There’s a new Washington state Long term care tax which is in all reality an income tax, newly named the WA Cares Fund. This will affect you if you are a W2 employee working and living in Washington State. (Starts January 1, 2022.) If you are employed, there is only one way to permanently opt out. That is to purchase private long term care insurance before November 1, 2021. Washington State, like most states has an aging population and state Medicaid budgets are tight to say the least, this is why this has come about.
The First State to Do This:
Washington State is the first state to enact such a law. However, the new Washington state Long term care tax doesn’t provide true long term care benefits. It only provides shorter term care benefits. Meaning, it’s a bandaid, it’s not a fix. These benefits will only give you about 1 year of care at state medicaid reimbursement rates. The average length is about 2 1/2 years.
We Have Many Concerns:
1. If you move out of Washington state and you are vested in the program (means you paid in for 10 years), you will lose this coverage. You must retire and live in this state to collect any benefits.
2. It is not enough coverage $ wise.
3. Taxes could go up, this is just a starting point. (.58 % of your income for now. Ex. If you make $80,000 this year, your tax will $464 with no cap, the more you earn the more you pay.)
The benefits of getting an individual private policy outweigh what the state is offering and gives you more control. A typical private plan gives you 2-3 years, or more, of coverage where the state only gives you 1 year at about $100 a day. This daily rate is not enough for a nursing home, that would have been the daily cost of a nursing home in the mid 90’s.
Private long term care insurance for those who qualify, based on their health, is a better solution for those wanting to protect themselves from the cost of long term care.
Call us if you have more questions or if you just want more clarification.
Here is a recent video Rick made on this topic.