What Has Washington State Wrought

The window is closing. Washington state’s WA Cares Fund deadline is November 1, 2021. If you don’t have private long-term care insurance in place by that date and you are a W2 employee, your January 2022 paycheck will include a .58% tax.

We could make a lengthy list of negative things about this legislation. But it’s for naught now. Postponement petitions from companies and lawmakers alike have fallen on the deaf ears of the governor. The legislation which has turned the long-term care insurance market upside down is moving forward.

Between mid-May and late September, carriers offering products in WA made changes including applicant ages, coverage requirements, premium requirements and more before suspending sales until after the November deadline.

And a dozen other states may follow

WA has set a precedent. If you live in AK, CA, CO, HI, IL, MI, MO, MN, OR, NC, NY or UT and you don’t have private long-term care insurance, get busy learning about it now.

States are certainly learning from the WA experience. Mostly what not to do. We speculate that in the future we will see minimum coverage requirements, annual exemption requirements and audits to be sure that residents don’t buy, get a one-time exemption and quit the policy.

To make prudent decisions, you need to know about the risk of needing care, the cost of venues where you reside, what long-term care insurance covers, how you qualify for benefits, funding options, pros and cons of products in the market, tax-advantaged funding and more.

Healthcare insurance and Medicare are not funding options for custodial care. These programs are designed to be curative or rehabilitative. They are not designed to fund long-term care which is custodial care. That’s Medicaid which is government assistance. It’s means tested. And, depending on assets and income, it can be an expensive way to fund long-term care.

What have we learned

  • The WA legislation certainly increased awareness. But not very efficiently. Employers had no responsibility under the legislation to inform or educate employees.
  • In past years, the average age that people bought this insurance was about 57. Now it’s younger. We have many WA clients applying in their forties. That’s good! They will have coverage and at a lesser cost than waiting until they are in their fifties or sixties.
  • Insurance carriers experienced up to 10 times normal applicant volumes. With the very short timeline to underwrite WA applicants, all applicants including those from other states experienced delays. Double or in some cases triple the normal time to underwrite.
  • Doctors’ offices were deluged with requests for medical records adding to the underwriting timeline.
  • In today’s world of online instant purchases, the expectation that long-term care insurance is available just like term life insurance does not apply. Underwriting morbidity is far more involved and takes longer than underwriting mortality.

Get ‘er done

If you have not done long-term care expense planning, do it now! There are other federal acts and ideas in the making. These include the WISH Act which we’ve covered previously in our blog, “The Wish Act – Appropriately Named.” Others:

  • Social Security Caregivers Credit Act
  • Better Care Better Jobs Act
  • Credit for Caring Act
  • The Long-Term Care Affordability Act

We’d like to see two things that we think would get the attention of consumers:

  • Allow funding with qualified funds without taxation or penalty regardless of age.
  • Full premium deductibility on federal and state income tax regardless of age.

In addition to tax incentives, we need better consumer education and a wider range of product options. (This is hardly news to the industry.)

Let’s get Americans insured against the ravages of long-term care. There are attractive, affordable and prudent ways to promote long-term care funding. 

Yes. Government assistance through public programs designed for the indigent will always be a funding source. But private insurance offers so much more.

Figure out your plan – where you want to receive care, who you want to provide care and how to pay for it. Talk with your loved ones about your plan. But get ‘er done!