In 2019, Washington State signed into law the Long-Term Care Trust Act, the first public, state-level long-term care
insurance program of its kind. The Act aspires to provide Washington State workers with basic, publicly funded
long-term care protection. This program underscores the significant impact long-term care costs have on a state’s
budget and reflects the importance of identifying options for how to pay these costs.
Long-term care is the largest financial risk most people face during
their lives and most people are unable to afford the long-term care
they need. With a vast majority of Washingtonians woefully
uninsured or underinsured, the Act is a step towards addressing a
serious issue. Will it be enough for all Washington residents? Let
us consider what we know and how it impacts high-income workers
in Washington.
State Funded Long-Term Care
The Washington State Long-Term Care Trust Act will be funded as
part of the employee’s wages through a payroll deduction.
Effective January 1st, 2022 the premium tax assessed will initially
be 58 cents per $100, which means for someone earning
$100,000 per year, $580 will be deducted from their paycheck.
Once an employee is vested in the program, they will be entitled to
a total lifetime benefit of $36,500, which equates to a $100 per
day benefit for one year.
• Long-Term Care benefits under the Washington State Long-Term
Care Trust Act are available only for care provided in Washington
for Washington State residents and are not transferable, which
may be problematic for individuals who work in Washington, but
live or plan to retire outside the state.
• The provision does not include a cap on wages subject to this
premium tax, which means a high-income earner could pay
premiums in excess of the $36,500 lifetime maximum benefit
provided by the law.
Exemption
An employee who attests they have long-term care coverage (LTC)
may apply for an exemption and opt out of the program. Once an
exempt employee opts out of coverage, he or she is permanently
ineligible for coverage under the program but is not required to pay
any of the premium tax either. Washington residents with existing
LTC coverage may file for an exemption only after October 1st,
2021 and before December 31st, 2022.
Alternative Option
Individuals who purchase a traditional individual long-term care
policy or life insurance policy with an LTC rider are likely to far
exceed the lifetime maximum benefit afforded under the
Washington State Long-Term Care Trust Act, at a much better
value. Washington’s new program is a groundbreaking step
towards addressing the long-term care crisis and will hopefully
raise awareness of the issues associated with long-term care.
Residents must be aware of their options now and planners should
be proactively addressing the issue of long-term care planning,
particularly as the window to opt-out of the program is very limited.
For many residents, especially high-income earners, or future highincome workers, purchasing a life insurance policy with the LTC
rider may provide much more extensive coverage at a more
reasonable cost. Moreover, individuals who purchase a life
insurance policy with an LTC rider and move out of Washington
would likely be able to cash in their policy or use the benefits in
another state.
Carter Gray, Chartered Life Underwriter®
carter@pacificinsurancegroup.com
425-246-4222
