Long-Term Care Awareness — Now a Key Focus of Several States

Today officially ends LTC Awareness Month, but not long-term care awareness — particularly as states are considering LTC legislation to help address this growing need and expense. Specifically, many states are now looking for ways to reduce long-term care spending from their Medicaid budgets and are trying to create new solutions.

The state of Washington was a pioneer in this space, but their WACares program has not gone as planned. The implementation has been delayed until July 2023, with the goal of addressing some issues. As currently written, those who contribute to the program will not be eligible to receive benefits if they move out of state. Additionally, they are addressing concerns about Washington workers who do not live in the state but are required to contribute to the tax.

There was an opportunity for Washington workers who purchased private LTC insurance prior to 11/1/21 to request an exemption from the program and its payroll tax. More workers opted out than initially expected — not surprising considering the math. At the start of the program, Washington workers will contribute $0.58 per $100 of earnings, for a lifetime benefit of $36,500. That means that high-income earners and young workers will likely pay more tax into the plan than they could ever receive in LTC benefits. Not to mention that taxable contributions are uncapped. 

To read all about the WA legislation, check out our AM Blog: Washington State Long-Term Care Program or visit https://wacaresfund.wa.gov/ to learn more about the WACares program.

Although Washington has not gone as planned, there are still other states considering similar legislation to address increasing LTC spending. California’s LTC task force is expected to deliver a recommendation by the end of 2022. Additional states looking into possible legislation include AK, CO, HI, IL, MI, MO, MN, OR, PA, NC, NM, NY and UT. While many are proposing exceptions for those with private LTC coverage, this may not apply to those who purchase after the legislation is approved or implemented.

That’s why it’s more important than ever to discuss the issue of paying for long-term care with your clients, especially high-income earners. What are their options? Perhaps they might want to consider a long-term care insurance solution that can offer portability, greater coverage and flexible premiums.

Washington and other states considering legislation have made it very clear that paying for long-term care is a problem that is not going away — and one that should be addressed.