Thursday, May 16, 2019

Evergreen State Long Term Care

So the great state of Washington has passed legislation implementing what appears to be the first "Social-Insurance Program for Long-Term Care" in the nation.


But what, exactly, does that mean?

Well first, let's look at what this plan isn't:

It is not an individually owned, Partnership Compliant long term care insurance plan (it's not, in fact, 'long term care' coverage at all, but we'll circle back to that). That's not to say it's evil, fattening or carcinogenic, just noting its limitations.

On the other hand, it's also not the late, unlamented CLASS Act, so it actually seems to have some decent value, especially relative to cost.

Okay, that's nice, Henry, but what is it?

Pretty simple, really:

"All residents will pay 58 cents on every $100 of income into the state’s trust. After state residents have paid into the fund for ten years—three if they experience a catastrophic disabling event—they’ll be able to tap $100 a day up to a lifetime cap of $36,500 when they need help with daily activities such as eating, bathing, or dressing."

That is, they'll be eligible to receive up to a year of extra help with common tasks (assuming care costs $100 a day, and this amount increases each year). Which is, quite frankly, pretty remarkable. And at a tax rate of about 6/10th's of 1%, quite affordable. Given the state's average income of $70,000, that comes to about $400 a year per taxpayer.

So, is this a good deal?

Depends, no?

I'm ambivalent as to its likely result:

On the one hand, as it relates to encouraging folks to at least discuss the idea of long term care (and insuring it, obviously), raising awareness, I think that can be good.

What I'm afraid of, though, is that it will give folks a false sense of security as to the need to self-insure. I see this quite a bit with folks who think "oh, I don't need LTCi, Medicare will pay for it."

Uh, no, no it won't.

But a lot of folks believe that it does. And I'm concerned that folks will think that this is indeed Long Term Care insurance when it's not even really Short Term Care coverage.

On the gripping hand, it may well be all that many (most?) Washingtonians want, or need, or even qualify for.

Then here's this: proponents say that "[a]ll working people will pay into the fund through a payroll tax and then be able to claim a benefit when they need it."

Oh, really?

Then what happens if I pay into the plan for 20 years, and then decide to retire to Florida?

Time will tell, no?

[Hat Tip: Bill Comfort]

blog comments powered by Disqus