Elizabeth Hovde of the Washington Policy Center offers advice to the hundreds of thousands of people who applied for exemption from the WA Cares Fund payroll tax
Elizabeth Hovde
Washington Policy Center
Hundreds of thousands of people who applied for exemption from the WA Cares Fund payroll tax feel a little betrayed. Make that a lot betrayed.
I’ve been on the hunt for advice for them since the Legislature delayed the payroll tax that many sought to avoid and in search of a better product than the one the state was pitching. The tax was supposed to start being withdrawn from last month’s paychecks. Instead, lawmakers approved an 18-month delay of the flawed long-term-care law last week, with even supporters of the law saying they hoped to fix its most broken parts.
Thousands will see no delay in money absent from their bank accounts during the next 18 months, however. They’ll still have to pay for the long-term-care insurance (LTCI) plans they’ve secured. Should they cancel policies they wouldn’t have gotten were it not for the new state payroll tax that’s now delayed until July 2023? I am not a financial planner, but my advice is to keep the plans, for many reasons.
Knowing that you have some money to help out later in life should you end up needing long-term care isn’t a bad thing. That’s especially true for those who might not have the assets, savings or family needed to see them through potential long-term care. A good plan — not the state’s insolvent, inadequate social program — can offer some assurance. The only silver lining to the state’s misguided law on long-term care is the awareness it has raised. More than 475,000 people now report having private LTCI.
Even for the many workers who would rather invest their money in other ways to pay for life’s needs, I say keeping the plan is the best bet. (That is unless you are one of the few, new exemption categories. See HB 1733.) This long-term-care law is set to resume in 18 months. When it does, a second opportunity to opt out won’t be afforded and a recurring attestation of coverage could be required. As Rep. Joe Schmick, R-Colfax, told me, he believes any private policy has to be better than the state’s program, so why give it up?
Schmick was one of the few lawmakers who got back to me after I asked more than a dozen if they had advice for those with exemptions. Those who replied agree that keeping one’s LTCI plan was wise and that a future opt-out window won’t be provided. They also said they would continue lobbying for an overhaul of the program. That’s welcome. Repeal is the only way to fix this law.
With no follow-up so far on who actually has private LTCI and who doesn’t — and because, right now, only a one-time attestation is required — I don’t doubt some people will choose to drop newly acquired plans. That seems risky to me, however. Lawmakers have vowed to “fix” this law and Gov. Jay Inslee has said the WA Cares Fund was delayed to “improve” on a program he likes. One of those “fixes” and “improvements” could likely be recurring attestation of a plan that was purchased before Nov. 1 of 2021.
Keep your plan.
Elizabeth Hovde is a policy analyst and director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is also a Clark County resident.
This is a poorly designed approach. $100/day is half the cost of home care and assisted living and 1/3 the cost of nursing home care… so people are going to be paying $100-$200+ per day ($3000-$6000+/month) out-of-pocket.
That means many are going to go broke and end up on Medicaid anyway.
The only ways to protect assets from Medicaid: 1. irrevokable trust (set up 60mo. before applying for Medicaid or 2. a traditional long term care insurance policy that is Partnership approved
– from partnershipforlongtermcare
According to Medicare/Medicaid 70% of Americans will need some long term care. Insurance is always cheaper than paying out-of-pocket. Would you buy car or house insurance if you didn’t have to?
The reality is most of us will need care and since we’re not in EU where some countries take care of citizens cradle to grave while taking a large part of income for tax to pay for it. In America people don’t like taxes but the long term care risk is the same… so one way or another we pay.
The law is so fundamentally flawed. And, frankly, issuing an exemption on the basis of a plan being in place on a single day – an exemption that we were warned repeatedly was PERMANENT – NO WAY BACK INTO THE POOL. And, now to change the rules? What is the penalty if you cancel? Paying into a pool that you are barred from benefitting from? That violates insurance laws. Paying a tax that is discriminatory and in violation of the WA Constitution? The whole thing is a cluster and so obviously was going to be from day 1. I honestly don’t know why legislators are paid if this is the schlock they come up with claiming it is good policy and legislation. None of the problems with the law were unforeseeable – they were embarrassingly obvious from the start.