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

[nisiprius]

- for those who are younger, it’s hard to buy insurance for something that won’t be needed for 50+ years.

If you have a secret of preventing someone from not needing any form of ADL-assistance for the next 50+ years, please share it.

It can be needed at any age. Three words: spinal cord injury.

[czaj]

It can be needed at any age. Three words: spinal cord injury.

Right, my statement should’ve included a probabilistic caveat! Certainly, it’s possible to need long term care when younger. Though I would guess less than 1% of those under 50 are insuring for the need for LTC at their age.

[VanGar+Goyle]

- for those who are younger, it’s hard to buy insurance for something that won’t be needed for 50+ years.

According to the industry, half LTC purchasers are under age 52, now that WA has a requirement.
Before only 27% were under the age of 55. This shows the large effect of one average sized state, and that most people are not purchasing LTC.
Also it is much easier to buy insurance if you are younger. Less than 21% of people under age 55 are declined for LTC insurance.
Over 38% of people over the age of 65 are declined for LTC insurance.

https://www.aaltci.org/i/long-term-care ... ue-age.jpg
https://www.aaltci.org/i/LTC-Applicant- ... s-2021.jpg

[czaj]

- for those who are younger, it’s hard to buy insurance for something that won’t be needed for 50+ years.

According to the industry, half LTC purchasers are under age 52, now that WA has a requirement.
Before only 27% were under the age of 55. This shows the large effect of one average sized state, and that most people are not purchasing LTC.
Also it is much easier to buy insurance if you are younger. Less than 21% of people under age 55 are declined for LTC insurance.
Over 38% of people over the age of 65 are declined for LTC insurance.

https://www.aaltci.org/i/long-term-care ... ue-age.jpg
https://www.aaltci.org/i/LTC-Applicant- ... s-2021.jpg

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

I purchased LTC for WA exemption status in my late 20s. I'm pretty sure the rating formula was the same for all those under 40 (WoW could probably confirm if any insurer adjusts rates below age 40). I doubt this would be a "good deal" in the long run, at least compared to if I purchased it in my 30s or 40s. Of course one could risk a health issue in their 30s that requires LTC or prevents someone from being insurable, but that would be a (likely low) risk to take.

[Marseille07]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

I purchased LTC for WA exemption status in my late 20s. I'm pretty sure the rating formula was the same for all those under 40 (WoW could probably confirm if any insurer adjusts rates below age 40). I doubt this would be a "good deal" in the long run, at least compared to if I purchased it in my 30s or 40s. Of course one could risk a health issue in their 30s that requires LTC or prevents someone from being insurable, but that would be a (likely low) risk to take.

At the end of the day we're choosing the smaller of 0.58% W-2 tax or a private policy. The chance that you actually need LTC coverage is non-zero but slim.

[WoW2012]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

[czaj]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

While that is sizeable, I would still prefer it to be larger

(1) given the pool is even smaller at the insurance company-level and (2) the risk is low frequency and high severity.

[drk]

Previously approved exemptions are still valid
Workers who had private long-term care insurance on or before November 1, 2021, are able to apply to ESD for an exemption from the WA Cares Fund until December 31, 2022. Under current law, these exemptions are permanent and employees who have received an approved exemption will not be able to re-enroll in the program.

It's interesting that ESD has the same "illogical" interpretation of the law as those of us lacking in "basic common sense".

[WoW2012]

Previously approved exemptions are still valid
Workers who had private long-term care insurance on or before November 1, 2021, are able to apply to ESD for an exemption from the WA Cares Fund until December 31, 2022. Under current law, these exemptions are permanent and employees who have received an approved exemption will not be able to re-enroll in the program.

It's interesting that ESD has the same "illogical" interpretation of the law as those of us lacking in "basic common sense".

Thank you for proving my point.
It doesn't say what you think it says.

[WoW2012]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

While that is sizeable, I would still prefer it to be larger

(1) given the pool is even smaller at the insurance company-level and (2) the risk is low frequency and high severity.

How many billions of dollars in LTCi claims will you need to see before you're confident in the industry?

[WoW2012]

It can be needed at any age. Three words: spinal cord injury.

Right, my statement should’ve included a probabilistic caveat! Certainly, it’s possible to need long term care when younger. Though I would guess less than 1% of those under 50 are insuring for the need for LTC at their age.

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.

Or, long-term care could be short:
a skiing accident that requires rehab for several months.
I had one client fall off her horse and need care for 9 months. She didn't die. She just needed help with bathing, dressing, etc... while she rehabbed at home.
Another fell out of her attic and fractured her pelvis. It took her about 9 months and then she recovered. She didn't die either. But she needed assistance while she rehabbed.

[zie]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

That's about 2% of the US population. Almost 2.4% if you include the life insurance w/ rider people too.

Given that there are around 8-ish million people in some form of elder care, it's almost a 1:1 correlation! I'm betting the relationship between those insured and those that need the insurance is nowhere close to the same though.

[WoW2012]

That's about 2% of the US population. Almost 2.4% if you include the life insurance w/ rider people too.

Most of the US population should NOT own long-term care insurance because they can qualify for Medicaid if they need long-term care.
Please re-work your calculations leaving out the 3/4ths of the population that can qualify for Medicaid-funded long-term care.

[zie]

That's about 2% of the US population. Almost 2.4% if you include the life insurance w/ rider people too.

Most of the US population should NOT own long-term care insurance because they can qualify for Medicaid if they need long-term care.
Please re-work your calculations leaving out the 3/4ths of the population that can qualify for Medicaid-funded long-term care.

Great point!

[VanGar+Goyle]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

7 million people sounds like a lot, but there are probably more left handed unicyclists.
Rhetorically, I would say that 2% of the population is a small percentage.
But then I never figured how a 45% / 55% election is declared a landslide

Also $36,500 maximum lifetime LTC benefit does not sound like a lot

[WoW2012]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

7 million people sounds like a lot, but there are probably more left handed unicyclists.
Rhetorically, I would say that 2% of the population is a small percentage.
But then I never figured how a 45% / 55% election is declared a landslide

Also $36,500 maximum lifetime LTC benefit does not sound like a lot

You're right. $36,500 does not sound like a lot. I never said that $36,500 was a lot. It would probably pay for four or five months of care here in Washington. That's why people buy private long-term care insurance because a private long-term care insurance policy can have hundreds of thousands of dollars of benefits.

2% of the population is a small percentage. Most of the US population should NOT own long-term care insurance because they can qualify for Medicaid if they need long-term care. Please re-work your percentage leaving out the 3/4ths of the population that can qualify for Medicaid-funded long-term care and the millions of people under age 18 who cannot legally buy any type of insurance.

[tj]

That certainly shows how small the LTC industry is in terms of lives insured. That also doesn't mean that it's necessarily a good idea to purchase LTC. I also would prefer not to purchase insurance when the pool is that small.

Approximately 7 million people own some type of TRADITIONAL long-term care insurance.

Is that small?

Additionally, there are probably close to 1 million people who own a life insurance policy with an extension of benefits rider (i.e. an additional pool of benefits that can pay for long-term care after the death benefit has been exhausted.)

7 million people sounds like a lot, but there are probably more left handed unicyclists.
Rhetorically, I would say that 2% of the population is a small percentage.
But then I never figured how a 45% / 55% election is declared a landslide

Also $36,500 maximum lifetime LTC benefit does not sound like a lot

You're right. $36,500 does not sound like a lot. I never said that $36,500 was a lot. It would probably pay for four or five months of care here in Washington. That's why people buy private long-term care insurance because a private long-term care insurance policy can have hundreds of thousands of dollars of benefits.

2% of the population is a small percentage. Most of the US population should NOT own long-term care insurance because they can qualify for Medicaid if they need long-term care. Please re-work your percentage leaving out the 3/4ths of the population that can qualify for Medicaid-funded long-term care and the millions of people under age 18 who cannot legally buy any type of insurance.

How is relying on Medicaid a plan though? Doesn't Medicaid limit your options?

I have no heirs, therefore I should cancel my LTC insurance because it doesn't matter where the $$$ goes after I'm gone?

[WoW2012]

How is relying on Medicaid a plan though? Doesn't Medicaid limit your options?

I have no heirs, therefore I should cancel my LTC insurance because it doesn't matter where the $$$ goes after I'm gone?

Most people end up on Medicaid because they do NOT plan.
They end up on Medicaid by default.

People with little or no savings don't need long-term care insurance.
Long-term care insurance is only for those who have enough income and/or assets to protect.

[czaj]

How is relying on Medicaid a plan though? Doesn't Medicaid limit your options?

I have no heirs, therefore I should cancel my LTC insurance because it doesn't matter where the $$$ goes after I'm gone?

Most people end up on Medicaid because they do NOT plan.
They end up on Medicaid by default.

People with little or no savings don't need long-term care insurance.
Long-term care insurance is only for those who have enough income and/or assets to protect.

I would agree that LTCi is really only optimal for a small portion of people: those whose financial plan does not have great margin of error, but still have enough assets to not qualify for Medicaid. For those who have significant assets (relative to expenses), LTCi could be justified but is not necessary; because many Bogleheads fall into the this category (or they perceive themselves as such) is why many here don’t purchase it (except to avoid a tax, of course! )

[WoW2012]

How is relying on Medicaid a plan though? Doesn't Medicaid limit your options?

I have no heirs, therefore I should cancel my LTC insurance because it doesn't matter where the $$$ goes after I'm gone?

Most people end up on Medicaid because they do NOT plan.
They end up on Medicaid by default.

People with little or no savings don't need long-term care insurance.
Long-term care insurance is only for those who have enough income and/or assets to protect.

I would agree that LTCi is really only optimal for a small portion of people: those whose financial plan does not have great margin of error, but still have enough assets to not qualify for Medicaid. For those who have significant assets (relative to expenses), LTCi could be justified but is not necessary; because many Bogleheads fall into the this category (or they perceive themselves as such) is why many here don’t purchase it (except to avoid a tax, of course! )

The problem with self-funding is that when you need care, you're not the one making the decisions anymore. Self-funding often turns into spouse-care or daughter-care, neither of which are "optimal".

[WhiteMaxima]

LTCa is not insurance, it is a tax based on your income and with no state resident approval.

[WoW2012]

LTCa is not insurance, it is a tax based on your income and with no state resident approval.

The Washington Long-Term Care Trust Act is a state-run, social program, to help pay for long-term care.
Private Long-Term Care Insurance is insurance regulated by 51 departments of insurance in the 50 states and the District of Columbia.

Washington state legislators overwhelming approved the Washington Long-Term Care Trust Act and they were overwhelming re-elected.

[czaj]

The problem with self-funding is that when you need care, you're not the one making the decisions anymore. Self-funding often turns into spouse-care or daughter-care, neither of which are "optimal".

That could still be the case whether LTCi is purchased or not. Perhaps the family doesn’t know that you have LTCi or they don’t want to deal with the claim submission process. But LTCi still gives the option for outsourced care.

[WoW2012]

The problem with self-funding is that when you need care, you're not the one making the decisions anymore. Self-funding often turns into spouse-care or daughter-care, neither of which are "optimal".

That could still be the case whether LTCi is purchased or not. Perhaps the family doesn’t know that you have LTCi or they don’t want to deal with the claim submission process. But LTCi still gives the option for outsourced care.

Withdrawing $X,XXX every month from a retirement account for an unknown number of months hurts a lot more than filing a long-term care insurance claim.

[Kookaburra]

I read through the following WA Cares page and the latest RCW, and it seems quite clear to me that permanent is permanent when it comes to the exemptions issued for those who had their own private LTC policy before Nov 2021, and that one is just fine to cancel their private insurance.

https://wacaresfund.wa.gov/private-insurance/

Specifically, the responses to the FAQs about “can I cancel my LTC policy?” and “Can I get a refund for the private LTC policy I purchased?” are particularly illuminating. If one even mildly “reads between the lines”, they reinforce that one can cancel and stay permanently exempted. Heck, the fact that they even have an FAQ about “can I get a refund?” is telling! There is no ambiguity in the law.

[Marseille07]

I read through the following WA Cares page and the latest RCW, and it seems quite clear to me that permanent is permanent when it comes to the exemptions issued for those who had their own private LTC policy before Nov 2021, and that one is just fine to cancel their private insurance.

https://wacaresfund.wa.gov/private-insurance/

Specifically, the responses to the FAQs about “can I cancel my LTC policy?” and “Can I get a refund for the private LTC policy I purchased?” are particularly illuminating. If one even mildly “reads between the lines”, they reinforce that one can cancel and stay permanently exempted. Heck, the fact that they even have an FAQ about “can I get a refund?” is telling! There is no ambiguity in the law.

There is no question permanent is permanent under the current law. What you're missing is that the law can change.

Just think about the implication of an ongoing verification process. If they find that you don't have coverage, do you think you stay exempted anyway? Then what's the point of the verification process when the outcome doesn't change at all.

[Kookaburra]

I read through the following WA Cares page and the latest RCW, and it seems quite clear to me that permanent is permanent when it comes to the exemptions issued for those who had their own private LTC policy before Nov 2021, and that one is just fine to cancel their private insurance.

https://wacaresfund.wa.gov/private-insurance/

Specifically, the responses to the FAQs about “can I cancel my LTC policy?” and “Can I get a refund for the private LTC policy I purchased?” are particularly illuminating. If one even mildly “reads between the lines”, they reinforce that one can cancel and stay permanently exempted. Heck, the fact that they even have an FAQ about “can I get a refund?” is telling! There is no ambiguity in the law.

There is no question permanent is permanent under the current law. What you're missing is that the law can change.

Just think about the implication of an ongoing verification process. If they find that you don't have coverage, do you think you stay exempted anyway? Then what's the point of the verification process when the outcome doesn't change at all.

I understand that the law can change in the future, but that would be speculation which is prohibited by forum rules. As of now, there is no verification process no matter what the committee has recommended.

[Marseille07]

I understand that the law can change in the future, but that would be speculation which is prohibited by forum rules. As of now, there is no verification process no matter what the committee has recommended.

I'm not speculating what the change in law will be. I'm just saying it is likely to change. We're in agreement that under the current law, the verification process is nonexistent and even if there is one, your opt-out is permanent.

[Kookaburra]

I understand that the law can change in the future, but that would be speculation which is prohibited by forum rules. As of now, there is no verification process no matter what the committee has recommended.

I'm not speculating what the change in law will be. I'm just saying it is likely to change. We're in agreement that under the current law, the verification process is nonexistent and even if there is one, your opt-out is permanent.

How is the statement “it is likely to change” not speculation? How do you know this?

[jstorz]

How is the statement “it is likely to change” not speculation? How do you know this?

Because it has been recommended by the LTSS commission:

https://wacaresfund.wa.gov/wp-content/u ... -Final.pdf

We will know reasonably soon now that the legislature is back in session.

[Kookaburra]

How is the statement “it is likely to change” not speculation? How do you know this?

Because it has been recommended by the LTSS commission:

https://wacaresfund.wa.gov/wp-content/u ... -Final.pdf

We will know reasonably soon now that the legislature is back in session.

There is a big schism between what a committee recommends and what a bipartisan group of legislators will pass into law. So yes- that is highly speculative.

[WoW2012]

How is the statement “it is likely to change” not speculation? How do you know this?

Because it has been recommended by the LTSS commission:

https://wacaresfund.wa.gov/wp-content/u ... -Final.pdf

We will know reasonably soon now that the legislature is back in session.

There is a big schism between what a committee recommends and what a bipartisan group of legislators will pass into law. So yes- that is highly speculative.

Doesn't Washington state have super majorities in both houses?

[LadyGeek]

As a reminder, political comments (political parties, constituents, etc.) are off-topic.

[BuyAndHodl]

Well, without talking about potential legislation - what is everyone doing? Still holding their same LTC policy, or have you canceled yet? (With a plan to buy a new policy of it’s needed) I hate paying for a policy I don’t want, but I absolutely don’t want to lose my exemption and pay the tax.

[Marseille07]

Well, without talking about potential legislation - what is everyone doing? Still holding their same LTC policy, or have you canceled yet? (With a plan to buy a new policy of it’s needed) I hate paying for a policy I don’t want, but I absolutely don’t want to lose my exemption and pay the tax.

I'm still holding my coverage. Given the program starts on July 1, I think it's silly to cancel before that on the off chance you will be questioned about your coverage when submitting your exemption letter (although they shouldn't ask you about it).

[wingman4uz]

I am reluctantly keeping mine.

[johan851]

Likewise, keeping mine. Is a few hundred dollars a year instead of a few thousand, it's not worth the risk of losing the exemption.

[Kookaburra]

I’m holding on. A barebones $100/year policy is some cheap insurance against this intrinsically unfair tax.

[nerdymarketer]

Do you folks mind if we keep the chatter down until / unless there's an actual substantial change in the law / policy?

I (and I suspect many others) are subscribed to notifications from this thread as it's the only way that I'm aware of to be notified of changes to the law in a reasonably timely manner... there's no other way to subscribe this as a "news topic" from a personal consumer / taxpayer standpoint. And the way the forum software is setup, if I don't click through the notification emails, it won't send me notifications of new replies, so I have to click through every time. (If anyone knows how to keep receiving notifications for a thread, I'm all ears!)

But the majority of posts the past few months have been chit-chat or conjecture about what are the odds the law will change, and not really actionable.

[Kookaburra]

Do you folks mind if we keep the chatter down until / unless there's an actual substantial change in the law / policy?

I (and I suspect many others) are subscribed to notifications from this thread as it's the only way that I'm aware of to be notified of changes to the law in a reasonably timely manner... there's no other way to subscribe this as a "news topic" from a personal consumer / taxpayer standpoint. And the way the forum software is setup, if I don't click through the notification emails, it won't send me notifications of new replies, so I have to click through every time. (If anyone knows how to keep receiving notifications for a thread, I'm all ears!)

But the majority of posts the past few months have been chit-chat or conjecture about what are the odds the law will change, and not really actionable.

Are you serious?

[EnerJi]

I (and I suspect many others) are subscribed to notifications from this thread as it's the only way that I'm aware of to be notified of changes to the law in a reasonably timely manner... there's no other way to subscribe this as a "news topic" from a personal consumer / taxpayer standpoint. And the way the forum software is setup, if I don't click through the notification emails, it won't send me notifications of new replies, so I have to click through every time. (If anyone knows how to keep receiving notifications for a thread, I'm all ears!)

I turn off email notifications so this may or may not work for you, but basically I visit the Bogleheads forums occasionally, when I have time. Sometimes more frequently if I'm actively researching or involved in a decision, sometimes just once a month or even every couple of months.

Either way, my "notifications" at the top let me know when there's an update to a thread I'm following. Doesn't seem to matter how many posts have been made nor how much time has passed, if there's been an update to a thread I follow, it will show in my notifications. And then clicking on the notification will take me to the oldest unread post within that thread.