Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

I was alerted to:
Washington State Long Term Care Trust Act
https://www.ltc-associates.com/educatio ... trust-act/

Short-term care benefit, publicly funded by a 0.58% payroll tax on all wages and remuneration, withheld quarterly by employers
Only Washington residents can qualify for benefits
Residents who move out of state for 5 or more years forfeit both benefits and premiums
Benefits are paid in $100 "stackable" units, up to a $36,500 lifetime maximum

----
From my reading, regardless of the amount of tax paid, people get the same benefit. So it is punitive for high income earners.

I was never in the market for long term care but there are exemptions for people who have their own policy. Has anyone looked into this in detail?

From a pure dollars and cents perspective. I am in an encore job as a Federal Employee. I could sign up in my initial enrollment for the Fed LTC for the minimum benefit and it would be way less then the payroll tax...
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
User avatar
arcticpineapplecorp.
Posts: 8571
Joined: Tue Mar 06, 2012 9:22 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by arcticpineapplecorp. »

hadn't heard of it. that article you linked says it's facing insolvency.

sounds like you're happy with your federal ltci benefit?

have you heard of long term care partnership programs? That's another cost burden sharing for states encouraging purchasing of LTCI because you can retain an equal number of resources as the policy pays out (which is not true with regular LTCI and medicaid) and still qualify for medicaid:

https://www.insurance.wa.gov/washington ... ip-program
https://www.hca.wa.gov/health-care-serv ... ntly-asked
Last edited by arcticpineapplecorp. on Tue Feb 16, 2021 11:08 pm, edited 1 time in total.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
MadHungarian
Posts: 230
Joined: Tue Jan 02, 2018 4:53 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by MadHungarian »

Oh no, not another one?! These things are multiplying here in WA State. I've already got several of these WA State programs already taking deductions out of my paycheck here, and all of them have turned out in practice to be useless. The money take take from my paycheck is very real, but the promised benefits turn out to be imaginary. At least that's what i found when i actually needed to use one of the new WA State programs last year, and discovered that it was useless.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

arcticpineapplecorp. wrote: Tue Feb 16, 2021 11:08 pm hadn't heard of it. that article you linked says it's facing insolvency.

sounds like you're happy with your federal ltci benefit?

have you heard of long term care partnership programs? That's another cost burden sharing for states encouraging purchasing of LTCI because you can retain an equal number of resources as the policy pays out (which is not true with regular LTCI and medicaid) and still qualify for medicaid:

https://www.insurance.wa.gov/washington ... ip-program
https://www.hca.wa.gov/health-care-serv ... ntly-asked
Hmm i'll check the long term care partnership program out.. I wasn't going to buy the Federal LTCi program, but i'm still in my first 60 days, so i could make a change and select an option that is actually cheaper then the new WA tax... (if i knew i would qualify for an exemption for the tax)...
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

MadHungarian wrote: Tue Feb 16, 2021 11:08 pm Oh no, not another one?! These things are multiplying here in WA State. I've already got several of these WA State programs already taking deductions out of my paycheck here, and all of them have turned out in practice to be useless. The money take take from my paycheck is very real, but the promised benefits turn out to be imaginary. At least that's what i found when i actually needed to use one of the new WA State programs last year, and discovered that it was useless.
Yes, its yet another one.
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
MadHungarian
Posts: 230
Joined: Tue Jan 02, 2018 4:53 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by MadHungarian »

[OT comment removed -- moderator oldcomputerguy]

But on a more practical note, and to bring the thread back again, is there any way i can deduct these new taxes on my Federal tax return, do you suppose?
sandramjet
Posts: 351
Joined: Thu Oct 23, 2014 11:28 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by sandramjet »

MadHungarian wrote: Tue Feb 16, 2021 11:08 pm Oh no, not another one?! These things are multiplying here in WA State. I've already got several of these WA State programs already taking deductions out of my paycheck here, and all of them have turned out in practice to be useless. The money take take from my paycheck is very real, but the promised benefits turn out to be imaginary. At least that's what i found when i actually needed to use one of the new WA State programs last year, and discovered that it was useless.
I'm curious ... what other ones are you referring to?
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

sandramjet wrote: Wed Feb 17, 2021 2:05 am
MadHungarian wrote: Tue Feb 16, 2021 11:08 pm Oh no, not another one?! These things are multiplying here in WA State. I've already got several of these WA State programs already taking deductions out of my paycheck here, and all of them have turned out in practice to be useless. The money take take from my paycheck is very real, but the promised benefits turn out to be imaginary. At least that's what i found when i actually needed to use one of the new WA State programs last year, and discovered that it was useless.
I'm curious ... what other ones are you referring to?

I assumed the paid leave law. https://paidleave.wa.gov/.

https://www.shrm.org/resourcesandtools/ ... e-law.aspx
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Tue Feb 16, 2021 10:38 pm I was alerted to:
Washington State Long Term Care Trust Act
https://www.ltc-associates.com/educatio ... trust-act/

Short-term care benefit, publicly funded by a 0.58% payroll tax on all wages and remuneration, withheld quarterly by employers
Only Washington residents can qualify for benefits
Residents who move out of state for 5 or more years forfeit both benefits and premiums
Benefits are paid in $100 "stackable" units, up to a $36,500 lifetime maximum

----
From my reading, regardless of the amount of tax paid, people get the same benefit. So it is punitive for high income earners.

I was never in the market for long term care but there are exemptions for people who have their own policy. Has anyone looked into this in detail?

From a pure dollars and cents perspective. I am in an encore job as a Federal Employee. I could sign up in my initial enrollment for the Fed LTC for the minimum benefit and it would be way less then the payroll tax...

If you're a healthy male, you'll get better benefits for less premium if you buy a policy on your own rather than buying the federal program. The federal program has unisex rates. Unisex rates are better for females than males.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

MadHungarian wrote: Tue Feb 16, 2021 11:08 pm Oh no, not another one?! These things are multiplying here in WA State. I've already got several of these WA State programs already taking deductions out of my paycheck here, and all of them have turned out in practice to be useless. The money take take from my paycheck is very real, but the promised benefits turn out to be imaginary. At least that's what i found when i actually needed to use one of the new WA State programs last year, and discovered that it was useless.
If you buy a long-term care insurance policy before July 24th, you can opt-out of this tax.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Tue Feb 16, 2021 11:26 pm
arcticpineapplecorp. wrote: Tue Feb 16, 2021 11:08 pm hadn't heard of it. that article you linked says it's facing insolvency.

sounds like you're happy with your federal ltci benefit?

have you heard of long term care partnership programs? That's another cost burden sharing for states encouraging purchasing of LTCI because you can retain an equal number of resources as the policy pays out (which is not true with regular LTCI and medicaid) and still qualify for medicaid:

https://www.insurance.wa.gov/washington ... ip-program
https://www.hca.wa.gov/health-care-serv ... ntly-asked
Hmm i'll check the long term care partnership program out.. I wasn't going to buy the Federal LTCi program, but i'm still in my first 60 days, so i could make a change and select an option that is actually cheaper then the new WA tax... (if i knew i would qualify for an exemption for the tax)...

The federal long-term care insurance program (available to federal employees, retirees, and their spouses/partners) will qualify for the exemption under the Washington State Long-Term Care Trust Act, as long as you buy at least $100/day with some type of inflation protection.

In order to be exempt from this tax, you'll need to buy your long-term care insurance policy before July 24th of this year and then you'll need to file a form with the state of Washington attesting to the fact that you own long-term care insurance.

Keep in mind, the federal long-term care program does NOT qualify as an LTC Partnership policy in any state. Also, the federal long-term care program is does NOT have to comply with the state of Washington's Rate Stability Regulation (which helps protect newer policyholders from large rate increases.)
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

MadHungarian wrote: Wed Feb 17, 2021 1:47 am [OT comment removed -- moderator oldcomputerguy]

But on a more practical note, and to bring the thread back again, is there any way i can deduct these new taxes on my Federal tax return, do you suppose?

I don't think you can deduct these new programs on your federal income taxes. The real cost of this program is not .58%, but .80% (if you're in a 28% federal income tax bracket.)
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Wed Feb 17, 2021 1:41 pm If you're a healthy male, you'll get better benefits for less premium if you buy a policy on your own rather than buying the federal program. The federal program has unisex rates. Unisex rates are better for females than males.
Unfortunately, my guess is i will not get "premier" underwriting. While I am in my mid 30s, I am a 70% disabled veteran (hence there is things wrong with me). Do you know if that status is enough to exempt me from the law?

https://www.dva.wa.gov/veterans-their-f ... rt-orchard
Veterans rated 70%-100% Service Connected Disabled, or whose service connected disability is the reason nursing care is needed, may have their nursing home care paid by the Federal VA.
WoW2012 wrote: Wed Feb 17, 2021 1:48 pm The federal long-term care insurance program (available to federal employees, retirees, and their spouses/partners) will qualify for the exemption under the Washington State Long-Term Care Trust Act, as long as you buy at least $100/day with some type of inflation protection.

In order to be exempt from this tax, you'll need to buy your long-term care insurance policy before July 24th of this year and then you'll need to file a form with the state of Washington attesting to the fact that you own long-term care insurance.

Keep in mind, the federal long-term care program does NOT qualify as an LTC Partnership policy in any state. Also, the federal long-term care program is does NOT have to comply with the state of Washington's Rate Stability Regulation (which helps protect newer policyholders from large rate increases.)
Is $100/day the minimum required for the exemption? Is there a number of years minimum?
Where does the July 24th deadline come from?
It looks like the FED LTCi plan has two inflation options either 3% or Future Purchase Option, would either be enough?

At my household asset levels, the previous plan was to self-fund just paying LTC. Do you know the cancelation rules around the fed ltc? (do you retain anything? or do you just walk away from what you paid? can you cancel anytime? etc)

For my age, it looks like LTCFEDS for $100/day 2 years, 90 day elimination with the ACI3% is $34/month or the FPO is $16/month... Both of these are substantially less then the proposed .58% payroll tax. (even if i just end up cancelling and walking away from the LTCFEDS at some point).

are there drawbacks to getting an exception then cancelling the policy at some point?
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Wed Feb 17, 2021 6:21 pm
WoW2012 wrote: Wed Feb 17, 2021 1:41 pm If you're a healthy male, you'll get better benefits for less premium if you buy a policy on your own rather than buying the federal program. The federal program has unisex rates. Unisex rates are better for females than males.
Unfortunately, my guess is i will not get "premier" underwriting. While I am in my mid 30s, I am a 70% disabled veteran (hence there is things wrong with me). Do you know if that status is enough to exempt me from the law?

https://www.dva.wa.gov/veterans-their-f ... rt-orchard
Veterans rated 70%-100% Service Connected Disabled, or whose service connected disability is the reason nursing care is needed, may have their nursing home care paid by the Federal VA.
WoW2012 wrote: Wed Feb 17, 2021 1:48 pm The federal long-term care insurance program (available to federal employees, retirees, and their spouses/partners) will qualify for the exemption under the Washington State Long-Term Care Trust Act, as long as you buy at least $100/day with some type of inflation protection.

In order to be exempt from this tax, you'll need to buy your long-term care insurance policy before July 24th of this year and then you'll need to file a form with the state of Washington attesting to the fact that you own long-term care insurance.

Keep in mind, the federal long-term care program does NOT qualify as an LTC Partnership policy in any state. Also, the federal long-term care program is does NOT have to comply with the state of Washington's Rate Stability Regulation (which helps protect newer policyholders from large rate increases.)
Is $100/day the minimum required for the exemption? Is there a number of years minimum?
Where does the July 24th deadline come from?
It looks like the FED LTCi plan has two inflation options either 3% or Future Purchase Option, would either be enough?

At my household asset levels, the previous plan was to self-fund just paying LTC. Do you know the cancelation rules around the fed ltc? (do you retain anything? or do you just walk away from what you paid? can you cancel anytime? etc)

For my age, it looks like LTCFEDS for $100/day 2 years, 90 day elimination with the ACI3% is $34/month or the FPO is $16/month... Both of these are substantially less then the proposed .58% payroll tax. (even if i just end up cancelling and walking away from the LTCFEDS at some point).

are there drawbacks to getting an exception then cancelling the policy at some point?

If you're 70% service-related disability, then you have little chance of purchasing long-term care insurance on your own. You might be able to qualify for the federal employees' LTCi program.

The July 24th deadline is 90 days after the amended law becomes effective. The amended law becomes effective at the end of this legislative session (April 24th or so). Anyone who owns long-term care insurance before July 24th will be able to get an exemption.

If you're 70% service-related disabled, you should buy as much LTCi as you can comfortably afford right now from the federal LTCi program. You should also max out your long-term disability offered you from the Feds.

Once you're exempt from the Washington Long Term Care Trust Act, you can never enroll. You're exempt for life. You can never receive benefits from it.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

The real losers from the Washington Long-Term Care Trust Act are those who are still working but will retire in the next 10 years. They'll have to pay the tax but not be able to receive any benefits from the program.

That's why a lot of Washington residents will seriously consider LTC insurance between now and the end of July. Washingtonians don't like taxes, especially income taxes.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Wed Feb 17, 2021 7:02 pm If you're 70% service-related disability, then you have little chance of purchasing long-term care insurance on your own. You might be able to qualify for the federal employees' LTCi program.

If you're 70% service-related disabled, you should buy as much LTCi as you can comfortably afford right now from the federal LTCi program. You should also max out your long-term disability offered you from the Feds.
When i look at the abbreviated application I won't throw any red flags:
https://cdn.ltcfeds.com/planning-tools/ ... cation.pdf
but when i look at the full application, there are red flags
https://cdn.ltcfeds.com/planning-tools/ ... cation.pdf

So i suppose this 60 day initial period is my chance. Lets assume I'm already financially independent, and this is an encore career even though I'm relatively young. Why wouldn't i just buy the smallest policy and self fund?*

(I would also have all the VA healthcare and LTC benefits owed to me: https://www.va.gov/health-care/about-va ... term-care/ )

As far as I know there isn't a true fed long term disability plan, but there is disability retirement from FERS if you have 18 months or more in:
https://www.opm.gov/retirement-services ... Disability
WoW2012 wrote: Wed Feb 17, 2021 7:05 pm The real losers from the Washington Long-Term Care Trust Act are those who are still working but will retire in the next 10 years. They'll have to pay the tax but not be able to receive any benefits from the program.

That's why a lot of Washington residents will seriously consider LTC insurance between now and the end of July. Washingtonians don't like taxes, especially income taxes.
I really doubt i'll work another 10 years. Maybe i will, but probably not. Hence this makes paying the WA tax unappealing. Also, I am not sure if we will stay in Washington long term, and my understanding is the WA policy is not portable.
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Wed Feb 17, 2021 7:45 pm
WoW2012 wrote: Wed Feb 17, 2021 7:02 pm If you're 70% service-related disability, then you have little chance of purchasing long-term care insurance on your own. You might be able to qualify for the federal employees' LTCi program.

If you're 70% service-related disabled, you should buy as much LTCi as you can comfortably afford right now from the federal LTCi program. You should also max out your long-term disability offered you from the Feds.
When i look at the abbreviated application I won't throw any red flags:
https://cdn.ltcfeds.com/planning-tools/ ... cation.pdf
but when i look at the full application, there are red flags
https://cdn.ltcfeds.com/planning-tools/ ... cation.pdf

So i suppose this 60 day initial period is my chance. Lets assume I'm already financially independent, and this is an encore career even though I'm relatively young. Why wouldn't i just buy the smallest policy and self fund?*

(I would also have all the VA healthcare and LTC benefits owed to me: https://www.va.gov/health-care/about-va ... term-care/ )

As far as I know there isn't a true fed long term disability plan, but there is disability retirement from FERS if you have 18 months or more in:
https://www.opm.gov/retirement-services ... Disability
WoW2012 wrote: Wed Feb 17, 2021 7:05 pm The real losers from the Washington Long-Term Care Trust Act are those who are still working but will retire in the next 10 years. They'll have to pay the tax but not be able to receive any benefits from the program.

That's why a lot of Washington residents will seriously consider LTC insurance between now and the end of July. Washingtonians don't like taxes, especially income taxes.
I really doubt i'll work another 10 years. Maybe i will, but probably not. Hence this makes paying the WA tax unappealing. Also, I am not sure if we will stay in Washington long term, and my understanding is the WA policy is not portable.


Why wouldn't i just buy the smallest policy and self fund?*

A) If you're 35 years old, you can buy a half million dollars of long-term care insurance benefits, from the FLTCIP, for $89 per month. Are you able to turn $89 per month into $500K anytime soon?

B) There's a reason you're uninsurable for long-term care with EVERY long-term care insurance company?
Because the probability of you filing a long-term care insurance claim is near 100%.

C) The V.A. benefits you mention are very limited when it comes to long-term care, except for those with very little net worth and income.

Please take my advice and apply for that coverage, before that 60 day window is gone.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Wed Feb 17, 2021 11:07 pm Why wouldn't i just buy the smallest policy and self fund?*

A) If you're 35 years old, you can buy a half million dollars of long-term care insurance benefits, from the FLTCIP, for $89 per month. Are you able to turn $89 per month into $500K anytime soon?

B) There's a reason you're uninsurable for long-term care with EVERY long-term care insurance company?
Because the probability of you filing a long-term care insurance claim is near 100%.

C) The V.A. benefits you mention are very limited when it comes to long-term care, except for those with very little net worth and income.

Please take my advice and apply for that coverage, before that 60 day window is gone.
Please don't take my responses in any way other then pure gratitude that your spending your person time to participate in these forums.

I'm going to noodle on this a bit. (i have another 40+ days)

Is it right for me to think about this as:

Daily Benefit Amount Benefit Period Maximum Lifetime Benefit Inflation Protection Premium
450 3 yrs. 492750 FPO $93.01 monthly
200 3 yrs. 219000 ACIO 3% $96.24 monthly

Basically for the same premium (ignoring the premium), the ACIO option in 27.43 years will have a daily rate that ends up the same as the FPO option?

Sooner then that the FPO has more dollars to spend, and after that the ACIO option would have more money?

Then when i look at the PV of the payments i'd owe if i don't buy any FPO and if there isn't any increases with either a 2% or 6% discount rate on the payments...

Age 63.43 68.43 73.43 78.43 83.43 88.43
Term 27.43 32.43 37.43 42.43 47.43 52.43
2% ($24,200.83) ($27,362.91) ($30,226.91) ($32,820.93) ($35,170.41) ($37,298.40)
6% ($15,355.35) ($16,339.18) ($17,074.36) ($17,623.73) ($18,034.25) ($18,341.02)

With these numbers, it seems like its about an $18k purchase decision if i just ear mark the invested dollars in my HSA today?
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Thu Feb 18, 2021 7:56 pm
WoW2012 wrote: Wed Feb 17, 2021 11:07 pm Why wouldn't i just buy the smallest policy and self fund?*

A) If you're 35 years old, you can buy a half million dollars of long-term care insurance benefits, from the FLTCIP, for $89 per month. Are you able to turn $89 per month into $500K anytime soon?

B) There's a reason you're uninsurable for long-term care with EVERY long-term care insurance company?
Because the probability of you filing a long-term care insurance claim is near 100%.

C) The V.A. benefits you mention are very limited when it comes to long-term care, except for those with very little net worth and income.

Please take my advice and apply for that coverage, before that 60 day window is gone.
Please don't take my responses in any way other then pure gratitude that your spending your person time to participate in these forums.

I'm going to noodle on this a bit. (i have another 40+ days)

Is it right for me to think about this as:

Daily Benefit Amount Benefit Period Maximum Lifetime Benefit Inflation Protection Premium
450 3 yrs. 492750 FPO $93.01 monthly
200 3 yrs. 219000 ACIO 3% $96.24 monthly

Basically for the same premium (ignoring the premium), the ACIO option in 27.43 years will have a daily rate that ends up the same as the FPO option?

Sooner then that the FPO has more dollars to spend, and after that the ACIO option would have more money?

Then when i look at the PV of the payments i'd owe if i don't buy any FPO and if there isn't any increases with either a 2% or 6% discount rate on the payments...

Age 63.43 68.43 73.43 78.43 83.43 88.43
Term 27.43 32.43 37.43 42.43 47.43 52.43
2% ($24,200.83) ($27,362.91) ($30,226.91) ($32,820.93) ($35,170.41) ($37,298.40)
6% ($15,355.35) ($16,339.18) ($17,074.36) ($17,623.73) ($18,034.25) ($18,341.02)

With these numbers, it seems like its about an $18k purchase decision if i just ear mark the invested dollars in my HSA today?
I'm sorry, but it's late, it's been a VERY busy day, and I've already had one over-sized glass of wine.
Are you saying that if you invest $18K in an HSA you'll get the same results as if you spend $93.01 per month for the LTCi policy?

OR

Are you saying that you should allocate $18K of your HSA to generate enough to pay the LTCi premium each year?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Thu Feb 18, 2021 9:55 pm
Soon2BXProgrammer wrote: Thu Feb 18, 2021 7:56 pm
WoW2012 wrote: Wed Feb 17, 2021 11:07 pm Why wouldn't i just buy the smallest policy and self fund?*

A) If you're 35 years old, you can buy a half million dollars of long-term care insurance benefits, from the FLTCIP, for $89 per month. Are you able to turn $89 per month into $500K anytime soon?

B) There's a reason you're uninsurable for long-term care with EVERY long-term care insurance company?
Because the probability of you filing a long-term care insurance claim is near 100%.

C) The V.A. benefits you mention are very limited when it comes to long-term care, except for those with very little net worth and income.

Please take my advice and apply for that coverage, before that 60 day window is gone.
Please don't take my responses in any way other then pure gratitude that your spending your person time to participate in these forums.

I'm going to noodle on this a bit. (i have another 40+ days)

Is it right for me to think about this as:

Daily Benefit Amount Benefit Period Maximum Lifetime Benefit Inflation Protection Premium
450 3 yrs. 492750 FPO $93.01 monthly
200 3 yrs. 219000 ACIO 3% $96.24 monthly

Basically for the same premium (ignoring the premium), the ACIO option in 27.43 years will have a daily rate that ends up the same as the FPO option?

Sooner then that the FPO has more dollars to spend, and after that the ACIO option would have more money?

Then when i look at the PV of the payments i'd owe if i don't buy any FPO and if there isn't any increases with either a 2% or 6% discount rate on the payments...

Age 63.43 68.43 73.43 78.43 83.43 88.43
Term 27.43 32.43 37.43 42.43 47.43 52.43
2% ($24,200.83) ($27,362.91) ($30,226.91) ($32,820.93) ($35,170.41) ($37,298.40)
6% ($15,355.35) ($16,339.18) ($17,074.36) ($17,623.73) ($18,034.25) ($18,341.02)

With these numbers, it seems like its about an $18k purchase decision if i just ear mark the invested dollars in my HSA today?
I'm sorry, but it's late, it's been a VERY busy day, and I've already had one over-sized glass of wine.
Are you saying that if you invest $18K in an HSA you'll get the same results as if you spend $93.01 per month for the LTCi policy?
That's not what i'm saying.

I am saying that paying $95/mo for 52 years with a 6% discount rate, would be 18kish today. (or roughly 36k with a 2% discount rate) So effectively I could ear mark 18k (up to 36k) to pay the monthly premium for the rest of my life. (the reason why i want to look at it in todays dollars is because I might only work another year or two, so its like buying a car with a one time payment) (i wish i could just pay it as a lump sum and be done)

If i understand the difference between FPO and ACIO3%.. The FPO policy would be best for the next 27 years, and then after that the ACIO 3% policy would pay more. Correct? (i took the current ACIO value and compounded at 3% to see how many periods it would be before it equaled the FPO)

I think it would take 56 years for my monthly premiums compounded at 6% to equal the FPO option. I didn't run the numbers but it seems that the monthly premiums can't ever save enough for the ACIO3% even in my "extended planning horizon"

In summary. For what seems to be about $18k today, I would be buying $200/day for 3 years adjusted for inflation if i end up needing it.

You are right, it seems like a good deal. I just would appreciate some validation on my logic/math/etc.

EDIT: i didn't see "Are you saying that you should allocate $18K of your HSA to generate enough to pay the LTCi premium each year?" -- yes basically, that's would be todays cost for the policy.
Last edited by Soon2BXProgrammer on Thu Feb 18, 2021 10:58 pm, edited 1 time in total.
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Thu Feb 18, 2021 10:45 pm
WoW2012 wrote: Thu Feb 18, 2021 9:55 pm
Soon2BXProgrammer wrote: Thu Feb 18, 2021 7:56 pm
WoW2012 wrote: Wed Feb 17, 2021 11:07 pm Why wouldn't i just buy the smallest policy and self fund?*

A) If you're 35 years old, you can buy a half million dollars of long-term care insurance benefits, from the FLTCIP, for $89 per month. Are you able to turn $89 per month into $500K anytime soon?

B) There's a reason you're uninsurable for long-term care with EVERY long-term care insurance company?
Because the probability of you filing a long-term care insurance claim is near 100%.

C) The V.A. benefits you mention are very limited when it comes to long-term care, except for those with very little net worth and income.

Please take my advice and apply for that coverage, before that 60 day window is gone.
Please don't take my responses in any way other then pure gratitude that your spending your person time to participate in these forums.

I'm going to noodle on this a bit. (i have another 40+ days)

Is it right for me to think about this as:

Daily Benefit Amount Benefit Period Maximum Lifetime Benefit Inflation Protection Premium
450 3 yrs. 492750 FPO $93.01 monthly
200 3 yrs. 219000 ACIO 3% $96.24 monthly

Basically for the same premium (ignoring the premium), the ACIO option in 27.43 years will have a daily rate that ends up the same as the FPO option?

Sooner then that the FPO has more dollars to spend, and after that the ACIO option would have more money?

Then when i look at the PV of the payments i'd owe if i don't buy any FPO and if there isn't any increases with either a 2% or 6% discount rate on the payments...

Age 63.43 68.43 73.43 78.43 83.43 88.43
Term 27.43 32.43 37.43 42.43 47.43 52.43
2% ($24,200.83) ($27,362.91) ($30,226.91) ($32,820.93) ($35,170.41) ($37,298.40)
6% ($15,355.35) ($16,339.18) ($17,074.36) ($17,623.73) ($18,034.25) ($18,341.02)

With these numbers, it seems like its about an $18k purchase decision if i just ear mark the invested dollars in my HSA today?
I'm sorry, but it's late, it's been a VERY busy day, and I've already had one over-sized glass of wine.
Are you saying that if you invest $18K in an HSA you'll get the same results as if you spend $93.01 per month for the LTCi policy?
That's not what i'm saying.

I am saying that paying $95/mo for 52 years with a 6% discount rate, would be 18kish today. (or roughly 36k with a 2% discount rate) So effectively I could ear mark 18k (up to 36k) to pay the monthly premium for the rest of my life. (the reason why i want to look at it in todays dollars is because I might only work another year or two, so its like buying a car with a one time payment) (i wish i could just pay it as a lump sum and be done)

If i understand the difference between FPO and ACIO3%.. The FPO policy would be best for the next 27 years, and then after that the ACIO 3% policy would pay more. Correct? (i took the current ACIO value and compounded at 3% to see how many periods it would be before it equaled the FPO)

I think it would take 56 years for my monthly premiums compounded at 6% to equal the FPO option. I didn't run the numbers but it seems that the monthly premiums can't ever save enough for the ACIO3% even in my "extended planning horizon"

In summary. For what seems to be about $18k today, I would be buying $200/day for 3 years adjusted for inflation if i end up needing it.

You are right, it seems like a good deal. I just would appreciate some validation on my logic/math/etc.


Your logic and math is officially validated, 100%!

...and thank you for your service to our country.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Thu Feb 18, 2021 10:45 pm
WoW2012 wrote: Thu Feb 18, 2021 9:55 pm
Soon2BXProgrammer wrote: Thu Feb 18, 2021 7:56 pm
WoW2012 wrote: Wed Feb 17, 2021 11:07 pm Why wouldn't i just buy the smallest policy and self fund?*

A) If you're 35 years old, you can buy a half million dollars of long-term care insurance benefits, from the FLTCIP, for $89 per month. Are you able to turn $89 per month into $500K anytime soon?

B) There's a reason you're uninsurable for long-term care with EVERY long-term care insurance company?
Because the probability of you filing a long-term care insurance claim is near 100%.

C) The V.A. benefits you mention are very limited when it comes to long-term care, except for those with very little net worth and income.

Please take my advice and apply for that coverage, before that 60 day window is gone.
Please don't take my responses in any way other then pure gratitude that your spending your person time to participate in these forums.

I'm going to noodle on this a bit. (i have another 40+ days)

Is it right for me to think about this as:

Daily Benefit Amount Benefit Period Maximum Lifetime Benefit Inflation Protection Premium
450 3 yrs. 492750 FPO $93.01 monthly
200 3 yrs. 219000 ACIO 3% $96.24 monthly

Basically for the same premium (ignoring the premium), the ACIO option in 27.43 years will have a daily rate that ends up the same as the FPO option?

Sooner then that the FPO has more dollars to spend, and after that the ACIO option would have more money?

Then when i look at the PV of the payments i'd owe if i don't buy any FPO and if there isn't any increases with either a 2% or 6% discount rate on the payments...

Age 63.43 68.43 73.43 78.43 83.43 88.43
Term 27.43 32.43 37.43 42.43 47.43 52.43
2% ($24,200.83) ($27,362.91) ($30,226.91) ($32,820.93) ($35,170.41) ($37,298.40)
6% ($15,355.35) ($16,339.18) ($17,074.36) ($17,623.73) ($18,034.25) ($18,341.02)

With these numbers, it seems like its about an $18k purchase decision if i just ear mark the invested dollars in my HSA today?
I'm sorry, but it's late, it's been a VERY busy day, and I've already had one over-sized glass of wine.
Are you saying that if you invest $18K in an HSA you'll get the same results as if you spend $93.01 per month for the LTCi policy?
That's not what i'm saying.

I am saying that paying $95/mo for 52 years with a 6% discount rate, would be 18kish today. (or roughly 36k with a 2% discount rate) So effectively I could ear mark 18k (up to 36k) to pay the monthly premium for the rest of my life. (the reason why i want to look at it in todays dollars is because I might only work another year or two, so its like buying a car with a one time payment) (i wish i could just pay it as a lump sum and be done)

If i understand the difference between FPO and ACIO3%.. The FPO policy would be best for the next 27 years, and then after that the ACIO 3% policy would pay more. Correct? (i took the current ACIO value and compounded at 3% to see how many periods it would be before it equaled the FPO)

I think it would take 56 years for my monthly premiums compounded at 6% to equal the FPO option. I didn't run the numbers but it seems that the monthly premiums can't ever save enough for the ACIO3% even in my "extended planning horizon"

In summary. For what seems to be about $18k today, I would be buying $200/day for 3 years adjusted for inflation if i end up needing it.

You are right, it seems like a good deal. I just would appreciate some validation on my logic/math/etc.

EDIT: i didn't see "Are you saying that you should allocate $18K of your HSA to generate enough to pay the LTCi premium each year?" -- yes basically, that's would be todays cost for the policy.

Your logic and math is officially validated, 100%!

...and thank you for your service to our country.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
User avatar
grabiner
Advisory Board
Posts: 30404
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by grabiner »

Soon2BXProgrammer wrote: Wed Feb 17, 2021 7:45 pm So i suppose this 60 day initial period is my chance. Lets assume I'm already financially independent, and this is an encore career even though I'm relatively young. Why wouldn't i just buy the smallest policy and self fund?*

(I would also have all the VA healthcare and LTC benefits owed to me: https://www.va.gov/health-care/about-va ... term-care/ )
Without the VA benefit, you would have likely have a positive expected value from the LTC plan, because you have medical conditions which will make it more likely that you will need LTC, and need it at a younger age.

However, if the benefit duplicates what you already have from the VA, it may not be worthwhile.
Wiki David Grabiner
LFT_PFT
Posts: 297
Joined: Mon May 28, 2007 6:59 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by LFT_PFT »

WoW2012 wrote: Wed Feb 17, 2021 1:54 pm
MadHungarian wrote: Wed Feb 17, 2021 1:47 am [OT comment removed -- moderator oldcomputerguy]

But on a more practical note, and to bring the thread back again, is there any way i can deduct these new taxes on my Federal tax return, do you suppose?

I don't think you can deduct these new programs on your federal income taxes. The real cost of this program is not .58%, but .80% (if you're in a 28% federal income tax bracket.)
Can you please explain the .80%? I don't see that referenced in any of the links.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

grabiner wrote: Thu Feb 18, 2021 11:34 pm
Soon2BXProgrammer wrote: Wed Feb 17, 2021 7:45 pm So i suppose this 60 day initial period is my chance. Lets assume I'm already financially independent, and this is an encore career even though I'm relatively young. Why wouldn't i just buy the smallest policy and self fund?*

(I would also have all the VA healthcare and LTC benefits owed to me: https://www.va.gov/health-care/about-va ... term-care/ )
Without the VA benefit, you would have likely have a positive expected value from the LTC plan, because you have medical conditions which will make it more likely that you will need LTC, and need it at a younger age.

However, if the benefit duplicates what you already have from the VA, it may not be worthwhile.

V.A. long-term care benefits are restricted. They are not available to every veteran. The V.A long term care benefits are prioritized by percentage disabled, net worth and income. It's highly unlikely the OP could ever qualify for V.A. long term care benefits.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

LFT_PFT wrote: Thu Feb 18, 2021 11:48 pm
WoW2012 wrote: Wed Feb 17, 2021 1:54 pm
MadHungarian wrote: Wed Feb 17, 2021 1:47 am [OT comment removed -- moderator oldcomputerguy]

But on a more practical note, and to bring the thread back again, is there any way i can deduct these new taxes on my Federal tax return, do you suppose?

I don't think you can deduct these new programs on your federal income taxes. The real cost of this program is not .58%, but .80% (if you're in a 28% federal income tax bracket.)
Can you please explain the .80%? I don't see that referenced in any of the links.
The .58% isn't a tax. It's literally called a premium. If it was a state income tax it would be free from federal income tax. But it's not a tax and from what I've heard it's subject to federal income tax.

If I'm in the 28% federal income tax bracket for every 80 cents I earn I have to pay 22 cents in federal income tax netting me 58 cents. 58 cents goes to the Washington long term care trust act. 22 cents goes to uncle Sam. Voila, the .58% state "premium" actually costs .80% after including federal taxes.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

grabiner wrote: Thu Feb 18, 2021 11:34 pm Without the VA benefit, you would have likely have a positive expected value from the LTC plan, because you have medical conditions which will make it more likely that you will need LTC, and need it at a younger age.

However, if the benefit duplicates what you already have from the VA, it may not be worthwhile.
WoW2012 wrote: Fri Feb 19, 2021 12:11 am V.A. long-term care benefits are restricted. They are not available to every veteran. The V.A long term care benefits are prioritized by percentage disabled, net worth and income. It's highly unlikely the OP could ever qualify for V.A. long term care benefits.

Thanks @grabiner for joining the discussion.

From an administrative eligibility, it seems I fall into the qualification requirements based on 70%
As previously mentioned, the Veterans Millennium Health Care and Benefits Act (P.L. 106-117) requires the VA to provide nursing home care to the following veterans:
 any veteran in need of such care for a service-connected disability; or
to any veteran who is in need of such care and who has a service-connected disability rating of 70% or more; or
 any veteran who has a service-connected disability rated 60% or more and unemployable; or
 any veteran who has a service-connected disability rated 60% or more and who has been rated permanently and totally disabled
however for the clinical eligibility, it is a lot more strict then just "two ADLs" for LTCFEDs
Veterans must meet nursing home level of care for either rehabilitation or custodial care; for custodial care, veteran has dependencies in three or more ADLs, or significant cognitive impairment, or requires care as adjunct to home hospice services, or two ADL dependencies and any two of the following:
 three IADLs dependencies;
 recent nursing facility discharge;
 age 75 or older;
 three hospitalizations in a year;
 clinical depression diagnosis
Thanks again for both you participation. I'll continue to research and think about this a bit.


(quotes pulled from: https://fas.org/sgp/crs/misc/R44697.pdf)
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
Workinprogress
Posts: 97
Joined: Wed Mar 06, 2019 9:25 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Workinprogress »

So, for those of us that are not going to be fully employed for the ten year period to become eligible...Can we just get a W2 job for a couple weeks every year for the rest of our ten year enrollment period?
Kind of looks like that would make us eligible, for a small outlay of time and treasure.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Workinprogress wrote: Fri Feb 19, 2021 5:28 pm So, for those of us that are not going to be fully employed for the ten year period to become eligible...Can we just get a W2 job for a couple weeks every year for the rest of our ten year enrollment period?
Kind of looks like that would make us eligible, for a small outlay of time and treasure.
500 hours per year is the minimum number of hours you have to work for it to count as one year.

keep in mind, even if you are fully vested, it's only $100 per day for 365 days of benefits.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Workinprogress
Posts: 97
Joined: Wed Mar 06, 2019 9:25 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Workinprogress »

Thank you for the information regarding the 500 hours, WoW2012. That makes perfect sense.
I guess I will just not worry about the extra charges and continue with my own thoughts of self insuring.
The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

Workinprogress wrote: Fri Feb 19, 2021 10:33 pm The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
My grandfather, who had been born in 1909, so he was from a different generation, always told my father, that he would rather be shot in the whore house at midnight before he goes into one of those homes.

He never did go into one of those homes.
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Workinprogress wrote: Fri Feb 19, 2021 10:33 pm Thank you for the information regarding the 500 hours, WoW2012. That makes perfect sense.
I guess I will just not worry about the extra charges and continue with my own thoughts of self insuring.
The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
Most people who need long-term care receive their care at home.
What's your plan for staying at home?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
User avatar
arcticpineapplecorp.
Posts: 8571
Joined: Tue Mar 06, 2012 9:22 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by arcticpineapplecorp. »

Soon2BXProgrammer wrote: Tue Feb 16, 2021 10:38 pm I was alerted to:
Washington State Long Term Care Trust Act
https://www.ltc-associates.com/educatio ... trust-act/

Short-term care benefit, publicly funded by a 0.58% payroll tax on all wages and remuneration, withheld quarterly by employers
Only Washington residents can qualify for benefits
Residents who move out of state for 5 or more years forfeit both benefits and premiums
Benefits are paid in $100 "stackable" units, up to a $36,500 lifetime maximum

----
From my reading, regardless of the amount of tax paid, people get the same benefit. So it is punitive for high income earners.

I was never in the market for long term care but there are exemptions for people who have their own policy. Has anyone looked into this in detail?

From a pure dollars and cents perspective. I am in an encore job as a Federal Employee. I could sign up in my initial enrollment for the Fed LTC for the minimum benefit and it would be way less then the payroll tax...
Barb Devereaux brought this up at www.retiremeet.com today

you can contact her at barbara@vestory.com or 425-606-7819
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

arcticpineapplecorp. wrote: Sat Feb 20, 2021 12:39 pm
Soon2BXProgrammer wrote: Tue Feb 16, 2021 10:38 pm I was alerted to:
Washington State Long Term Care Trust Act
https://www.ltc-associates.com/educatio ... trust-act/

Short-term care benefit, publicly funded by a 0.58% payroll tax on all wages and remuneration, withheld quarterly by employers
Only Washington residents can qualify for benefits
Residents who move out of state for 5 or more years forfeit both benefits and premiums
Benefits are paid in $100 "stackable" units, up to a $36,500 lifetime maximum

----
From my reading, regardless of the amount of tax paid, people get the same benefit. So it is punitive for high income earners.

I was never in the market for long term care but there are exemptions for people who have their own policy. Has anyone looked into this in detail?

From a pure dollars and cents perspective. I am in an encore job as a Federal Employee. I could sign up in my initial enrollment for the Fed LTC for the minimum benefit and it would be way less then the payroll tax...
Barb Devereaux brought this up at www.retiremeet.com today

you can contact her at barbara@vestory.com or 425-606-7819

What did she say?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
User avatar
arcticpineapplecorp.
Posts: 8571
Joined: Tue Mar 06, 2012 9:22 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by arcticpineapplecorp. »

WoW2012 wrote: Sat Feb 20, 2021 12:52 pm
arcticpineapplecorp. wrote: Sat Feb 20, 2021 12:39 pm
Soon2BXProgrammer wrote: Tue Feb 16, 2021 10:38 pm I was alerted to:
Washington State Long Term Care Trust Act
https://www.ltc-associates.com/educatio ... trust-act/

Short-term care benefit, publicly funded by a 0.58% payroll tax on all wages and remuneration, withheld quarterly by employers
Only Washington residents can qualify for benefits
Residents who move out of state for 5 or more years forfeit both benefits and premiums
Benefits are paid in $100 "stackable" units, up to a $36,500 lifetime maximum

----
From my reading, regardless of the amount of tax paid, people get the same benefit. So it is punitive for high income earners.

I was never in the market for long term care but there are exemptions for people who have their own policy. Has anyone looked into this in detail?

From a pure dollars and cents perspective. I am in an encore job as a Federal Employee. I could sign up in my initial enrollment for the Fed LTC for the minimum benefit and it would be way less then the payroll tax...
Barb Devereaux brought this up at www.retiremeet.com today

you can contact her at barbara@vestory.com or 425-606-7819

What did she say?
not much. I think she said you wouldn't have the tax if you had a long term care plan, but if you wanted a more detailed analysis and understand the minimum requirements to avoid the tax to call her to go over the details. Vestory is a fiduciary and she made clear the insurance partners they use adhere to similar principles and do not push policies.

she also talked about (and provided info, see link below) tax advantages for small business owners who offer LTCI for self/employees:
https://static1.squarespace.com/static/ ... andout.pdf
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

arcticpineapplecorp. wrote: Sat Feb 20, 2021 1:01 pm
WoW2012 wrote: Sat Feb 20, 2021 12:52 pm

What did she say?
not much. I think she said you wouldn't have the tax if you had a long term care plan, but if you wanted a more detailed analysis and understand the minimum requirements to avoid the tax to call her to go over the details. Vestory is a fiduciary and she made clear the insurance partners they use adhere to similar principles and do not push policies.

she also talked about (and provided info, see link below) tax advantages for small business owners who offer LTCI for self/employees:
https://static1.squarespace.com/static/ ... andout.pdf

Tax-deductible premiums.
Tax-free benefits.
There are only 2 types of insurance that have that: medical insurance and long-term care insurance.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Workinprogress
Posts: 97
Joined: Wed Mar 06, 2019 9:25 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Workinprogress »

WoW2012 wrote: Sat Feb 20, 2021 11:46 am
Workinprogress wrote: Fri Feb 19, 2021 10:33 pm Thank you for the information regarding the 500 hours, WoW2012. That makes perfect sense.
I guess I will just not worry about the extra charges and continue with my own thoughts of self insuring.
The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
Most people who need long-term care receive their care at home.
What's your plan for staying at home?
A very good and valid question.

I am a manual laborer, so I have seen my contemporaries experience body damaging events, in addition to the ravages of time. In some sort of effort to prepare for this risk, I made a few features into my home when building. All floor space and sidewalks on the same level with no steps or door sills above one inch, wide doorways, grab handles in the bathrooms, lower counters/cupboards and other provisions for Grampa Tim.

I had/have not thought about "real" long term care in the home. I appreciate you pointing out the shortfall in my outlook/planning.

As far as LTC in a facility, we had decided to assume the risk. We looked at statistics on length of stay and cost per day and decided that we would have enough finances to cover the median duration stay. This, while all the time hoping to die with our hair on fire and never visit a LTC facility.

Looks like more planning is in order, thanks for the heads up.
czaj
Posts: 163
Joined: Sun Oct 04, 2015 4:01 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

WoW2012 wrote: Fri Feb 19, 2021 12:24 am
LFT_PFT wrote: Thu Feb 18, 2021 11:48 pm
WoW2012 wrote: Wed Feb 17, 2021 1:54 pm
MadHungarian wrote: Wed Feb 17, 2021 1:47 am [OT comment removed -- moderator oldcomputerguy]

But on a more practical note, and to bring the thread back again, is there any way i can deduct these new taxes on my Federal tax return, do you suppose?

I don't think you can deduct these new programs on your federal income taxes. The real cost of this program is not .58%, but .80% (if you're in a 28% federal income tax bracket.)
Can you please explain the .80%? I don't see that referenced in any of the links.
The .58% isn't a tax. It's literally called a premium. If it was a state income tax it would be free from federal income tax. But it's not a tax and from what I've heard it's subject to federal income tax.

If I'm in the 28% federal income tax bracket for every 80 cents I earn I have to pay 22 cents in federal income tax netting me 58 cents. 58 cents goes to the Washington long term care trust act. 22 cents goes to uncle Sam. Voila, the .58% state "premium" actually costs .80% after including federal taxes.
Not sure I follow your logic. You wouldn’t be paying any additional federal tax due to the premium. On the HSA side, it may even be eligible for HSA distributions if it were considered LTC insurance according to the IRS.
czaj
Posts: 163
Joined: Sun Oct 04, 2015 4:01 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

I live in Washington and from what I’ve seen on this, not really a fan of the program. Not really sure I’ll be in Washington and/or working for 10 more years.

My wife and I are 28 and may look into private insurance. Given how far away we’d likely need LTC, my current plan was self-insuring with HSA funds as we already have about 50K built up. To be exempt, I wonder if would you have to show you have LTC each year. Otherwise, one could buy private insurance this year, cancel shortly after, and be exempt for life?

Their vesting requirements seem rather restrictive and premium is expensive for such a small benefit. I also see an issue with a non-working spouse who would never be eligible for benefits.

As far as taxable income, it’s possible that they’ll limit this to OASDI income, like their current family leave tax.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

czaj wrote: Sat Feb 20, 2021 1:29 pm I live in Washington and from what I’ve seen on this, not really a fan of the program. Not really sure I’ll be in Washington and/or working for 10 more years.

My wife and I are 28 and may look into private insurance. Given how far away we’d likely need LTC, my current plan was self-insuring with HSA funds as we already have about 50K built up. To be exempt, I wonder if would you have to show you have LTC each year. Otherwise, one could buy private insurance this year, cancel shortly after, and be exempt for life?

Their vesting requirements seem rather restrictive and premium is expensive for such a small benefit. I also see an issue with a non-working spouse who would never be eligible for benefits.

As far as taxable income, it’s possible that they’ll limit this to OASDI income, like their current family leave tax.

Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Sat Feb 20, 2021 1:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

czaj wrote: Sat Feb 20, 2021 1:18 pm
WoW2012 wrote: Fri Feb 19, 2021 12:24 am
LFT_PFT wrote: Thu Feb 18, 2021 11:48 pm
WoW2012 wrote: Wed Feb 17, 2021 1:54 pm
MadHungarian wrote: Wed Feb 17, 2021 1:47 am [OT comment removed -- moderator oldcomputerguy]

But on a more practical note, and to bring the thread back again, is there any way i can deduct these new taxes on my Federal tax return, do you suppose?

I don't think you can deduct these new programs on your federal income taxes. The real cost of this program is not .58%, but .80% (if you're in a 28% federal income tax bracket.)
Can you please explain the .80%? I don't see that referenced in any of the links.
The .58% isn't a tax. It's literally called a premium. If it was a state income tax it would be free from federal income tax. But it's not a tax and from what I've heard it's subject to federal income tax.

If I'm in the 28% federal income tax bracket for every 80 cents I earn I have to pay 22 cents in federal income tax netting me 58 cents. 58 cents goes to the Washington long term care trust act. 22 cents goes to uncle Sam. Voila, the .58% state "premium" actually costs .80% after including federal taxes.
Not sure I follow your logic. You wouldn’t be paying any additional federal tax due to the premium. On the HSA side, it may even be eligible for HSA distributions if it were considered LTC insurance according to the IRS.

The premium for the WaLTCTA will not have additional federal taxes due, it will just have regular federal income taxes due.
That's why a premium that is .58% of your income is actually costing you .80% of your income (if you're in a 28% federal income tax bracket).

Your statement, "(The Washington Long-Term Care Trust Act) may even be eligible for HSA distributions if it were considered LTC insurance according to the IRS" is very interesting.

The Washington Long-Term Care Trust Act does NOT even meet the requirements for long-term care insurance under Washington state Law.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Sat Feb 20, 2021 1:49 pm
WoW2012 wrote: Sat Feb 20, 2021 1:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Workinprogress wrote: Sat Feb 20, 2021 1:09 pm
WoW2012 wrote: Sat Feb 20, 2021 11:46 am
Workinprogress wrote: Fri Feb 19, 2021 10:33 pm Thank you for the information regarding the 500 hours, WoW2012. That makes perfect sense.
I guess I will just not worry about the extra charges and continue with my own thoughts of self insuring.
The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
Most people who need long-term care receive their care at home.
What's your plan for staying at home?
A very good and valid question.

I am a manual laborer, so I have seen my contemporaries experience body damaging events, in addition to the ravages of time. In some sort of effort to prepare for this risk, I made a few features into my home when building. All floor space and sidewalks on the same level with no steps or door sills above one inch, wide doorways, grab handles in the bathrooms, lower counters/cupboards and other provisions for Grampa Tim.

I had/have not thought about "real" long term care in the home. I appreciate you pointing out the shortfall in my outlook/planning.

As far as LTC in a facility, we had decided to assume the risk. We looked at statistics on length of stay and cost per day and decided that we would have enough finances to cover the median duration stay. This, while all the time hoping to die with our hair on fire and never visit a LTC facility.

Looks like more planning is in order, thanks for the heads up.


Between my wife and sons we've had about 8 different knee surgeries. So, when we moved to Washington we made sure to buy a single-level home. No steps. It's a good thing, too, because my mother-in-law lives with us now. We have grab bars in her bedroom and bathroom and in her hallway. We have a walk-in-shower. We have a special toilet.

Guess what?
She still needs someone to help her wash herself in the shower and to make sure she doesn't fall.
She still needs someone to help her get dressed in the morning.
Sometimes she needs help with personal hygiene after toileting.

That's why we have a home health aide here about 40 hours every week. Fortunately, her long-term care insurance is paying the full cost of the home health aide.

Long-term care is not "end-of-life" care. Hospice care is "end-of-life" care. Long-term care is care that lasts a long time and you don't know how long it will last.

The biggest problem with self-insuring is this: your family doesn't know how long you'll need care. Since your family doesn't know how long you might need care, they might be hesitant to withdraw money from the savings to pay someone to care for you. They'll try to care for you themselves. Unfortunately, this burden falls on wives and daughters more than men.

You might say, "We've already discussed it. I've told my (wife, my kids, etc...) to just use the savings if I need long-term care." Guess what? When that time comes, you probably won't be the one making the decisions.

The best part about having the long-term care insurance on my mother-in-law (besides the fact that it saved us over $100K in capital gains taxes and she's already received over $200K in benefits from her policy), the best part about the LTCi policy was that there was no hesitation in getting her the care that she needs AND there was no strife between her 3 adult children. Everyone knew that she had this LTCi policy which and we all knew that we should use it right away. And we did. No strife. No arguments. No arguing over which asset should we sell first to pay for her care.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Sat Feb 20, 2021 1:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 1:49 pm
WoW2012 wrote: Sat Feb 20, 2021 1:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
What rule am I missing that is different then the standard itemize medical deduction with the agi floor?

How are they different then medical expenses?
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
czaj
Posts: 163
Joined: Sun Oct 04, 2015 4:01 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

WoW2012 wrote: Sat Feb 20, 2021 1:49 pm
czaj wrote: Sat Feb 20, 2021 1:18 pm
WoW2012 wrote: Fri Feb 19, 2021 12:24 am
LFT_PFT wrote: Thu Feb 18, 2021 11:48 pm
WoW2012 wrote: Wed Feb 17, 2021 1:54 pm


I don't think you can deduct these new programs on your federal income taxes. The real cost of this program is not .58%, but .80% (if you're in a 28% federal income tax bracket.)
Can you please explain the .80%? I don't see that referenced in any of the links.
The .58% isn't a tax. It's literally called a premium. If it was a state income tax it would be free from federal income tax. But it's not a tax and from what I've heard it's subject to federal income tax.

If I'm in the 28% federal income tax bracket for every 80 cents I earn I have to pay 22 cents in federal income tax netting me 58 cents. 58 cents goes to the Washington long term care trust act. 22 cents goes to uncle Sam. Voila, the .58% state "premium" actually costs .80% after including federal taxes.
Not sure I follow your logic. You wouldn’t be paying any additional federal tax due to the premium. On the HSA side, it may even be eligible for HSA distributions if it were considered LTC insurance according to the IRS.

The premium for the WaLTCTA will not have additional federal taxes due, it will just have regular federal income taxes due.
That's why a premium that is .58% of your income is actually costing you .80% of your income (if you're in a 28% federal income tax bracket).
You’re still only paying 0.58%. If you were offered LTC insurance as part of an employer cafeteria plan under section 125, you would be paying 0.4176% [=0.58% * (1-.28)] if in the 28% bracket and the difference would be your opportunity cost.
czaj
Posts: 163
Joined: Sun Oct 04, 2015 4:01 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

WoW2012 wrote: Sat Feb 20, 2021 1:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 1:49 pm
WoW2012 wrote: Sat Feb 20, 2021 1:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
You can only deduct LTC expense above 10% of AGI, so HSA can fill in the gap below that, so I agree that using Traditional accounts for expenses above that threshold is better.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

czaj wrote: Sat Feb 20, 2021 2:11 pm
WoW2012 wrote: Sat Feb 20, 2021 1:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 1:49 pm
WoW2012 wrote: Sat Feb 20, 2021 1:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
You can only deduct LTC expense above 10% of AGI, so HSA can fill in the gap below that, so I agree that using Traditional accounts for expenses above that threshold is better.
But if you are someone who managed to over save in their HSA, the "penalty" for not using the HSA for eligible expenses is that it acts just like a traditional account while you are alive (assuming your 65+), however, you can't pass an HSA to the next generation. (all it taxed on the year of death)

A traditional account gets a 10 year distribution period. Also a traditional account can be converted to Roth.

Therefore, i don't see why if someone has saved a fortune in a HSA, they wouldn't prioritize getting it empty before death, either through qualified medical/LTC expenses or via paying taxes on it if their income bracket is low.
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
Topic Author
Soon2BXProgrammer
Posts: 2636
Joined: Mon Nov 24, 2014 11:30 pm

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

czaj wrote: Sat Feb 20, 2021 1:29 pm As far as taxable income, it’s possible that they’ll limit this to OASDI income, like their current family leave tax.
Currently the law isn't limited to OASDI income. Also the proposed changes (i know we can't talk about proposed changes, so I'm specifically saying what isn't in the proposed changes), don't have a change to that. its all payroll income.
Earned 34 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
WoW2012
Posts: 1033
Joined: Sun Dec 23, 2012 11:28 am

Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

czaj wrote: Sat Feb 20, 2021 2:07 pm
You’re still only paying 0.58%. If you were offered LTC insurance as part of an employer cafeteria plan under section 125, you would be paying 0.4176% [=0.58% * (1-.28)] if in the 28% bracket and the difference would be your opportunity cost.
You’re still only paying 0.58%.
True.


What do you mean by this:
If you were offered LTC insurance as part of an employer cafeteria plan under section 125, you would be paying 0.4176% [=0.58% * (1-.28)] if in the 28% bracket and the difference would be your opportunity cost.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Post Reply