WA Long-Term Care Act Update

Did you purchase a long-term care (LTC) policy before the Washington Long-Term Services and Supports Trust Program (also known as the WA Cares Fund or Long-Term Care Act) took effect?
Long-Term Care

If so, you made a smart decision that will exempt you from the mandatory payroll deduction imposed on all Washingtonians. That payroll tax will go into effect on July 1, so be sure to check your July paystubs to ensure you are not being taxed.

LTC WA Cares tax implemented - don't drop your coverage!

As a CWM client, if you worked with us in the summer of 2021 to purchase an LTC policy to avoid the state tax, you more than likely purchased a life insurance policy with a long-term care rider. Upon implementation of this policy, you should have gone to the WA Cares Fund website to apply for an exemption. Once approved, you would have received a letter that you then provided to your HR department. This letter signifies that you are exempt from the WA Cares tax and your employer should NOT withhold the premiums from your paycheck. We recommend verifying with your HR department that they have the letter on file and are not going to withhold premiums starting July 1st.

As the litigation against the WA Cares tax worked its way through the court system, we know many clients questioned the benefit of maintaining their policy. Now that the tax is in-force as of July 1, 2023 it’s crucial to keep your policy in place. If you cancel it, you will be subject to the payroll tax in perpetuity. And in the absence of a private LTC policy, your only option will be the state coverage of $100 per day, or a $36,500 total lifetime benefit, in the event you do need long-term care in a nursing home or assisted living facility. The actual cost of this care continues to rise, with an average lifetime cost of $172,000. The current cost of home care in Seattle is estimated to be around $219 per day; assisted living care is around $222 per day; and skilled nursing care ranges from $349 - $393 per day. Considering these numbers are only expected to increase with time, the Washington state coverage is woefully insufficient. What’s more, that coverage won’t follow you if you move out of state, no matter how much you’ve paid into the fund via payroll tax.

You can find our detailed analysis of the Long-Term Care Act here. If you have any questions about your LTC policy please contact us, we’re always happy to help at Comprehensive Wealth Management.

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