The State of Washington’s Long-Term Care Trust Act is “as good as it gets”

by | Mar 22, 2018

The State of Washington was recently considering legislation to help fund long-term care for some of the state’s residents. The program would be funded through a payroll tax of .49% on all wages. Every employee in the state of Washington will be automatically enrolled in the program on January 1st, 2022. A family earning $70,000 per year would pay $343 per year in taxes to fund this program.

There are five major flaws in the proposed program.

It Excludes Retirees
If you are disabled, retired, or if you will retire before December 2024, you canNOT participate in this program. In order to participate in the program you must work for at least three years and pay the tax. The people who are at the greatest risk of needing long-term care are excluded from this program.
The Benefits Are Short, Not Long
Contrary to the programs name, the benefits are short, not long. The program will pay benefits for only one year. The average duration of coverage for long-term care insurance is just over five years. (5.3 years to be exact.)*

*Source: The Benefits of Long-Term Care Insurance and What They Mean For Long-Term Care Financing (see page 5)

It Only Pays $100 Per Day
Beginning in 2025, those eligible for benefits will receive $100 per day which will be paid to one of the approved care providers. Using current costs of care $100 per day would pay for less than 4 hours of home care. Industry estimates show that by 2025 $100 per day will pay for less than 3 hours of home care. The average long-term care insurance policy purchased today has roughly $5,000 of monthly benefit (about $170 per day).

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It’s Hard To Qualify For Benefits
This program will only pay benefits if you need assistance with THREE of the six activities of daily living (ADL’s). Real long-term care insurance pay benefits when you need assistance with only TWO ADL’s. (The six ADL’s are: bathing, dressing, eating, maintaining continence, toileting, and transferring to and from bed and chair.) Needing help with bathing and dressing is pretty easy to qualify for. Needing help with bathing, dressing and toileting means you need A LOT more care.
It Does NOT Cover Dementia Or Alzheimer’s
Federal law requires long-term care insurance policies to pay benefits for policyholders who need supervision due to a cognitive impairment like Alzheimer’s or dementia. Washington’s Long-Term Care Trust Act does not pay any benefits for those who need supervision due to a cognitive impairment.
Yet, I Support This Bill
With all that’s wrong with this bill, you’d think that I, as a long-term care insurance specialist, would be against this bill. On the contrary, I support this bill and hope it becomes law in the state of Washington. I support this bill for three reasons:

First, this bill will help to slow the growth of Medicaid. By providing a year of modest benefits this bill may delay the need for Medicaid. By slowing the growth of Medicaid this bill can help preserve our limited Medicaid dollars for those who need it the most.

Second, this bill will increase the dollars that are available to the home care industry. That will help to grow the “care infrastructure”.

Third, this program will remind every employee (every pay period) that we all need to plan for long-term care. The small payroll tax is a constant reminder that neither Medicare nor medical insurance pays for long-term care.