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

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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 »

Soon2BXProgrammer wrote: Sat Feb 20, 2021 1:36 pm
czaj wrote: Sat Feb 20, 2021 12:29 pm As far as taxable income, it’s possible that they’ll limit this to OASDI income, like their current family leave tax.
Currently the law isn't limited to OASDI income. Also the proposed changes (i know we can't talk about proposed changes, so I'm specifically saying what isn't in the proposed changes), don't have a change to that. its all payroll income.
Correct.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
czaj
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

WoW2012 wrote: Sat Feb 20, 2021 1:41 pm What do you mean by this:
If you were offered LTC insurance as part of an employer cafeteria plan under section 125, you would be paying 0.4176% [=0.58% * (1-.28)] if in the 28% bracket and the difference would be your opportunity cost.
I was just trying to make sense of your 0.80% comment, which I believe you’re referring to the lack of deductibility of the premium on federal taxes.
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 »

czaj wrote: Sat Feb 20, 2021 1:50 pm
WoW2012 wrote: Sat Feb 20, 2021 1:41 pm What do you mean by this:
If you were offered LTC insurance as part of an employer cafeteria plan under section 125, you would be paying 0.4176% [=0.58% * (1-.28)] if in the 28% bracket and the difference would be your opportunity cost.
I was just trying to make sense of your 0.80% comment, which I believe you’re referring to the lack of deductibility of the premium on federal taxes.
Correct.
You said it more clearly than I did.
Thank you.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
Hilltop
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Hilltop »

Thanks for putting this on the radar.

I am in the category of employees who plan to retire before having a sufficient number of payments into the state plan to qualify for any benefit. Even if the State’s $36k benefit was available, opting out with a comparable, very basic long-term care insurance policy will be considerably less expensive for us – particularly given the breadth of “wages” considered for purposes of the 0.58% premium assessment.

With regards to the exemption, the current law specifies that an employee who attests to having “long-term care insurance” may submit an application to opt out of the premium assessment between October 1, 2021 and December 31, 2022. RCW 50B.04.085. While the Act does not describe what is meant by “long term care insurance,” the term is somewhat broadly defined elsewhere in state law. See e.g., RCW 48.83.020(5). I assume there may be further direction from the State on this.

I see that the Washington State Employment Security Department is in the process of issuing its draft rules. https://esd.wa.gov/newsroom/ltss-rule-making/phase2 I also see that the State legislature has a pending bill that would require employees to have a private policy in effect by July of 2021 in order to apply for the exemption. https://app.leg.wa.gov/billsummary?Bill ... tive=false . Some will likely be tripped up by that if it is adopted.
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 »

Hilltop wrote: Sat Feb 20, 2021 2:03 pm Thanks for putting this on the radar.

I am in the category of employees who plan to retire before having a sufficient number of payments into the state plan to qualify for any benefit. Even if the State’s $36k benefit was available, opting out with a comparable, very basic long-term care insurance policy will be considerably less expensive for us – particularly given the breadth of “wages” considered for purposes of the 0.58% premium assessment.

With regards to the exemption, the current law specifies that an employee who attests to having “long-term care insurance” may submit an application to opt out of the premium assessment between October 1, 2021 and December 31, 2022. RCW 50B.04.085. While the Act does not describe what is meant by “long term care insurance,” the term is somewhat broadly defined elsewhere in state law. See e.g., RCW 48.83.020(5). I assume there may be further direction from the State on this.

I see that the Washington State Employment Security Department is in the process of issuing its draft rules. https://esd.wa.gov/newsroom/ltss-rule-making/phase2 I also see that the State legislature has a pending bill that would require employees to have a private policy in effect by July of 2021 in order to apply for the exemption. https://app.leg.wa.gov/billsummary?Bill ... tive=false . Some will likely be tripped up by that if adopted.

The law, as originally written, allowed for anyone to opt out if they owned LTCi before 12/31/22. The new amendment, which has already been approved by the committee and will likely become law, will change the deadline to July 24th, 2021. For those of us in the LTCi industry, we're going to have a very busy few months.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
asdfgf
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by asdfgf »

Does any know what prevents someone from just buying a policy before 7/24 and then abandoning it after a year or so.

How often are they going to check for a policy in place?
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 »

asdfgf wrote: Sat Apr 03, 2021 6:32 pm Does any know what prevents someone from just buying a policy before 7/24 and then abandoning it after a year or so.

How often are they going to check for a policy in place?

To opt-out of the Washington Long-Term Care Trust Act, there are important deadlines that must be met. There is the

Application Deadline, the
Attestation Period, and the
Verification Period.

The application deadline is around July 24th, 2021 (or thereabouts). This could change, but it's not likely to change. This means that you must own long-term care insurance with an effective date of July 24, 2021 or earlier in order to be able to opt-out.

The attestation period starts on October 1st, 2021., In order to avoid paying the tax in January, 2022, your attestation must be received and approved by the state of Washington by December 31, 2021. You'll receive a letter from the state of Washington confirming that you've opted-out of the program. That letter must be given to your employer in order for your employer to not take the payroll tax from your pay each pay period.

Washington state expects anywhere from 90,000 to 250,000 people to opt-out of the program. Those of us who are LTCi specialists and who speak to consumers everyday, expect this number to be over 300,000, possibly even as high as 450,000.

Obviously, it would be impossible for the state of Washington to verify 90,000 to 250,000 policyholders in a 3-month period. That's why they are just requiring an "attestation" initially. The verification comes later.

The state has budgeted for and expects the verification period to last 2 to 3 years. But it will probably take much longer than that because the state is grossly underestimating how many Washingtonians will take advantage of the opt-out.

So, how often are they going to check? We know they are going to check at least once. If the number of opt-outs is much higher than they project, they will put a lot more money into the verification process to stop the fraudulent opt-outers.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
czaj
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?

Given my income level and uncertainty on staying in Washington for that amount of time, it will definitely make sense to at least get the cheapest plan available to gain exemption status. My wife’s income is lower so it may not make as much sense. I was recently quoted around $40/month for both of us (under age 30).
dstac
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by dstac »

Is my math right on this, using simple numbers:
$100k income means paying $580/yr in payroll taxes.
After 10yrs eligible for a $100/dy benefit for 365 days. (Consecutive? Adjusted fir CPI?)
At 10yrs, this benefit will have cost $5,800. 20yrs, $11,600. 30yrs $17,400.

What am I missing here? (Besides opportunity cost and ability to select the “right” plan for me.)
asdfgf
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Joined: Sat Jul 12, 2014 10:11 pm

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

Post by asdfgf »

WoW2012 wrote: Sat Apr 03, 2021 9:51 pm
asdfgf wrote: Sat Apr 03, 2021 6:32 pm Does any know what prevents someone from just buying a policy before 7/24 and then abandoning it after a year or so.

How often are they going to check for a policy in place?

To opt-out of the Washington Long-Term Care Trust Act, there are important deadlines that must be met. There is the

Application Deadline, the
Attestation Period, and the
Verification Period.

The application deadline is around July 24th, 2021 (or thereabouts). This could change, but it's not likely to change. This means that you must own long-term care insurance with an effective date of July 24, 2021 or earlier in order to be able to opt-out.

The attestation period starts on October 1st, 2021., In order to avoid paying the tax in January, 2022, your attestation must be received and approved by the state of Washington by December 31, 2021. You'll receive a letter from the state of Washington confirming that you've opted-out of the program. That letter must be given to your employer in order for your employer to not take the payroll tax from your pay each pay period.

Washington state expects anywhere from 90,000 to 250,000 people to opt-out of the program. Those of us who are LTCi specialists and who speak to consumers everyday, expect this number to be over 300,000, possibly even as high as 450,000.

Obviously, it would be impossible for the state of Washington to verify 90,000 to 250,000 policyholders in a 3-month period. That's why they are just requiring an "attestation" initially. The verification comes later.

The state has budgeted for and expects the verification period to last 2 to 3 years. But it will probably take much longer than that because the state is grossly underestimating how many Washingtonians will take advantage of the opt-out.

So, how often are they going to check? We know they are going to check at least once. If the number of opt-outs is much higher than they project, they will put a lot more money into the verification process to stop the fraudulent opt-outers.
Thanks. This is very helpful.
asdfgf
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by asdfgf »

czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?

Given my income level and uncertainty on staying in Washington for that amount of time, it will definitely make sense to at least get the cheapest plan available to gain exemption status. My wife’s income is lower so it may not make as much sense. I was recently quoted around $40/month for both of us (under age 30).
$40/month sounds great. I'm in my mid 40s and I'm getting quoted over double that for just myself.

Anyone have any ideas about where to get the cheapest policy that qualifies for the 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 »

dstac wrote: Sun Apr 04, 2021 12:20 am Is my math right on this, using simple numbers:
$100k income means paying $580/yr in payroll taxes.
After 10yrs eligible for a $100/dy benefit for 365 days. (Consecutive? Adjusted fir CPI?)
At 10yrs, this benefit will have cost $5,800. 20yrs, $11,600. 30yrs $17,400.

What am I missing here? (Besides opportunity cost and ability to select the “right” plan for me.)

Your math is correct. For high-income earners the Washington Long-Term Care Trust Act is a terrible deal.

There are 3 main types of people who are opting-out of the program:

1) Everyone who plans on retiring before 2032.
2) Anyone earning $100K+ per year
3) Anyone who plans on moving out of Washington.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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 »

asdfgf wrote: Sun Apr 04, 2021 1:04 am
czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?

Given my income level and uncertainty on staying in Washington for that amount of time, it will definitely make sense to at least get the cheapest plan available to gain exemption status. My wife’s income is lower so it may not make as much sense. I was recently quoted around $40/month for both of us (under age 30).
$40/month sounds great. I'm in my mid 40s and I'm getting quoted over double that for just myself.

Anyone have any ideas about where to get the cheapest policy that qualifies for the exemption.

ask czaj. that sounds like a great deal.
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
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 »

czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?
Yes. Washington state insurance law defines long-term care insurance here:

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


It says:

"Long-term care insurance" means an insurance policy, contract, or rider that is advertised, marketed, offered, or designed to provide coverage for at least twelve consecutive months for a covered person. Long-term care insurance may be on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes any policy, contract, or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity.


However, what's even more important is what is NOT long-term care insurance. The WA insurance law states:

long-term care insurance does not include life insurance policies that: (i) Accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement; (ii) provide the option of a lump sum payment for those benefits; and (iii) do not condition the benefits or the eligibility for the benefits upon the receipt of long-term care.



There are a lot of agents selling life insurance policies with "chronic illness riders" saying that a policy like that will qualify for the exemption. Beware of someone selling a life insurance policy and labeling it "long-term care insurance".
Disclaimer: I am a licensed insurance professional and am certified as a long-term care insurance specialist.
tj
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by tj »

WoW2012 wrote: Sat Feb 20, 2021 12:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 12:49 pm
WoW2012 wrote: Sat Feb 20, 2021 12:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
LTC expenses ARE medical expenses. The question of "why use tax-free money to pay for a tax-deductible expense" applies to literally every medical expense. It seems like you are asking why bother having an HSA in the first place?
z0r
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by z0r »

I may move to washington in the next few years. is there a way for me to opt out?
czaj
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by czaj »

asdfgf wrote: Sun Apr 04, 2021 1:04 am
czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?

Given my income level and uncertainty on staying in Washington for that amount of time, it will definitely make sense to at least get the cheapest plan available to gain exemption status. My wife’s income is lower so it may not make as much sense. I was recently quoted around $40/month for both of us (under age 30).
$40/month sounds great. I'm in my mid 40s and I'm getting quoted over double that for just myself.

Anyone have any ideas about where to get the cheapest policy that qualifies for the exemption.
I used https://www.ltcshop.com, but will probably shop around a bit more.
dstac
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by dstac »

WoW2012 wrote: Sun Apr 04, 2021 8:18 am
dstac wrote: Sun Apr 04, 2021 12:20 am Is my math right on this, using simple numbers:
$100k income means paying $580/yr in payroll taxes.
After 10yrs eligible for a $100/dy benefit for 365 days. (Consecutive? Adjusted fir CPI?)
At 10yrs, this benefit will have cost $5,800. 20yrs, $11,600. 30yrs $17,400.

What am I missing here? (Besides opportunity cost and ability to select the “right” plan for me.)

Your math is correct. For high-income earners the Washington Long-Term Care Trust Act is a terrible deal.

There are 3 main types of people who are opting-out of the program:

1) Everyone who plans on retiring before 2032.
2) Anyone earning $100K+ per year
3) Anyone who plans on moving out of Washington.
I guess for moderate earners this doesn't seem bad, but around $100k it really starts to shift. Some quick math:
50yo working until 70yo at $100k/yr then take LTC at 80yo: $11,600 in contributions would have grown to $38,200 at 6%/yr by the time LTC is used.
40yo working until 50yo at $100k/yr then take LTC at 80yo: $5,800 in contributions would have grown to $43,900.
Seems like for it to make sense at 10yrs working, you should be using it within the next 35 years or so. More years means you should need it sooner.
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 »

Is there a website that can give premium quotes for LTC policy? I want to see if it's lower than 0.58% of my income. Really don't want to spend time talking to insurance agents. I just need the quote. If it's cheaper, I'll buy that and not pay LTC pax.
tj
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by tj »

heapq wrote: Sun Apr 04, 2021 5:17 pm Is there a website that can give premium quotes for LTC policy? I want to see if it's lower than 0.58% of my income. Really don't want to spend time talking to insurance agents. I just need the quote. If it's cheaper, I'll buy that and not pay LTC pax.
You are going to have to talk an agent.
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 »

tj wrote: Sun Apr 04, 2021 5:27 pm
heapq wrote: Sun Apr 04, 2021 5:17 pm Is there a website that can give premium quotes for LTC policy? I want to see if it's lower than 0.58% of my income. Really don't want to spend time talking to insurance agents. I just need the quote. If it's cheaper, I'll buy that and not pay LTC pax.
You are going to have to talk an agent.
Thanks. I'll send my hourly billing to WA state :D
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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 »

tj wrote: Sun Apr 04, 2021 11:32 am
WoW2012 wrote: Sat Feb 20, 2021 12:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 12:49 pm
WoW2012 wrote: Sat Feb 20, 2021 12:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
LTC expenses ARE medical expenses. The question of "why use tax-free money to pay for a tax-deductible expense" applies to literally every medical expense. It seems like you are asking why bother having an HSA in the first place?
For medical expenses below the 7.5% AGI threshold (for 2021; Congress kept it at 7.5% rather than the 10% it was going to revert to), you would pay for them with HSA funds and then pay for any expenses above the threshold with tax-deferred funds.
The Sensible Steward
tj
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by tj »

willthrill81 wrote: Sun Apr 04, 2021 6:24 pm
tj wrote: Sun Apr 04, 2021 11:32 am
WoW2012 wrote: Sat Feb 20, 2021 12:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 12:49 pm
WoW2012 wrote: Sat Feb 20, 2021 12:45 pm Using an HSA to self-insure for long-term care is one of the worst ways to self-insure.
If you're going to self-insure for long-term care use a traditional IRA or 401k.
I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
LTC expenses ARE medical expenses. The question of "why use tax-free money to pay for a tax-deductible expense" applies to literally every medical expense. It seems like you are asking why bother having an HSA in the first place?
For medical expenses below the 7.5% AGI threshold (for 2021; Congress kept it at 7.5% rather than the 10% it was going to revert to), you would pay for them with HSA funds and then pay for any expenses above the threshold with tax-deferred funds.
The reimbursed expenses from the HSA are not included in your deducible medical expenses. Unless you are saying only take reimbursements in the years you don't exceed the threshold. But if you use that logic, why not simply reimburse as you go?
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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 »

tj wrote: Sun Apr 04, 2021 6:47 pm
willthrill81 wrote: Sun Apr 04, 2021 6:24 pm
tj wrote: Sun Apr 04, 2021 11:32 am
WoW2012 wrote: Sat Feb 20, 2021 12:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 12:49 pm

I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
LTC expenses ARE medical expenses. The question of "why use tax-free money to pay for a tax-deductible expense" applies to literally every medical expense. It seems like you are asking why bother having an HSA in the first place?
For medical expenses below the 7.5% AGI threshold (for 2021; Congress kept it at 7.5% rather than the 10% it was going to revert to), you would pay for them with HSA funds and then pay for any expenses above the threshold with tax-deferred funds.
The reimbursed expenses from the HSA are not included in your deducible medical expenses. Unless you are saying only take reimbursements in the years you don't exceed the threshold. But if you use that logic, why not simply reimburse as you go?
I think what everyone is missing is the HDHP/HSA is typically the best account combination for my family. So i view the HSA as "almost another IRA" but if i spend it on medical, then its a double win. I fully expect to have more money in an HSA then i will ever spend on qualified medical care. So post 65, the HSA and the IRA are the same effectively, however, i'd rather burn my HSA to 0 before I die, then leave it to my heirs. So when its time, i will take as much out of my HSA as possible via medical expenses (or long term care expenses).
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
asdfgf
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by asdfgf »

WoW2012 wrote: Sun Apr 04, 2021 8:23 am
asdfgf wrote: Sun Apr 04, 2021 1:04 am
czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?

Given my income level and uncertainty on staying in Washington for that amount of time, it will definitely make sense to at least get the cheapest plan available to gain exemption status. My wife’s income is lower so it may not make as much sense. I was recently quoted around $40/month for both of us (under age 30).
$40/month sounds great. I'm in my mid 40s and I'm getting quoted over double that for just myself.

Anyone have any ideas about where to get the cheapest policy that qualifies for the exemption.

ask czaj. that sounds like a great deal.
I guess I'll do that. I have found some quotes closer to what he posted though. His is still a bit better.
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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 »

tj wrote: Sun Apr 04, 2021 6:47 pm
willthrill81 wrote: Sun Apr 04, 2021 6:24 pm
tj wrote: Sun Apr 04, 2021 11:32 am
WoW2012 wrote: Sat Feb 20, 2021 12:53 pm
Soon2BXProgrammer wrote: Sat Feb 20, 2021 12:49 pm

I dont understand this. Why is a 401k/ira better then HSA? I have gotten pretax deductions for the HSA and my account balance is nearly $100k?

If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
LTC expenses ARE medical expenses. The question of "why use tax-free money to pay for a tax-deductible expense" applies to literally every medical expense. It seems like you are asking why bother having an HSA in the first place?
For medical expenses below the 7.5% AGI threshold (for 2021; Congress kept it at 7.5% rather than the 10% it was going to revert to), you would pay for them with HSA funds and then pay for any expenses above the threshold with tax-deferred funds.
The reimbursed expenses from the HSA are not included in your deducible medical expenses.
That's not my understanding, but I could be wrong. I believe that if your 7.5% AGI level came out to $10k and you had $20k of medical expenses, you could reimburse yourself $10k from an HSA and withdraw the additional $10k tax free from a tax-deferred account.
Soon2BXProgrammer wrote: Sun Apr 04, 2021 6:57 pm I think what everyone is missing is the HDHP/HSA is typically the best account combination for my family. So i view the HSA as "almost another IRA" but if i spend it on medical, then its a double win. I fully expect to have more money in an HSA then i will ever spend on qualified medical care. So post 65, the HSA and the IRA are the same effectively, however, i'd rather burn my HSA to 0 before I die, then leave it to my heirs. So when its time, i will take as much out of my HSA as possible via medical expenses (or long term care expenses).
Yes, this is something we've covered in prior HSA threads. Although those who are charitably inclined can make a charity the secondary beneficiary of their HSA after their spouse in order to avoid the tax hit that heirs would experience.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by tj »

That's not my understanding, but I could be wrong. I believe that if your 7.5% AGI level came out to $10k and you had $20k of medical expenses, you could reimburse yourself $10k from an HSA and withdraw the additional $10k tax free from a tax-deferred account.
My understanding is that Sch A - Medical deductions are reduced by your HSA reimbursements, the same way they are reduced by insurance reimbursements.
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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 »

Soon2BXProgrammer wrote: Sun Apr 04, 2021 6:57 pm
tj wrote: Sun Apr 04, 2021 6:47 pm
willthrill81 wrote: Sun Apr 04, 2021 6:24 pm
tj wrote: Sun Apr 04, 2021 11:32 am
WoW2012 wrote: Sat Feb 20, 2021 12:53 pm


If someone wants to self-insure for long-term care, an HSA is one of the worst ways to do it.
HSA withdrawals for medical expenses are tax-free.
Long-term care expenses are tax-deductible.
Why use tax-free money to pay for a tax-deductible expense.

You're better off using a 401k/Traditional IRA.
401k/Traditional IRA withdrawals are taxable.
The tax would be offset (mostly) because the long-term care expenses you incur are tax-deductible.
LTC expenses ARE medical expenses. The question of "why use tax-free money to pay for a tax-deductible expense" applies to literally every medical expense. It seems like you are asking why bother having an HSA in the first place?
For medical expenses below the 7.5% AGI threshold (for 2021; Congress kept it at 7.5% rather than the 10% it was going to revert to), you would pay for them with HSA funds and then pay for any expenses above the threshold with tax-deferred funds.
The reimbursed expenses from the HSA are not included in your deducible medical expenses. Unless you are saying only take reimbursements in the years you don't exceed the threshold. But if you use that logic, why not simply reimburse as you go?
I think what everyone is missing is the HDHP/HSA is typically the best account combination for my family. So i view the HSA as "almost another IRA" but if i spend it on medical, then its a double win. I fully expect to have more money in an HSA then i will ever spend on qualified medical care. So post 65, the HSA and the IRA are the same effectively, however, i'd rather burn my HSA to 0 before I die, then leave it to my heirs. So when its time, i will take as much out of my HSA as possible via medical expenses (or long term care expenses).
HSA is tax free on the way in and the way out, so it's generally better than a traditional retirement account which is tax-free on the way in but taxed on the way out. But if HSA funds are limited, it may be better to use it for medical rather than LTC because LTC expenses is more likely to be high enough to exceed the 7.5% threshold and thus permit traditional funds to be withdrawn tax free during the LTC years. Since LTC usually happens at end of life, this may not matter for single/widowed people. But if there's a surviving spouse who will inherit, it may be better to leave the HSA for the spouse's medical expenses and pay for LTC by withdrawing tax-free from traditional retirement accounts.

In other words, if the opportunity to withdraw tax-free from traditional retirement accounts presents itself, might as well take it. HSA will be tax free in a wider range of circumstances. So save it for when it's not possible to withdraw tax-free from the traditional retirement account (i.e. non LTC years with medical expenses below 7.5% threshold.)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by dziuniek »

Soon2BXProgrammer wrote: Fri Feb 19, 2021 11:23 pm
Workinprogress wrote: Fri Feb 19, 2021 9:33 pm The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
My grandfather, who had been born in 1909, so he was from a different generation, always told my father, that he would rather be shot in the whore house at midnight before he goes into one of those homes.

He never did go into one of those homes.
My father (almost 60) says this now.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

dziuniek wrote: Mon Apr 05, 2021 7:36 am
Soon2BXProgrammer wrote: Fri Feb 19, 2021 11:23 pm
Workinprogress wrote: Fri Feb 19, 2021 9:33 pm The kid in me thinks that I will never see a convalescent center any way. That is for all those other people :oops: .
My grandfather, who had been born in 1909, so he was from a different generation, always told my father, that he would rather be shot in the whore house at midnight before he goes into one of those homes.

He never did go into one of those homes.
My father (almost 60) says this now.


Only 13% of the people who need long-term care are in nursing homes.
Over 80% of the people who need long-term care are at home.
That's why most long-term care insurance claims are for care at home, not nursing homes.
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 »

dstac wrote: Sun Apr 04, 2021 3:01 pm
WoW2012 wrote: Sun Apr 04, 2021 8:18 am
dstac wrote: Sun Apr 04, 2021 12:20 am Is my math right on this, using simple numbers:
$100k income means paying $580/yr in payroll taxes.
After 10yrs eligible for a $100/dy benefit for 365 days. (Consecutive? Adjusted fir CPI?)
At 10yrs, this benefit will have cost $5,800. 20yrs, $11,600. 30yrs $17,400.

What am I missing here? (Besides opportunity cost and ability to select the “right” plan for me.)

Your math is correct. For high-income earners the Washington Long-Term Care Trust Act is a terrible deal.

There are 3 main types of people who are opting-out of the program:

1) Everyone who plans on retiring before 2032.
2) Anyone earning $100K+ per year
3) Anyone who plans on moving out of Washington.
I guess for moderate earners this doesn't seem bad, but around $100k it really starts to shift. Some quick math:
50yo working until 70yo at $100k/yr then take LTC at 80yo: $11,600 in contributions would have grown to $38,200 at 6%/yr by the time LTC is used.
40yo working until 50yo at $100k/yr then take LTC at 80yo: $5,800 in contributions would have grown to $43,900.
Seems like for it to make sense at 10yrs working, you should be using it within the next 35 years or so. More years means you should need it sooner.

Keep in mind as your salary goes up what you'll be "contributing" to the WaLTCTA will go up.
Somebody making $100,000 today will probably be making $150,000 10 years from now, probably $200,000 20 years from now.
Every time you get a pay raise you pay more into the WaLTCTA.
But even though you're paying more each year, the amount of benefits you can receive from it remains the same.
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 »

tj wrote: Mon Apr 05, 2021 12:15 am
That's not my understanding, but I could be wrong. I believe that if your 7.5% AGI level came out to $10k and you had $20k of medical expenses, you could reimburse yourself $10k from an HSA and withdraw the additional $10k tax free from a tax-deferred account.
My understanding is that Sch A - Medical deductions are reduced by your HSA reimbursements, the same way they are reduced by insurance reimbursements.
You're correct. Intuit says the same thing here. Thanks for the clarification.

Given that, I would be really tempted to withdraw from the HSA first unless the medical expenses far exceeded the (currently) 7.5% AGI threshold, in which case I would opt to make a largely tax free withdrawal from a tax-deferred account. In a LTC situation for us at least, the threshold would probably be very low anyway because if we have a substantial LTC expense, we won't be spending (nor withdrawing) nearly as much on discretionary things like travel as we would otherwise.
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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 Apr 05, 2021 9:33 am
dstac wrote: Sun Apr 04, 2021 3:01 pm
WoW2012 wrote: Sun Apr 04, 2021 8:18 am
dstac wrote: Sun Apr 04, 2021 12:20 am Is my math right on this, using simple numbers:
$100k income means paying $580/yr in payroll taxes.
After 10yrs eligible for a $100/dy benefit for 365 days. (Consecutive? Adjusted fir CPI?)
At 10yrs, this benefit will have cost $5,800. 20yrs, $11,600. 30yrs $17,400.

What am I missing here? (Besides opportunity cost and ability to select the “right” plan for me.)

Your math is correct. For high-income earners the Washington Long-Term Care Trust Act is a terrible deal.

There are 3 main types of people who are opting-out of the program:

1) Everyone who plans on retiring before 2032.
2) Anyone earning $100K+ per year
3) Anyone who plans on moving out of Washington.
I guess for moderate earners this doesn't seem bad, but around $100k it really starts to shift. Some quick math:
50yo working until 70yo at $100k/yr then take LTC at 80yo: $11,600 in contributions would have grown to $38,200 at 6%/yr by the time LTC is used.
40yo working until 50yo at $100k/yr then take LTC at 80yo: $5,800 in contributions would have grown to $43,900.
Seems like for it to make sense at 10yrs working, you should be using it within the next 35 years or so. More years means you should need it sooner.
Keep in mind as your salary goes up what you'll be "contributing" to the WaLTCTA will go up.
Somebody making $100,000 today will probably be making $150,000 10 years from now, probably $200,000 20 years from now.
Every time you get a pay raise you pay more into the WaLTCTA.
But even though you're paying more each year, the amount of benefits you can receive from it remains the same.
Are premiums based on pre-tax or post-tax income? I cannot find a source that says which. They only state that the premiums themselves will be post-tax. Since we put so much into tax-deferred accounts, it makes a substantial difference for us.

If the tax is based on $100k of income, the annual premium would be $580. How much would a LTC policy with a $36,500 limit or thereabouts bought on the private market cost for a healthy 40 year old?
Last edited by willthrill81 on Mon Apr 05, 2021 9:51 am, edited 1 time in total.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

willthrill81 wrote: Mon Apr 05, 2021 9:49 am Are premiums based on pre-tax or post-tax income? I cannot find a source that says which. They only state that the premiums themselves will be post-tax.
premiums are paid against all wage income, the pretax amount.
Last edited by Soon2BXProgrammer on Mon Apr 05, 2021 9:52 am, edited 1 time in total.
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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: Mon Apr 05, 2021 9:50 am
willthrill81 wrote: Mon Apr 05, 2021 9:49 am Are premiums based on pre-tax or post-tax income? I cannot find a source that says which. They only state that the premiums themselves will be post-tax.
premiums are paid against all wage income, the pretax amount.
Thanks. Dang. :x

Apparently, you can no longer get an online quote for LTCi in WA state; you must contact an agent. I just noticed that Genworth has stopped selling individual LTCi policies and is apparently in potentially dire financial straits; they used to provide online quotes.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

willthrill81 wrote: Mon Apr 05, 2021 9:51 am
Soon2BXProgrammer wrote: Mon Apr 05, 2021 9:50 am
willthrill81 wrote: Mon Apr 05, 2021 9:49 am Are premiums based on pre-tax or post-tax income? I cannot find a source that says which. They only state that the premiums themselves will be post-tax.
premiums are paid against all wage income, the pretax amount.
Thanks. Dang. :x
This is the WA Legislature's workaround for an income tax. They first pushed through the Family Leave law using payroll taxes. The benefit scales way slower then the payroll taxes do. They they realized they could do the same with the LTCi program. Fixed benefit, unlimited payroll tax. Etc.

I know this is conjecture, but I would expect any "earmark" type program they can dream up that has mostly a flat benefit, could be a target of a payroll tax from them, because as long as the benefit is flat, and the tax is flat, then the cost is very progressive. This is essentially a work around to the constitutions requiremenst of a flat tax. They just keep the benefit flat as well.

They must have talked with investment advisors in the AUM business. Same work, more money, higher fee, more profit.
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 suemarkp »

I'm glad I'm retiring this year, as this is just another Progressive idea here in WA state. I'd get hosed bad and get no benefit. Even if I decided to work 10 more years, I really don't like these things where you keep paying in more and more and receive no additional benefit. Social Security is bad enough that the benefit ramps down as your income increases. But at least it has a cap and it stops.

Perhaps if they abuse this enough, the citizens will demand progressive taxation instead of the fixed rate the constitution requires. Then they'll slap a progressive income tax on us.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by asdfgf »

Is the $100/day benefit really not indexed to inflation in any way?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by bob1234 »

WoW2012 wrote: Sun Apr 04, 2021 8:34 am
czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?
Yes. Washington state insurance law defines long-term care insurance here:

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


It says:

"Long-term care insurance" means an insurance policy, contract, or rider that is advertised, marketed, offered, or designed to provide coverage for at least twelve consecutive months for a covered person. Long-term care insurance may be on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes any policy, contract, or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity.
Is there any guidance on the minimum level of coverage? One agent recommended 2 years, $100/day, 3% inflation adjustment. Another agent said I could get away with 2 years, $50/day, no inflation adjustment. It seems the inflation adjustment makes a big difference in premium.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by WoW2012 »

bob1234 wrote: Mon Apr 05, 2021 7:11 pm
WoW2012 wrote: Sun Apr 04, 2021 8:34 am
czaj wrote: Sat Apr 03, 2021 11:00 pm Has there been any guidance on what constitutes LTC insurance eligible for exemption? Equivalent (or greater) actuarial value or anything?
Yes. Washington state insurance law defines long-term care insurance here:

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


It says:

"Long-term care insurance" means an insurance policy, contract, or rider that is advertised, marketed, offered, or designed to provide coverage for at least twelve consecutive months for a covered person. Long-term care insurance may be on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes any policy, contract, or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity.
Is there any guidance on the minimum level of coverage? One agent recommended 2 years, $100/day, 3% inflation adjustment. Another agent said I could get away with 2 years, $50/day, no inflation adjustment. It seems the inflation adjustment makes a big difference in premium.

There is no guidance from the state on the minimum level of coverage. Any agent who says "X benefits" will qualify you for the opt-out is wrong. We don't know what minimum levels of coverage the state will require in order to opt-out. The best we can do is be reasonably certain.

To suggest that a policy with HALF the daily benefit of the WaLTCTA would qualify for the opt-out is ludicrous, in my humble opinion.


Edit: It now looks like we'll have some guidance on the opt-out rules and "minimum levels of coverage" next week.
Stay tuned......
Last edited by WoW2012 on Tue Apr 06, 2021 1:11 pm, edited 1 time in total.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

bob1234 wrote: Mon Apr 05, 2021 7:11 pm Is there any guidance on the minimum level of coverage? One agent recommended 2 years, $100/day, 3% inflation adjustment. Another agent said I could get away with 2 years, $50/day, no inflation adjustment. It seems the inflation adjustment makes a big difference in premium.
Are you just trying to opt out? or do you want what your paying to give you a meaningful benefit?

Over time a $50/day policy without inflation adjustment (or even a $100 a day) will become less and less meaningful. You will have paid more and more as the years go on, but the "real value" of your benefit will shrink.

A 3% Compound inflation adjustment policy depending on your age, coudl be the policy price of twice the daily benefit, because if your young enough, the 3% compound adds up significantly. The nice thing about this is as you pay more through the years (in aggregate), your benefit actually keeps getting bigger. So if you pay till your 90, your benefit will be significant... if you don't buy an inflation adjustment and your young, the $50/day might not buy a cup of coffee..

No inflation = your hoping you go to LTC early in your life.
3% inflation = your hoping you live a long life, and then in your old age you need LTC.

I know which one i'd prefer for me personally.
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 bob1234 »

I am younger, so my thought was to get the minimum level of coverage to opt-out for now, and then consider better coverage when I'm older. I was under the impression that they can raise the premium at any time, so I wasn't sure how much of an advantage it is to lock in a lower premium now.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by asdfgf »

WoW2012 wrote: Tue Apr 06, 2021 12:36 pm

Edit: It now looks like we'll have some guidance on the opt-out rules and "minimum levels of coverage" next week.
Stay tuned......
Where will this guidance be published?

Also is there any reason (right now) to believe a $3000/month policy with a 75K max benefit wouldn't meet opt out threshold. I suppose technically the $3000/month is a bit less than $100/day, but I would think that more than double the benefit would make the policy at least as good as what WA offers by any reasonable 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 »

bob1234 wrote: Tue Apr 06, 2021 11:21 pm I am younger, so my thought was to get the minimum level of coverage to opt-out for now, and then consider better coverage when I'm older. I was under the impression that they can raise the premium at any time, so I wasn't sure how much of an advantage it is to lock in a lower premium now.
Long-term care insurance companies canNOT "raise the premium at anytime".
Especially in Washington state!
Washington state is one of the top 10 states when it comes to protecting consumers from rate increases.
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 »

asdfgf wrote: Tue Apr 06, 2021 11:24 pm
WoW2012 wrote: Tue Apr 06, 2021 12:36 pm

Edit: It now looks like we'll have some guidance on the opt-out rules and "minimum levels of coverage" next week.
Stay tuned......
Where will this guidance be published?

Also is there any reason (right now) to believe a $3000/month policy with a 75K max benefit wouldn't meet opt out threshold. I suppose technically the $3000/month is a bit less than $100/day, but I would think that more than double the benefit would make the policy at least as good as what WA offers by any reasonable person.

What about the inflation protection?
What about the elimination period?
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 pasadena »

I'm going to take the contrarian position here... I'll pay. I can afford it, and the whole point is to provide protection for people who can't. So I'll just pay the damn tax and it won't change my life. I will probably never use it myself, but neither would I use a private LTC insurance, so if I'm going to pay for one either way, I'd rather give my money to the community than a private insurance company. Even if the latter might be cheaper.

I do think it's probably doomed, long term, but hey.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

bob1234 wrote: Tue Apr 06, 2021 11:21 pm I am younger, so my thought was to get the minimum level of coverage to opt-out for now, and then consider better coverage when I'm older. I was under the impression that they can raise the premium at any time, so I wasn't sure how much of an advantage it is to lock in a lower premium now.
i'd suggest you look at it a different way.. i'd consider getting the best policy you can for the amount of the tax. Try to get an inflation adjustment even if that means you get a small daily benefit for now.. This might be "enough" and you might decide you don't want any more then this later.

There is a misconception that you shouldn't buy LTC when your younger.. when you buy it younger. it seems you get more "insurance" because you have a greater chance of kicking the bucket and them paying nothing. (this is based on my limited analysis using the Time value of money with a cost of capital)
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 »

pasadena wrote: Wed Apr 07, 2021 11:06 am I'm going to take the contrarian position here... I'll pay. I can afford it, and the whole point is to provide protection for people who can't. So I'll just pay the damn tax and it won't change my life. I will probably never use it myself, but neither would I use a private LTC insurance, so if I'm going to pay for one either way, I'd rather give my money to the community than a private insurance company. Even if the latter might be cheaper.

I do think it's probably doomed, long term, but hey.
The latter isn't cheaper. It's just better.
A LOT better.
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 asdfgf »

WoW2012 wrote: Wed Apr 07, 2021 10:54 am
asdfgf wrote: Tue Apr 06, 2021 11:24 pm
WoW2012 wrote: Tue Apr 06, 2021 12:36 pm

Edit: It now looks like we'll have some guidance on the opt-out rules and "minimum levels of coverage" next week.
Stay tuned......
Where will this guidance be published?

Also is there any reason (right now) to believe a $3000/month policy with a 75K max benefit wouldn't meet opt out threshold. I suppose technically the $3000/month is a bit less than $100/day, but I would think that more than double the benefit would make the policy at least as good as what WA offers by any reasonable person.

What about the inflation protection?
What about the elimination period?
Do you know what those are on the default Washington Plan?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

asdfgf wrote: Wed Apr 07, 2021 12:46 pm
WoW2012 wrote: Wed Apr 07, 2021 10:54 am
asdfgf wrote: Tue Apr 06, 2021 11:24 pm
WoW2012 wrote: Tue Apr 06, 2021 12:36 pm

Edit: It now looks like we'll have some guidance on the opt-out rules and "minimum levels of coverage" next week.
Stay tuned......
Where will this guidance be published?

Also is there any reason (right now) to believe a $3000/month policy with a 75K max benefit wouldn't meet opt out threshold. I suppose technically the $3000/month is a bit less than $100/day, but I would think that more than double the benefit would make the policy at least as good as what WA offers by any reasonable person.

What about the inflation protection?
What about the elimination period?
Do you know what those are on the default Washington Plan?
I just got a quote from a LTCi specialist for a Mutual of Omaha policy. The elimination period is 90 days, with 1% inflation protection and $50k of maximum benefits, well above the state's $36.5k of maximum benefits. I'm pretty confident that this will meet the state's minimum for opt-out purposes. Since I'm still young and healthy, annual premiums would be about $290/year, which is much less than the payroll tax would cost me and the sole purpose of me obtaining such a policy. I'll probably wait for a few weeks to see if we get more guidance on the minimum amounts before buying this policy though.
The Sensible Steward
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