Long Term Care Insurance – What’s going on in Washington?

Long term care is an issue that is going to get bigger in the coming years. The silver tsunami of aging Americans is coming, and most states are not prepared. The costs associated with long term care can devastate families, wipe out retirements, and put a strain on state Medicaid programs. Washington is the first state to enact a payroll tax to cover long term care expenses, and many insurance experts are predicting other states will soon follow suit. The question going through many minds is, what can be done differently now that a few of the rougher lessons have been learned?

Washington long term care payroll tax

Effective January 1, 2022 Washington residents will pay .58% of their income, and this amount may be adjusted every two years. They are eligible to receive benefits January 1, 2025 if they are a Washington resident, 18 years or older, are vested, and need help with three activities of daily living. Benefits are $100 a day with a maximum lifetime limit of $36,500. Individuals are allowed to opt-out if they purchase private long term care insurance by November 1, 2021.

"The silver tsunami of aging Americans is coming, and most states are not prepared."

Some residents don’t seem bothered by the new tax. These include those who are low income and wouldn’t be able to afford private coverage, anyone with significant health issues who wouldn’t qualify, or self-employed and business owners who will not be included in the payroll tax.

Others – most often high-income earners - are scrambling to get a policy in place by the November 1 deadline. Unfortunately, those who didn’t purchase right away, may be running out of options.

Insurance Carrier Washington Response

Transamerica announced in December 2020 that they would be discontinuing individual long term care insurance sales in March 2021, then made another announcement in January 2021 that they would also be discontinuing employer-based long term care insurance in June 2021.

In an attempt to curb the flood of applications carriers placed limitations on policy cancellations and commissions chargebacks, minimum age of applicants and increasing inflation requirements. However, the applications continued to surge. With limited staff and a narrow time frame to process them all, Mutual of Omaha suspended all Washington sales as of June 16. Thrivent followed suit on June 17. National Guardian Life is currently still available in the state at the time of this article being published.

"The costs associated with long term care can devastate families, wipe out retirements, and put a strain on state Medicaid programs."

Questions Other States Should be Asking

Will other states follow a similar model and timeframe? Would staggering opt-out deadlines based on age be beneficial? Should the states work closer with insurance carriers to ensure proper staffing and realistic timelines? Which states will be next? We’ll be sure to keep you up-to-date as we learn these answers and more.

How to Prepare

At LTC Consumer our goal is to offer serious long term care planning. We want to protect your retirement, your family, and your pride. Our specialists have decades in the business and offer a portfolio of top options to choose from. If you’d like to begin learning more, contact our team today, and gain peace of mind knowing you’re covered when things get stressful in a family’s time of crisis.