Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

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Whakamole
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

Kookaburra wrote: Wed May 12, 2021 11:21 am
Bmac wrote: Wed May 12, 2021 11:16 am
Whakamole wrote: Wed May 12, 2021 10:53 am
Bmac wrote: Tue May 11, 2021 5:41 pm When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
The state hasn't been communicating out the tax and the opt-out. Why would they?

Some workplaces (think large tech) are telling their employees about the tax and opt-out - along with a LTCI plan that employees can easily apply for.
Call me naive, but I would think it would be incumbent upon, if not mandatory for, HR/Payroll departments to notify all employees of this legislation. I can confirm what others have said previously that I have not heard a single person I know mention this whatsoever. I’ve only learned of it via this thread on Bogleheads. It appears to WA best kept secret.
Yea, it’s almost like they know it’s a raw deal with lots of strings attached, and that it wouldn’t self-sustain if people actually knew about it.
According to this LTCI broker
"The State must create an educational outreach program to employers to ensure employees are aware of the WA Cares Fund (and that payroll deductions are imminent) by October 1, 2021"

As a result, there are many people in Washington State who have never heard of this plan. Even those who think that a state-run LTCI program is a good idea shake their heads at all the restrictions.

I'm not even sure it's a good deal for many poor-middle class residents; there are the minimum working hours, minimum years paying a premium, minimum years paying without a break, and the requirement that they still be in Washington State to even collect - not a guarantee due to many reasons (moving due to family, the high cost of living and long-term care in the state, etc.)

The broker above has an estimate on how much Washington State is expected to be collecting in taxes vs. paying out. Even mob-run casinos have better payouts.
heapq
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by heapq »

As of May 12, 2021, can someone confirm the following is factually correct:

1) The period to attest that you have a private LTC plan and opt-out of the LTC tax is between Oct 2021 and Dec 2022. After this window closes, you're out of luck
2) The private LTC plan needs to be in place/ in force before Nov 2021.
3) You can cancel the private LTC plan and you are confirmed to be opt-out, and you don't need to pay LTC tax in the future -> No need to maintain private LTC plan beyond the submission period because opt out is permanent?
4) There is no guidance on what counts as a qualified private LTC plan to opt-out: i.e. does it need to be a standalone LTC plan? Life insurance with LTC rider? Disability insurance with LTC rider? Need to have certain min payout (in terms of amount)? Need to have certain min payout (in terms of time)? Need to have certain claim eligibility (e.g. 3 out of 10 ADL at min)?
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Soon2BXProgrammer
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

heapq wrote: Thu May 13, 2021 1:28 am As of May 12, 2021, can someone confirm the following is factually correct:

1) The period to attest that you have a private LTC plan and opt-out of the LTC tax is between Oct 2021 and Dec 2022. After this window closes, you're out of luck
2) The private LTC plan needs to be in place/ in force before Nov 2021.
3) You can cancel the private LTC plan and you are confirmed to be opt-out, and you don't need to pay LTC tax in the future -> No need to maintain private LTC plan beyond the submission period because opt out is permanent?
4) There is no guidance on what counts as a qualified private LTC plan to opt-out: i.e. does it need to be a standalone LTC plan? Life insurance with LTC rider? Disability insurance with LTC rider? Need to have certain min payout (in terms of amount)? Need to have certain min payout (in terms of time)? Need to have certain claim eligibility (e.g. 3 out of 10 ADL at min)?
1) between oct 1 2021 and dec 31st 2022 is the opt out window

2) Before Nov 1st of 2021, correct.

3) That is a hypothesis of some, however, the law doesn't specify one way or another, and it will be up to how the regulation (one step below law) want to treat the opt out. i.e. will they enforce maintaining that coverage.

4) There is some guidance in the law about what qualifies as "Long term care insurance". The law explicitly states that a Life policy with something like a "living benefit rider" that doesn't test for ADL's doesn't qualify. I would want to make sure if i bought something it was sold by someone who is licensed to sell LTCi. (that would be a start, as some agents who aren't licensed to sell LTC, might sell a life policy with a rider that doesn't count).

there is some wait and see about the next steps by the state for regulations related to these laws.
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
prd1982
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by prd1982 »

Given how fluid the rules seem to be, I would plan on keeping my LTCi for 2 years in case they change the rules retroactively. You may be wasting 2 years of insurance, but the cost of being wrong is very expensive.
dekecarver
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by dekecarver »

IMO, $37K lifetime benefit is a rip off (about 2-3 months in a quality assisted living facility) and a person would be better off self funding and showing proof of that amount in some escrow account of sorts.

The transfer of personal wealth to gov't/corporate during the last few years of life is pitiful.
Last edited by dekecarver on Thu May 13, 2021 10:04 am, edited 1 time in total.
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willthrill81
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Soon2BXProgrammer wrote: Thu May 13, 2021 8:35 am 4) There is some guidance in the law about what qualifies as "Long term care insurance". The law explicitly states that a Life policy with something like a "living benefit rider" that doesn't test for ADL's doesn't qualify. I would want to make sure if i bought something it was sold by someone who is licensed to sell LTCi. (that would be a start, as some agents who aren't licensed to sell LTC, might sell a life policy with a rider that doesn't count).
While the law doesn't specify any minimums in terms of maximum benefit, inflation adjustment of benefits, elimination period, etc., it's probably a good idea to get a LTC policy with a maximum benefit of at least the same $36,500 benefit as the state plan, just in case the ESD tries to change the rules down the road. It might be worthwhile to also get a 2% inflation adjustment to the benefits, no elimination period, and a minimum daily benefit of $100 (to match the state plan). The risk of slightly overpaying for a LTC policy seems to be less to me than the risk of losing your one and only chance to opt out of the tax.
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truenyer
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

willthrill81 wrote: Thu May 13, 2021 10:03 amno elimination period
That is VERY expensive. About 50% more expensive than the standard 90-day elimination.

In fact, some companies don't even offer 0-day elimination periods.

Also, the minimum benefit period must be one year, per RCW 48.83.020. That's the only definite thing thus far.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

truenyer wrote: Thu May 13, 2021 10:25 am
willthrill81 wrote: Thu May 13, 2021 10:03 amno elimination period
That is VERY expensive. About 50% more expensive than the standard 90-day elimination.

In fact, some companies don't even offer 0-day elimination periods.

Also, the minimum benefit period must be one year, per RCW 48.83.020. That's the only definite thing thus far.
That's why I only offered that option as a possibility. Whether it's worth the risk of losing the opt out over the higher premiums is a subjective assessment.
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truenyer
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

willthrill81 wrote: Thu May 13, 2021 10:30 am
truenyer wrote: Thu May 13, 2021 10:25 am
willthrill81 wrote: Thu May 13, 2021 10:03 amno elimination period
That is VERY expensive. About 50% more expensive than the standard 90-day elimination.

In fact, some companies don't even offer 0-day elimination periods.

Also, the minimum benefit period must be one year, per RCW 48.83.020. That's the only definite thing thus far.
That's why I only offered that option as a possibility. Whether it's worth the risk of losing the opt out over the higher premiums is a subjective assessment.
A few agents have told me their coverage is guaranteed to meet the exemption requirements. Obviously a load of crap.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

truenyer wrote: Thu May 13, 2021 10:37 am
willthrill81 wrote: Thu May 13, 2021 10:30 am
truenyer wrote: Thu May 13, 2021 10:25 am
willthrill81 wrote: Thu May 13, 2021 10:03 amno elimination period
That is VERY expensive. About 50% more expensive than the standard 90-day elimination.

In fact, some companies don't even offer 0-day elimination periods.

Also, the minimum benefit period must be one year, per RCW 48.83.020. That's the only definite thing thus far.
That's why I only offered that option as a possibility. Whether it's worth the risk of losing the opt out over the higher premiums is a subjective assessment.
A few agents have told me their coverage is guaranteed to meet the exemption requirements. Obviously a load of crap.
Absolutely. Insurance salespeople as a collective group have earned a reputation of treating insurance as the solution to every financial problem (insert pertinent Upton Sinclair quote here), and bending or breaking the truth to get a sale is not uncommon.
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Whakamole
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

willthrill81 wrote: Thu May 13, 2021 10:47 am
truenyer wrote: Thu May 13, 2021 10:37 am
willthrill81 wrote: Thu May 13, 2021 10:30 am
truenyer wrote: Thu May 13, 2021 10:25 am
willthrill81 wrote: Thu May 13, 2021 10:03 amno elimination period
That is VERY expensive. About 50% more expensive than the standard 90-day elimination.

In fact, some companies don't even offer 0-day elimination periods.

Also, the minimum benefit period must be one year, per RCW 48.83.020. That's the only definite thing thus far.
That's why I only offered that option as a possibility. Whether it's worth the risk of losing the opt out over the higher premiums is a subjective assessment.
A few agents have told me their coverage is guaranteed to meet the exemption requirements. Obviously a load of crap.
Absolutely. Insurance salespeople as a collective group have earned a reputation of treating insurance as the solution to every financial problem (insert pertinent Upton Sinclair quote here), and bending or breaking the truth to get a sale is not uncommon.
I've had a broker try to oversell me on insurance, even after I mentioned that I'm in good shape financially and have zero desire to buy a policy that will pay for three years of coverage.
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Whakamole wrote: Thu May 13, 2021 11:28 am ...I'm in good shape financially and have zero desire to buy a policy that will pay for three years of coverage.
You can buy a policy with lifetime/unlimited benefits. Or, if you have a spouse/partner, you can buy a policy where you can share 15 years of benefits between the two of you.

Or buy a policy with a 4-year elimination period. If married, you can have $1.3 million of shared benefits at the end of that 4-year elimination period.

Lots of choices.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Kookaburra
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

WoW2012 wrote: Thu May 13, 2021 11:50 am
Whakamole wrote: Thu May 13, 2021 11:28 am ...I'm in good shape financially and have zero desire to buy a policy that will pay for three years of coverage.
You can buy a policy with lifetime/unlimited benefits. Or, if you have a spouse/partner, you can buy a policy where you can share 15 years of benefits between the two of you.

Or buy a policy with a 4-year elimination period. If married, you can have $1.3 million of shared benefits at the end of that 4-year elimination period.

Lots of choices.
Sadly, the one choice we now don’t have is the most important choice of all ... whether to even have a policy at all (either private or state-run).
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by BruDude »

IMO, one of the big concerns I would have is that the state quickly realizes they won't have the funding since everyone over ~$100k income is better off opting out, and therefore may increase the minimum required benefits to discourage people from getting their own policies and opting out of the tax. I have avoided selling any LTC policies to WA residents for this purpose until more guidance is available. It would really suck to go through setting up a bunch of policies and then having to re-write them all after they've been placed in force because the state changes their mind on what's acceptable.
TheDDC
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by TheDDC »

Am I to understand that Washington state is forcing you to buy something you don't want or need simply for the privilege of existing within its borders? Haven't any of you people filed suit? This sounds like a giant scam without an opt out method.

-TheDDC
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Soon2BXProgrammer
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

TheDDC wrote: Thu May 13, 2021 2:35 pm Am I to understand that Washington state is forcing you to buy something you don't want or need simply for the privilege of existing within its borders? Haven't any of you people filed suit? This sounds like a giant scam without an opt out method.

-TheDDC
The law might be contested in court under ERISA. However, the argument is your not buying something.. They are taxing you, and giving you a benefit. It is structured exactly the same way as paid family leave is in WA.
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

TheDDC wrote: Thu May 13, 2021 2:35 pm Am I to understand that Washington state is forcing you to buy something you don't want or need simply for the privilege of existing within its borders? Haven't any of you people filed suit? This sounds like a giant scam without an opt out method.

-TheDDC
You can opt out IF you have your own LTCi policy or if you're self-employed.

To your bigger point, a majority of WA state residents voted against the law, but the legislature and governor ignored the vote, which was merely 'advisory'.
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daave
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by daave »

WA DSHS has put together a website, http://www.wacaresfund.wa.gov/private-insurance/, which clarifies:
  • Exemptions are permanent, there's no re-attestation each year that you're still covered
  • To get an exemption, any LTCI plan as defined under RCW 48.83.020 will do
  • You need the coverage by Nov 1 2021 to get an exemption
  • You must apply for the exemption between Oct 1 2021 and Dec 31 2021
My employer offers a group plan which does not require a health exam, and with the minimal possible benefit costs $20/month. Seems I should be able to get this for 1-2 months, and for $20-40 total avoid a 0.58% payroll tax for the long term (which would cost me several thousand $/year). I also got quotes from a local agent which were closer to $40/month (healthy 32 year old male).
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

daave wrote: Thu May 13, 2021 9:52 pm WA DSHS has put together a website, http://www.wacaresfund.wa.gov/private-insurance/, which clarifies:
  • Exemptions are permanent, there's no re-attestation each year that you're still covered
  • To get an exemption, any LTCI plan as defined under RCW 48.83.020 will do
  • You need the coverage by Nov 1 2021 to get an exemption
  • You must apply for the exemption between Oct 1 2021 and Dec 31 2021
My employer offers a group plan which does not require a health exam, and with the minimal possible benefit costs $20/month. Seems I should be able to get this for 1-2 months, and for $20-40 total avoid a 0.58% payroll tax for the long term (which would cost me several thousand $/year). I also got quotes from a local agent which were closer to $40/month (healthy 32 year old male).
Thanks for the added info. That clarifies and confirms what many of us have been saying all along: any LTCi policy will qualify you for the opt out, and that opt out, under current law, is permanent.

However, I have heard that it may take years for the ESD to verify (if they ever actually do) that those who filed for the exemption actually had a LTCi policy in place on November 1st of 2021.

The ESD's proposed rules regarding the exemptions from this tax state this:
The department may verify an employee's long-term care insurance coverage and may request additional information from the employee.
https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf

They are making it clear that they may verify your coverage, but it doesn't explicitly say that you must have a LTCi policy in force when they conduct this verification. The law definitely implies that you must only have coverage on November 1st, 2021, and says nothing about maintaining that coverage indefinitely. So your strategy might work, but the ESD may say it doesn't, and your only recourse if that happened would be the courts, which would cost a lot more than the $240/year the policy your considering would cost.
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daave
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by daave »

Another option would be to keep the policy until said verification takes place, or until it's clear the department is not conducting verifications.

In any case, it won't be indefinite without a change in the statute.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by daave »

[deleted]
Last edited by daave on Sun May 23, 2021 1:06 am, edited 1 time in total.
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

daave wrote: Thu May 13, 2021 9:52 pm WA DSHS has put together a website, http://www.wacaresfund.wa.gov/private-insurance/, which clarifies:
  • Exemptions are permanent, there's no re-attestation each year that you're still covered
  • To get an exemption, any LTCI plan as defined under RCW 48.83.020 will do
  • You need the coverage by Nov 1 2021 to get an exemption
  • You must apply for the exemption between Oct 1 2021 and Dec 31 2021
My employer offers a group plan which does not require a health exam, and with the minimal possible benefit costs $20/month. Seems I should be able to get this for 1-2 months, and for $20-40 total avoid a 0.58% payroll tax for the long term (which would cost me several thousand $/year). I also got quotes from a local agent which were closer to $40/month (healthy 32 year old male).
Group LTCi policies are usually about 30% more expensive than buying a policy on your own, especially for men.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Whakamole
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

WoW2012 wrote: Fri May 14, 2021 3:37 pm
daave wrote: Thu May 13, 2021 9:52 pm WA DSHS has put together a website, http://www.wacaresfund.wa.gov/private-insurance/, which clarifies:
  • Exemptions are permanent, there's no re-attestation each year that you're still covered
  • To get an exemption, any LTCI plan as defined under RCW 48.83.020 will do
  • You need the coverage by Nov 1 2021 to get an exemption
  • You must apply for the exemption between Oct 1 2021 and Dec 31 2021
My employer offers a group plan which does not require a health exam, and with the minimal possible benefit costs $20/month. Seems I should be able to get this for 1-2 months, and for $20-40 total avoid a 0.58% payroll tax for the long term (which would cost me several thousand $/year). I also got quotes from a local agent which were closer to $40/month (healthy 32 year old male).
Group LTCi policies are usually about 30% more expensive than buying a policy on your own, especially for men.
It can, but group policies typically require no medical underwriting except in rare circumstances, so you are all but guaranteed to get a policy without having to wait for the medical underwriting backup to clear.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Ben Mathew »

daave wrote: Thu May 13, 2021 9:52 pm WA DSHS has put together a website, http://www.wacaresfund.wa.gov/private-insurance/, which clarifies:
  • Exemptions are permanent, there's no re-attestation each year that you're still covered
  • To get an exemption, any LTCI plan as defined under RCW 48.83.020 will do
  • You need the coverage by Nov 1 2021 to get an exemption
  • You must apply for the exemption between Oct 1 2021 and Dec 31 2021 2022
My employer offers a group plan which does not require a health exam, and with the minimal possible benefit costs $20/month. Seems I should be able to get this for 1-2 months, and for $20-40 total avoid a 0.58% payroll tax for the long term (which would cost me several thousand $/year). I also got quotes from a local agent which were closer to $40/month (healthy 32 year old male).
Looks like a typo in the date above.
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TheDDC
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by TheDDC »

I would take option 2 or 3.

Option 2: Sue (under ERISA, maybe)

Option 3: Leave

There is no respect for you as adults capable of making your own decisions in this state apparently.

-TheDDC
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

TheDDC wrote: Sun May 16, 2021 10:50 pm I would take option 2 or 3.

Option 2: Sue (under ERISA, maybe)

Option 3: Leave

There is no respect for you as adults capable of making your own decisions in this state apparently.

-TheDDC
$300/year for a policy that allows a high income earner to opt out of the tax is far less costly than the income tax that most states would levy.
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bg_san
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by bg_san »

Do we have any more information on how to opt out if you do not have a W2 job right now?
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Soon2BXProgrammer
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
I think what isn't clear with this is... if someone who is self employed, eventually quits being self employed, do they have to pay the tax? or does it opt them out permanently?

The same goes for federal government W2 workers.. I think i read that they don't have to pay the tax.... So what happens when they quit being a federal worker? and go work for someone else? Do they pay the tax? not pay the tax? are they barred from participating? etc?
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Soon2BXProgrammer wrote: Mon May 17, 2021 10:55 am
WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
I think what isn't clear with this is... if someone who is self employed, eventually quits being self employed, do they have to pay the tax? or does it opt them out permanently?

The same goes for federal government W2 workers.. I think i read that they don't have to pay the tax.... So what happens when they quit being a federal worker? and go work for someone else? Do they pay the tax? not pay the tax? are they barred from participating? etc?


Q: I think what isn't clear with this is... if someone who is self employed, eventually quits being self employed, do they have to pay the tax?
A: Yes, unless they opted out before the deadlines.

Q: or does it opt them out permanently?
A: If you are self-employed, you have to opt-in. If you're self-employed and you don't opt-out, if you get a W-2 job in the future, you'll have to pay the tax.

Q: The same goes for federal government W2 workers.. I think i read that they don't have to pay the tax....
A: That's correct. Federal employees are exempt.

Q: So what happens when they quit being a federal worker? and go work for someone else? Do they pay the tax? not pay the tax? are they barred from participating? etc?
A: They will pay the tax UNLESS they opted out before the deadlines.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
bg_san
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by bg_san »

WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
Thanks. Don't you have to be a W2 employee to be able to opt out?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by LadyGeek »

I removed an off-topic post conjecturing on what "might happen" regarding legislative changes in 2022 (proposed legislation). See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

bg_san wrote: Mon May 17, 2021 1:33 pm
WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
Thanks. Don't you have to be a W2 employee to be able to opt out?
Yes. But if you're self-employed, you don't have to opt out; you must opt in if you want to participate.

People who are currently self-employed but become W2 employees after the opt out window closes must pay the tax and participate in the system. There is no way for self-employed people to 'opt out' now and maintain that status permanently.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

willthrill81 wrote: Mon May 17, 2021 1:48 pm
bg_san wrote: Mon May 17, 2021 1:33 pm
WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
Thanks. Don't you have to be a W2 employee to be able to opt out?
Yes. But if you're self-employed, you don't have to opt out; you must opt in if you want to participate.

People who are currently self-employed but become W2 employees after the opt out window closes must pay the tax and participate in the system. There is no way for self-employed people to 'opt out' now and maintain that status permanently.
Q: Don't you have to be a W2 employee to be able to opt out?
A: No. If you are unemployed now you can still request the opt-out as long as you own LTCi by November 1st and then request the opt-out before 12/31/2022.

Will: There is no way for self-employed people to 'opt out' now and maintain that status permanently.
Wow: Incorrect. A self-employed person can opt-out now as long as they own LTCi by November 1st and then request the opt-out before 12/31/2022.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

WoW2012 wrote: Mon May 17, 2021 1:57 pm
willthrill81 wrote: Mon May 17, 2021 1:48 pm
bg_san wrote: Mon May 17, 2021 1:33 pm
WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
Thanks. Don't you have to be a W2 employee to be able to opt out?
Yes. But if you're self-employed, you don't have to opt out; you must opt in if you want to participate.

People who are currently self-employed but become W2 employees after the opt out window closes must pay the tax and participate in the system. There is no way for self-employed people to 'opt out' now and maintain that status permanently.
Q: Don't you have to be a W2 employee to be able to opt out?
A: No. If you are unemployed now you can still request the opt-out as long as you own LTCi by November 1st and then request the opt-out before 12/31/2022.

Will: There is no way for self-employed people to 'opt out' now and maintain that status permanently.
Wow: Incorrect. A self-employed person can opt-out now as long as they own LTCi by November 1st and then request the opt-out before 12/31/2022.
Thanks for the clarification.
The Sensible Steward
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

LadyGeek wrote: Mon May 17, 2021 1:43 pm I removed an off-topic post conjecturing on what "might happen" regarding legislative changes in 2022 (proposed legislation). See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.

Sorry about that.

It is worth noting that the Governor has already signed 3 versions of this law. One version was signed in 2019. Another version was signed in 2020. And the latest version was signed April, 2021. I will not conjecture on any proposed legislative changes for 2022.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
bg_san
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by bg_san »

WoW2012 wrote: Mon May 17, 2021 1:57 pm
Q: Don't you have to be a W2 employee to be able to opt out?
A: No. If you are unemployed now you can still request the opt-out as long as you own LTCi by November 1st and then request the opt-out before 12/31/2022.
Thanks a lot. I was looking for this confirmation.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

WoW2012 wrote: Mon May 17, 2021 1:57 pm
willthrill81 wrote: Mon May 17, 2021 1:48 pm
bg_san wrote: Mon May 17, 2021 1:33 pm
WoW2012 wrote: Mon May 17, 2021 10:03 am
bg_san wrote: Mon May 17, 2021 12:00 am Do we have any more information on how to opt out if you do not have a W2 job right now?
If you're self-employed, you don't have to opt-out. Self-employed people have to opt-in.
If you're unemployed, if you want to opt-out, you have to opt-out like everyone else:

1) buy an LTCi policy before the Nov. 1st deadline.
2) complete an opt-out request on the ESD website between 10/1/2021 and 12/31/2022.
Thanks. Don't you have to be a W2 employee to be able to opt out?
Yes. But if you're self-employed, you don't have to opt out; you must opt in if you want to participate.

People who are currently self-employed but become W2 employees after the opt out window closes must pay the tax and participate in the system. There is no way for self-employed people to 'opt out' now and maintain that status permanently.
Q: Don't you have to be a W2 employee to be able to opt out?
A: No. If you are unemployed now you can still request the opt-out as long as you own LTCi by November 1st and then request the opt-out before 12/31/2022.

Will: There is no way for self-employed people to 'opt out' now and maintain that status permanently.
Wow: Incorrect. A self-employed person can opt-out now as long as they own LTCi by November 1st and then request the opt-out before 12/31/2022.
WoW2012:

1. How does someone who is currently self-employed apply for a “pre-emptive” opt-out? (to ensure they are exempt in the future if they ever become a W-2 worker)

2. Can you clarify (link to a reference?) where in the RCW or statute this pre-emptive opt-out option is allowed?

Thank you.
seatac
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by seatac »

Q: The same goes for federal government W2 workers.. I think i read that they don't have to pay the tax....
A: That's correct. Federal employees are exempt.

I am a federal employee.

I have been looking through this Long Term care Act and I found NOT
found where it states Federal employees are exempt in this Act.

Can someone provide a reference that states federal employees are exempted?

thanks
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

seatac wrote: Tue May 18, 2021 3:30 pm Q: The same goes for federal government W2 workers.. I think i read that they don't have to pay the tax....
A: That's correct. Federal employees are exempt.

I am a federal employee.

I have been looking through this Long Term care Act and I found NOT
found where it states Federal employees are exempt in this Act.

Can someone provide a reference that states federal employees are exempted?

thanks
https://app.leg.wa.gov/RCW/default.aspx ... 0A.05.010
5b
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Kookaburra wrote: Mon May 17, 2021 7:56 pm

WoW2012:

1. How does someone who is currently self-employed apply for a “pre-emptive” opt-out? (to ensure they are exempt in the future if they ever become a W-2 worker)

2. Can you clarify (link to a reference?) where in the RCW or statute this pre-emptive opt-out option is allowed?

Thank you.
Question 1: How does someone who is currently self-employed apply for a “pre-emptive” opt-out? (to ensure they are exempt in the future if they ever become a W-2 worker)
Answer 1: They do it the same way everyone else does it. Step 1, buy long-term care insurance. Step 2, complete the form at the ESD website requesting to be opted out and attesting that you own long-term care insurance. Step 3, receive the letter from the ESD confirming approval of your opt-out. Step 4, store that letter in a safe place.


Question 2: Can you clarify (link to a reference?) where in the RCW or statute this pre-emptive opt-out option is allowed?
Answer 2: No. There's no such thing as a "pre-emptive" opt-out. Everyone opts out the same way: Step 1, buy long-term care insurance. Step 2, complete the form at the ESD website requesting to be opted out and attesting that you own long-term care insurance. Step 3, receive the letter from the ESD confirming approval of your opt-out. Step 4, store that letter in a safe place.


The hardest part will be Step 1.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Kookaburra
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

WoW2012 wrote: Tue May 18, 2021 3:41 pm
Kookaburra wrote: Mon May 17, 2021 7:56 pm

WoW2012:

1. How does someone who is currently self-employed apply for a “pre-emptive” opt-out? (to ensure they are exempt in the future if they ever become a W-2 worker)

2. Can you clarify (link to a reference?) where in the RCW or statute this pre-emptive opt-out option is allowed?

Thank you.
Question 1: How does someone who is currently self-employed apply for a “pre-emptive” opt-out? (to ensure they are exempt in the future if they ever become a W-2 worker)
Answer 1: They do it the same way everyone else does it. Step 1, buy long-term care insurance. Step 2, complete the form at the ESD website requesting to be opted out and attesting that you own long-term care insurance. Step 3, receive the letter from the ESD confirming approval of your opt-out. Step 4, store that letter in a safe place.


Question 2: Can you clarify (link to a reference?) where in the RCW or statute this pre-emptive opt-out option is allowed?
Answer 2: No. There's no such thing as a "pre-emptive" opt-out. Everyone opts out the same way: Step 1, buy long-term care insurance. Step 2, complete the form at the ESD website requesting to be opted out and attesting that you own long-term care insurance. Step 3, receive the letter from the ESD confirming approval of your opt-out. Step 4, store that letter in a safe place.


The hardest part will be Step 1.
It feels like we are going in circles.

Self-employed people are inherently opted out, so it is incorrect to say “everyone opts out the same way”.

By pre-emptive opt-out, I’m referring to the situation where someone is currently opted out by default but they want to apply for lifelong exemption now just in case they become a W2 employee in the future after the Oct 21-Dec 22 window closes.

Can a self-employed person who is opted out by default (and likely isn’t even recognized in ESD’s system since they have no W-2 income) apply to opt out just like W2 employees?

Wouldn’t an application under these conditions cause confusion with the ESD? For example, the ESD responding with “opt out request denied. You are already opted out as a self-employed person”
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

Kookaburra wrote: Tue May 18, 2021 4:21 pm

It feels like we are going in circles.

Self-employed people are inherently opted out, so it is incorrect to say “everyone opts out the same way”.

By pre-emptive opt-out, I’m referring to the situation where someone is currently opted out by default but they want to apply for lifelong exemption now just in case they become a W2 employee in the future after the Oct 21-Dec 22 window closes.

Can a self-employed person who is opted out by default (and likely isn’t even recognized in ESD’s system since they have no W-2 income) apply to opt out just like W2 employees?

Wouldn’t an application under these conditions cause confusion with the ESD? For example, the ESD responding with “opt out request denied. You are already opted out as a self-employed person”
Kookaburra: Self-employed people are inherently opted out, so it is incorrect to say “everyone opts out the same way”.
WOW: A self-employed person is only opted-out while they are self-employed. If they take a job in the future with a W-2 they will have to pay the tax UNLESS they "opted out the way everyone else has to opt out".

Kookaburra: Can a self-employed person who is opted out by default (and likely isn’t even recognized in ESD’s system since they have no W-2 income) apply to opt out just like W2 employees?
WOW: Yes. They can opt-out the same way everyone opts out. Please re-read the 4 steps I listed above.

Kookaburra: Wouldn’t an application under these conditions cause confusion with the ESD? For example, the ESD responding with “opt out request denied. You are already opted out as a self-employed person”
WOW: The ESD will not deny an opt-out request simply because someone is self-employed person. The ESD knows that someone who is self-employed now may get a W-2 job in the future.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
LFT_PFT
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by LFT_PFT »

Does anyone know whether an employer provided long term care policy ($1k per month for 3 years) can be submitted for exemption?
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

LFT_PFT wrote: Tue May 18, 2021 5:05 pm Does anyone know whether an employer provided long term care policy ($1k per month for 3 years) can be submitted for exemption?
As long as it is defined as "long-term care insurance" in the state of Washington.
I've never seen a long-term care insurance policy that pays only $1K per month.
That's only $33 per day. The lowest I've seen is $50 per day.
I suspect you're being shown a life insurance policy and not a long-term care insurance policy.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
downshiftme
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by downshiftme »

After an extensive review of LTC policies and options a few years ago, I elected to self insure. I'm less than 10 years from retiring, so if I start paying this tax I will never qualify for the benefit before I retire. Less than 10 years paying in means no benefit. Any tax I pay is guaranteed to give no benefit to my account.
> There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)
I would happily enroll in this or any similar inexpensive LTC insurance, since I don't intend to use the benefit, ever. Sadly, all these policies seem to require medical underwriting, so even though I do not want to use the benefit, and would be willing to agree to zero benefits, I am no longer qualified to buy such a policy. I will be forced into the state plan, which is also guaranteed to pay zero benefit, but will cost more than even a real LTC policy because the tax is high enough to take more than regular policy premiums would be. For guaranteed zero benefit from the state plan.
Last edited by downshiftme on Tue May 18, 2021 11:05 pm, edited 1 time in total.
WoW2012
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

downshiftme wrote: Tue May 18, 2021 10:52 pm After an extensive review of LTC policies and options a few years ago, I elected to self insure. I'm less than 10 years from retiring, so if I start paying this tax I will never qualify for the benefit before I retire. Less than 10 years paying in means no benefit. Any tax I pay is guaranteed to give no benefit to my account.

> There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)

I would happily enroll in this or any similar inexpensive LTC insurance, since I don't intend to use the benefit, ever. Sadly, all these policies seem to require medical underwriting, so even though I do not want to use the benefit, and would be willing to agree to zero benefits, I am no longer qualified to buy such a policy. I will be forced into the state plan, which is also guaranteed to pay zero benefit, but will cost more than even a real LTC policy because the tax is high enough to take more than regular policy premiums would be. For guaranteed zero benefit from the state plan.
Why are you no longer qualified to buy a policy?
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Kookaburra
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

downshiftme wrote: Tue May 18, 2021 10:52 pm After an extensive review of LTC policies and options a few years ago, I elected to self insure. I'm less than 10 years from retiring, so if I start paying this tax I will never qualify for the benefit before I retire. Less than 10 years paying in means no benefit. Any tax I pay is guaranteed to give no benefit to my account.

> There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)

I would happily enroll in this or any similar inexpensive LTC insurance, since I don't intend to use the benefit, ever. Sadly, all these policies seem to require medical underwriting, so even though I do not want to use the benefit, and would be willing to agree to zero benefits, I am no longer qualified to buy such a policy. I will be forced into the state plan, which is also guaranteed to pay zero benefit, but will cost more than even a real LTC policy because the tax is high enough to take more than regular policy premiums would be. For guaranteed zero benefit from the state plan.
What does medical underwriting involve? Is it just filling out some forms, or does it require an exam by a physician?
downshiftme
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by downshiftme »

Why are you no longer qualified to buy a policy?
I had a recent hospitalization. I'm fully recovered and expect no long term health impact, but I have been told (by several different carriers) that my application for any LTC policy will be denied until two years have passed. This will make it impossible to have any policy in place before November unless I can find an actual near-zero benefit policy that doesn't do medical underwriting. For example, I'm willing to buy a policy with a two year (or ten year!) elimination period, but so far have not been able to find any company that is willing to accept me for any LTC policy.

There are life insurance policies with LTC riders and I can buy those, but I do not need additional life insurance so that really raises the cost. They are very expensive, and I haven't found anyone who can show that they qualify for the LTC exemption anyway.
LFT_PFT
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by LFT_PFT »

WoW2012 wrote: Tue May 18, 2021 5:29 pm
LFT_PFT wrote: Tue May 18, 2021 5:05 pm Does anyone know whether an employer provided long term care policy ($1k per month for 3 years) can be submitted for exemption?
As long as it is defined as "long-term care insurance" in the state of Washington.
I've never seen a long-term care insurance policy that pays only $1K per month.
That's only $33 per day. The lowest I've seen is $50 per day.
I suspect you're being shown a life insurance policy and not a long-term care insurance policy.
The policy is explicitly described as long term care (not life insurance) in multiple employer benefit documents and includes policy description of long term care. The coverage amount is quite small. Although, the coverage maximum of $36k ($1k x 36 months) is similar to this new WA Cares maximum of $36.5k. The policy is through Unum. The coverage is minimal, but allows employer to list benefit and is obviously an effort by Unum to get employees to increase coverage.

It seems the employer provided long term care (group long term care insurance) meets the state definitions from points 6 & 7:

https://app.leg.wa.gov/RCW/default.aspx?cite=48.83.020

Anyone else in similar situation? Thoughts?
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