ABOUT GROUP-SPONSORED INSURANCE COVERAGE
In Washington State, it can cost at least $25,000 for in-home care and $60,000 for in-facility care per year. With the average length of care lasting two to four years, the state's WA Cares Fund benefit of $36,500 per lifetime is just a drop in the bucket. For those wanting additional financial protection, there is long-term care insurance.
You may be familiar with short-term and long-term disability insurance. We call this "paycheck insurance" - if you are unable to work due to a qualifying disability, you can receive a percentage of your salary.
We call long-term care coverage "nest egg insurance" - since this benefit helps you pay for nursing home, assisted living, and at-home care without your needing to dip into your retirement and other savings. While purchasing this insurance coverage after Washington State's 10/31/2021 deadline means that you will not be able to opt out of the Washington State WA Cares Fund program, it can offer additional peace-of-mind knowing that you are covered right away (the state program takes years of paying into it to become activated) regardless of where you live (the state program will only cover you if you remain a resident of the state).
You may be familiar with short-term and long-term disability insurance. We call this "paycheck insurance" - if you are unable to work due to a qualifying disability, you can receive a percentage of your salary.
We call long-term care coverage "nest egg insurance" - since this benefit helps you pay for nursing home, assisted living, and at-home care without your needing to dip into your retirement and other savings. While purchasing this insurance coverage after Washington State's 10/31/2021 deadline means that you will not be able to opt out of the Washington State WA Cares Fund program, it can offer additional peace-of-mind knowing that you are covered right away (the state program takes years of paying into it to become activated) regardless of where you live (the state program will only cover you if you remain a resident of the state).
Insurance Benefits
This program is a Life insurance policy with a Long-Term Care rider, providing two types of coverage in one.
This program is a Life insurance policy with a Long-Term Care rider, providing two types of coverage in one.
- Life Insurance: You choose the amount of life insurance you would like, from $40,000 to $250,000.
- Long-Term Care: The plan will provide you a benefit for up to 25 months. The amount payable will be 4% of the Life insurance amount you chose. For example, if you choose Life benefits of $70,000 you would receive Long-Term Care payments of $2800 per month.
The state's program charges a tax on every dollar that you earn (as your wages increase your state tax burden will also increase). However, under the insurance plan your rate will be locked in based on your age at the time of purchase and your tobacco use status (you can lower your rates to non-tobacco use status by applying to the carrier for a rate change following at least 12 months of being tobacco free).
Group-Sponsored Life with LTC versus the State Program - Benefits
Below are the main differences between the group-sponsored insurance and Washington State's program. This can help you to determine if the State plan will be available to you in the future so that you can determine the right amount of insurance to purchase. For example, if you plan to move out of state in retirement, you won't be able to qualify for the Washington State program's benefit. So you will likely need to purchase additional insurance coverage to fill that void.
Below are the main differences between the group-sponsored insurance and Washington State's program. This can help you to determine if the State plan will be available to you in the future so that you can determine the right amount of insurance to purchase. For example, if you plan to move out of state in retirement, you won't be able to qualify for the Washington State program's benefit. So you will likely need to purchase additional insurance coverage to fill that void.
Life with Long-Term Care |
Versus |
Washington State Long-Term Care |
Employees age 18-70 |
Eligible Employees |
All W-2 employees who were not able to opt out |
You choose your coverage amount from $40,000 up to a maximum of $250,000 |
Life Insurance |
None included |
Provides up to the amount you choose for Life Insurance coverage. For example, if you choose $70,000 in Life coverage, you would be able to use up to $70,000 for Long-Term Care needs. |
Long-Term Care Lifetime Maximum |
Provides up to $36,500 per lifetime. May increase over time if the state approves increases, which would be based on the Washington State Consumer Price Index, but there is no guaranteed increase. |
Once you qualify for benefits you would receive 4% of your life insurance benefit for up to 25 months. For example, if you choose $70,000 in Life coverage you would receive $2800/month to use for long-term care. |
Long-Term Care Benefit Payments |
This is a reimbursement program. You send receipts to the state and they will reimburse you. They will require you to use certain providers and reimburse at Medicaid payment levels. Providers can bill you for charges not covered by the state program. |
You can enroll your spouse/domestic partner for coverage if you enroll on coverage yourself. |
Spouse Enrollment |
Your spouse/domestic partner would only be eligible if they work as a W-2 employee and pay the state tax through their job. |
Rates are based on your age and tobacco use in the last 12 months. These rates do not increase every year as you get older. We call this “locking in” your rates at your age on the policy effective date. |
Rates |
The tax is currently set to start at 0.58% of your wages. Wages include base, bonus, commission, overtime, etc. with no cap. As your wages increase, the amount you pay in tax will increase. |
You can qualify in one of two ways. Either you must have a loss of 2 of 6 Activities of Daily Living or you must have a Cognitive Impairment. Activities include bathing, continence, dressing, eating, toileting and transferring. |
Needing Benefits |
You must have a loss of 3 of 10 Activities of Daily Living. Activities include medication management, personal hygiene, eating, toileting, cognitive functioning, transfer assistance, body care, bathing, ambulation/mobility, and dressing. |
You must pay the first premium through payroll deduction. Then as long as you continue to pay premiums for the policy you will be eligible for benefits. Note that benefits will not be paid for a period of illness that begins within the first 6 months after the policy effective date due to a pre-existing condition. |
Eligibility for Benefits |
You must pay into the program for 10 years (without more than a 5-year consecutive break in paying in) to be permanently eligible for benefits. You can become temporarily eligible for benefits once you pay into the program for at least 3 years, but there are certain requirements. |
This benefit is available anywhere in the US and its territories. If you retire or change employment, you can take this policy with you. The benefits and the premium would remain the same – you would just pay the premiums from your bank account rather than through payroll deduction. |
Portability |
This benefit is only available while you are a resident of the state of Washington. The program will only reimburse you for services received in Washington state. |
Accumulated Cash Value if you decide to surrender (cancel) the policy. |
“Walk Away” Benefits |
None – no refund of premiums will be allowed. |
Once you reach age 95. Premiums will also be waived at any time that you are receiving Long-Term Care benefits. |
Payments End |
Once retired and no longer earning W-2 wages. |