay over your career, the benefit is capped at a $36,500 lifetime maximum plus an inflationary increase.

In order to be eligible to collect benefits under the program, you need to have contributed to the fund for at least 10 years without a break of five or more years; or for three of the last six years worked at least 500 hours per year. The soonest a worker could access the benefits would be Jan. 1, 2025. Also, you need to be a Washington state resident at the time of claim.

The law does offer a one-time opt out. In order to take advantage of this provision, you need to have a purchased an individual long-term care policy prior to Nov. 1, 2021.

As more residents are becoming aware of this mandate, we are receiving calls and emails daily from clients and others searching for a long-term care policy so that they can exempt themselves from the tax.

Unfortunately, there are not any companies to which we have access that are still offering LTC coverage to Washington state residents. It is not only us, but it also seems to be a statewide issue.

There are three reasons for this. First, there are a limited number of players in the long-term care insurance arena. It is not like auto or home insurance, where there is a much larger pool of companies. Second, each application is reviewed by an underwriter. This is in contrast to auto or home insurance, where the majority of underwriting is performed by software. LTC underwriting usually requires reviewing the applicant’s medical records. It takes time to review the application, order any medical exam and request doctor records. Finally, with the Nov. 1 deadline to have coverage in place, the companies are overwhelmed by the tsunami of applications. So, they have turned off the flow so that they can concentrate on the existing applications.

If you wish to see if there are any policies available, I suggest contacting the Insurance Commissioner’s officer at 800-562-6900 or www.insurance.wa.gov to see if they have any suggestions.

In contrast to the state’s rollout of the Health Exchange in 2014, the state has been very quiet about this new tax, and I believe intentionally so. Unless you have a private plan, you are mandated to pay the tax for your entire working career in Washington.

This means that a student working part time while in high school will pay the tax, as well as an out-of-state student working while attending one of our universities.

But if at the time you need the coverage, you are not a Washington state resident the program will not help you. So, if you are planning on retiring or accepting a job in another state, even though you have paid the payroll tax, this program will not be available to you should need it after you have moved out of Washington.

Another determinantal provision of the program is that it is just providing this limited one-time opt-out to the tax. In addition, any resident that joins the workforce after Jan. 1, 2022, does not have an opt-out option and must pay the tax.

The options to obtain an individual plan are, for the time being, non-existent. This means that many residents wanting to have their own plan can’t; “the shelves are bare.” The legislature created this program, and they should fix it, I would encourage you to contact your legislators to voice your concern about this program and ask them to modify it to give residents more opt-out options and also to remove the residency restrictions so that the benefits are portable and can be accessed should you live out of state at the time of need.

Here is the contact information for the local legislators.

21st District
Senator – Marko Liias 360-786-7640 marko.liias@leg.wa.gov
Representative – Lillian Ortiz-Self 360-786-7640 lillian.ortiz-self@leg.wa.gov
Representative – Strom Peterson 564-888-2336 strom.peterson@leg.wa.gov

32nd District
Senator – Jesse Salomon 360-786-7662 Jesse.Salomon@leg.wa.gov
Representative – Lauren Davis 206-673-3501 Lauren.Davis@leg.wa.gov
Representative – Cindy Ryu 206-307-0769 cindy.ryu@leg.wa.gov

1st District
Senator – Derek Stanford 360-786-7600 derek.stanford@leg.wa.gov
Representative – Davina Duerr 360-318-1303 Davina.Duerr@leg.wa.gov
Representative – Shelley Kloba 564-888-2377 Shelley.Kloba@leg.wa.gov
Also, here is the contact information for the Governor and Insurance Commissioner

Governor Jay Inslee 360-902-4111
Link for sending an e-message:
www.governor.wa.gov/contact/contact/send-gov-inslee-e-message

Insurance Commissioner Mike Kriedler 800-562-6900
Link for sending an e-message
www.insurance.wa.gov/ask-mike

Any questions or comments, please contact me at 425-774-3200 or john@mcdonaldmcgarry.com

— Sponsored by McDonald McGarry Insurance

9 Replies to “Sponsor spotlight: What you should know about public long-term care insurance”

  1. Please tell our representatives that more work needs to be done before this is instated. Until September most people I know did not even know this was happening. It is not a tax that benefits everyone; there are seniors working to help support themselves that will never see any of the benefits; and those people as stated who work here but live elsewhere pay in but don’t see the benefit. You cap out at 36,000; in reality that will only cover a few months in a facility at our current rates. Again we are being asked to work to cover others in taxes. Being first in the nation with a new law doesn’t make it right or beneficial for its residents.

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  2. Thank you for the detailed information.

    I am confused about the law regarding those 55 and older. According to one website, it states, “Those that do not pay into the program for a minimum of 10 years and those already currently retired will not be eligible for the state-run long-term care program benefits.” Does that mean that a 62-year old (not my actual age) can opt out of the program right away because I don’t plan on working till I’m 72? Or does it mean I will have money taken out of my paycheck with no hope of ever benefiting from the program? If it’s the latter, I am being discriminated against.

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    1. It means you’re getting shafted. This bill was poorly written and contains so many bad provisions. Beyond that’s the coverage is laughable. To be “fully vested” you have to contribute for 10 years. Or, there’s a second eligilbilty if you work 3 or the previous 5 years. It’s unclear if the benefits are reduced. Basically people within 10 years of retirement are getting a raw deal. People who don’t live in Washington in retirement get a raw deal. People who move to Washington after January 1, 2023 get a raw deal (the opt-out period is a one-time thing and over by then). The only saving grace is that at the very last minute one representative stood up and got the exemption for existing policy holders included. Otherwise, I’d be filing a class action for wage theft. Olympia wants an income tax so bad. Because (currently) they can’t do it, they just keep coming at us with these “payroll deductions” like the WA Family Leave, WA Medical Leave, and now this LTC. All total, we’re around 1% of climbing.

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    2. Robert, it means you will be paying in but won’t be eligible to receive the benefits. It is a poorly planned, poorly written tax.

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  3. People are unrealistic about long term care… and about the WA Cares Act providing any decent coverage.
    LTC Costs in WA are $200+/day for home care & assisted living and $300+/day for nursing home. The $100/day benefit is not going to stop people going bankrupt paying the difference out of pocket.

    The problem is that after insurance companies were flooded with low premium applications they either suspended sales (Mutual of Omaha, John Hancock, Thrivent, etc) or they raised the minimum premium to disuade applicants since most were not looking to the insurance for protection, just to opt-out of the tax. guidetolongtermcare.com

    Articles need to address the problem: the risk. Transamerica says 72% of women and 44% of men will need care. The Dept HHS says 70% (not including home care & assisted living – longtermcare.gov)

    Some European countries provide from cradle to grave… and they pay a high tax. Americans don’t like to be taxed, but the long term care risk is there, like in Europe… somehow one way or another, we all pay. Medicaid can come after your estate for repayment.

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    1. There is a ballot initiative (I-1436) in the signature collecting phase to make it optional to participate in Washington’s long-term care insurance. I-1436 “would amend state law establishing a state long term care program to provide that employees must elect to keep coverage under RCW 508.04.080, allow employees to opt-out of coverage at any time and for any reason, and repeal current laws governing exemption and eligibility and allowing self-employed people to opt into coverage.”

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  4. What suggestions DO those opposed to the bill have for providing care not only for yourself but for ALL people? Even for those who work in service jobs you enjoy, like restaurants, childcare, cleaners and so on?

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  5. Everybody wants Government services, but nobody wants to pay for them. I went to J. Cass’s citizen seminar yesterday on drug addiction and homelessness and came away just shaking my head. A couple of the presenters said that we need more treatment and intervention of social workers to help people and another presenter said government and throwing money at the problem won’t ever solve it (this is from someone who was a recent government (police) employee involved in dealing with the problem).

    Then who pays for and administers the programs of intervention and treatment? Maybe the government throwing money at the problem won’t solve it.; but neither will the government NOT throwing money at the problem solve it. You think this problem isn’t going to slam into our city parks and public places soon? Better think, again because there is no city code against camping in our city parks right now; just a code on closing time for city parks. (Ref. Diane Bucksnis, ECCP). Can the police arrest someone sleeping in a tent in Yost park after closing time because the park is closed? More to the point, perhaps, will they?

    As to the actual subject of this thread, I have lots of personal knowledge of what long term care costs. My recently deceased wife had L.T. care insurance that covered one third of her expenses in assisted living and our combined incomes covered the rest for a period of two and one half years. We had no income for two and one half years. You folks complaining about this horrible tax better have made some pretty good plans for getting yourselves cared for if you are badly hurt or contract dementia in your old ages. Good luck; you’ll need it because it is now almost impossible to buy long term care insurance in the private market because insurance companies are losing their collective shirts on the pay outs.

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