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There is a lot of talk right now about long-term care (LTC), especially with the upcoming implementation of the Washington State WA Care Fund. And, if you are a W-2 employee in the state of Washington, this is a must read. But before I go there, it is important to know what is long-term care insurance and why it may be important in one’s planning.
Simply put, at some point in the future - often in one’s retirement years - our body is just not able to do what it has done so easily before. Sometimes further personal care is needed, so how does one best prepare?
The answer depends on and should be a decision made on each person’s individual situation.
What is Long-Term Care Insurance:
Long-term insurance coverage can help for various qualifying services, including home health care, helping people stay living in their home as long as possible, nursing home costs and adult day care. Benefits are paid tax-free after qualifying conditions are met. Qualifying decisions are made based on the inability to do two of the following without help (or one in the case of a cognitive diagnosis):
What is the Washington State’s WA Cares Fund?
Washington State is in the process of implementing the new WA Cares Fund, a state-run LTC plan for W-2 employees.
Some features of the Fund are:
While public funds for many societal needs can be imperative to the health of a person and community, this fund has some serious short-comings, and many people should consider other options. My concerns are that people will believe they will a decent benefit by participating through their working years, thus not properly planning for incapacity. If skilled nursing in Washington currently costs about $100,000 - $120,000 a year, and the maximum benefit of the program will pay $36,500 for one year (annualized), for most people it will fall way short of their potential need.
Considerations in purchasing a policy:
There is the ability to opt out of the program if a person has another qualified long-term care policy in place by November 1, 2021. The employment security department will accept applications for the exemption only from October 1, 2021 through December 31, 2022.
Note: Much of the Washington State long-term care legislation is incomplete and subject to different interpretation.
I’m happy to have a conversation on how these changes may affect you. Please don’t hesitate to contact me.