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What You Need To Know About WA State's Long-Term Care Insurance Program

What You Need To Know About WA State's Long-Term Care Insurance Program

June 01, 2021

In case you missed it: In May of 2019, Washington Governor Jay Inslee signed a bill into law, known as the "Aging and Long-Term Support Administration Long-Term Services and Supports Trust Act", a state-operated long-term care insurance program. Here's what you need to know:

How will it work?

The benefits will be funded with an employee payroll tax of 0.58%  starting in January of 2022, with benefits starting in 2025. The program will pay a lifetime benefit of up to $36,500 per person for services such as professional in-home care, nursing home stays, adaptive equipment, home accessibility modifications, support for family members who are providing care, home-delivered meals, and rides to the doctor. People are eligible for benefits once they need assistance with three or more daily activities. Washington defines daily activities differentlythan private long-term care insurance companies. Washington residents age 18+ who pay in for either 10 years without a 5 year straight gap, or three of the last six years, and who work at least 500 hours a year are considered eligible. Self-employed people may opt in, but will not be included by default. You can read the one page quick info sheet from the state here.

What are my options?

You basically have two options. Your first choice is to participate in the program by paying the tax, which is the default for W-2 employees, including single-owner LLC's. (Note that as a self-employed person who does not pay yourself W-2 wages, you can choose to opt in.)

Your second option as an employee is to opt out by putting in place your own long-term care insurance coverage by November 1st and applying for an exemption between October 1, 2021 and December 21, 2022. This option could save you some money, but you'll want to be careful to make sure that whatever coverage you put in place is an appropriate replacement for what you're giving up.

Which choice is right for you? Consider the following questions:

  • Do you expect to work enough years in the state of Washington to be eligible for benefits?
  • Do you have satisfactory long term care coverage in place already?
  • How much do you expect to pay in LTC taxes over the duration of your career?
  • Do you want to set up long-term care insurance that would fully cover your needs?
  • Do you want to set up a bare minimum long term care policy to get you out of the tax?

I highly encourage you to reach out to your insurance or financial professional for help weighing your options, especially if you're contemplating opting out by establishing your own private insurance coverage. 

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