Are you Prepared for Long Term Care?
The state of Washington passed the Long-Term Services and Supports Trust Program Act (also known as the Washington Cares Fund) in 2019 to reduce pressure on the Medicaid system. It goes into effect in January of 2022. The Cares Fund will be funded by a mandatory .58% payroll tax on all W-2 wage earners without a cap on their income or renumeration. The only way to avoid this tax is to provide proof that one owns private LTC insurance by November 1st of this year.
The benefit that will be paid by this tax is minimal, to say the least. Once vested, residents will be eligible for $100 a day up to a maximum lifetime benefit of $36,500 (adjusted for inflation) to pay for expenses associated with assistance with activities of daily living (ADLs). While private LTC insurance only requires you to be unable to perform 2 ADLs, the Washington state plan requires that individuals need assistance with 3 ADLs. ADLs include things like eating, dressing, bathing, toileting, transferring, and cognitive impairment.
A significant portion of every state’s budget goes to pay for long-term care for people who have run out of money. With the aging of the large cohort of Baby Boomers, states can only expect those expenses to increase. With Washington state taking the lead, at least 10 other states are beginning to discuss similar solutions to the pressing budgetary need. When a similar “solution” will come to PA is anyone’s guess.
If you have not yet addressed how you will pay for long-term care expenses, it may not be too late. While traditional long-term care insurance may not make sense or be possible at this time, there are other options: life insurance with a long-term care rider, annuities with a long-term care rider, and plans where you can pay for a pre-determined number of home health care hours.