Will Washington’s Long-Term Care Insurance Benefit Kill Private Insurance

The State of Washington is poised to enact a new tax to fund a nominal long-term care insurance benefit according to the latest study conducted by the American Association for Long-Term Care Insurance (AALTCI).

Read the Act here:  http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/House%20Bills/1087.pdf#page=1

“The Long-Term Care Trust Act has passed the House by a 63-33 vote,” explains Jesse Slome, director of AALTCI.    ”If the bill becomes law, Washington workers will pay into a trust making them eligible for benefits.”

Under the bill, starting in 2022 a tax of 0.58 percent will be assessed to most full-time workers.  Workers who pay in for either three years within the last six, or for a total of 10 years including five interrupted years, become qualified for benefits.  “Ultimately the benefit could total $36,500 – thought this amount could increase by three percent if approved by the program,” Slome acknowledges.

“The new program will be a boon for the State’s providers of homecare services because now they’ll have a steady and secure source of payments,” Slome noted.  “It’ll be good for older citizens who will pay in for just a few years and can quickly become eligible.  Younger people who’ll pay for many, many years will be funding the care for older residents I suppose.”

In terms of the impact on long-term care insurance, Slome notes he’s heard little if any reaction from the nation’s long-term care insurers or insurance agents who market long-term care insurance solutions.    “There was far greater chatter when the CLASS Act was proposed as part of the Affordable Care Act.  That said, it will be interesting to see if programs like this are adopted by other states,” he adds.

“There’s great incentive to implement programs like this,” Slome notes.  “First, as I said, home care companies and providers benefit from a secure source of payment for their services, and there is also some benefit to State Medicaid programs.  But, the benefits available to consumers are really minimal, so there will always be a marketplace for those who want protection against costs that will exceed the benefit level of $36,500.”

Ultimately if plans like this become commonplace, there will be room for supplemental long-term care insurance available, Slome predicts.  “Just as there are Medicare Supplement insurance plans that 13 million Americans pay for to supplement Medicare, there will need to be supplemental LTCi policies to augment what really is a minimal benefit.”

The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning and helps consumers connect with knowledgeable professionals who are independent advisors.   Consumers looking for local long-term care insurance cost comparisons should visit the Association’s website at www.aaltci.org or can call the organization’s national headquarters at 818-597-3227.

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