The Washington law allowed those with qualified LTC coverage to opt out and avoid the payroll tax entirely, but residents were given a short period of time after the law was enacted to secure a qualified LTC policy. Not only were Washingtonians forced to scramble, but many insurers also placed restrictions on the types of coverage available for Washington residents.

Long Term Care Insurance Provides Options

The state programs will provide LTC coverage for those who remain uninsured, but for most people, the state benefits won’t be nearly enough. In Washington, residents who do not own a private policy can receive up to $36,500 in state-supplied lifetime benefits to pay for extended care–far short of anticipated needs given that current costs for long term care during the last five years of life average between $233,000 and $367,000.¹

With more states considering “opt-out” model LTC programs like Washington’s, it’s important to put meaningful coverage in place now. Like Washington, California is expected to allow a small window for enrollment in private LTC coverage. But in New York, the current draft bill requires coverage to be in place before the law goes into effect. Since it can take up to two months to apply and be approved, it’s important to start planning now.

With an affordable LTC policy, you can safeguard your income and your assets from the expensive costs of extended care, including in-home care. With fifteen new states considering new LTC tax plans, it’s important to start your own planning now.

An important note for younger people: If you’re young and expect your earnings to increase significantly in future years, you can save significantly by buying LTC insurance sooner rather than later, especially if you reside in a state like Washington where there is no cap on the payroll tax. By securing LTC insurance while you’re younger and in good health, you’ll also benefit from lower premiums.

An important note for everyone: When considering LTC insurance, it may be tempting to purchase the lowest-cost plan available to avoid the payroll tax. But keep in mind that a robust LTC policy can help protect your future assets and lifestyle choices. With a meaningful policy, you’ll have access to high-quality care, including home care, without burdening your family.

Our experienced LTC Advisors can help you find the right coverage. Don’t delay!

¹ “Average Cost of Long Term Care Insurance,” cosumeraffairs.com, March, 2022.