By Tina Keller, Staff Accountant, Falco Sult
In April 2019, Washington state made history by passing the country’s first state program to help pay for long-term care. The passing of this Act will help ease the burden of long-term care for many families and will save taxpayers approximately $3.9 billion in Medicaid costs by 2052. Contributions will be withheld from wages beginning in 2022 with first benefit payouts beginning in 2025.
Currently, long-term care is not covered by Medicare or other health insurance carriers and private long-term care policies are unaffordable for most individuals, averaging lifetime costs estimated at $260,000. The current requirements to receive long-term care through Washington Medicaid, for a single person, is to have a monthly income no higher than about $6,700 and have $2,000 or less in cash with only one home valued at $572,000 or less and one automobile. Anything above these limits is considered an available asset that the individual can sell and receive cash to pay for long-term care. If an individual is considered eligible and then decides to sell their house, they will become ineligible until they meet the above requirement of having $2,000 or less in available cash. The state also has a look-back period of 5 years to determine if any valuable assets were given away or sold for less than fair market value to determine eligibility.
The new long-term care program will be funded through mandatory employee paycheck deductions starting January 1, 2022 at a rate of 58 cents for every $100 of earned income, equaling an average contribution of about $20 per month based on average incomes in Washington State. An individual is eligible for benefits after paying in for a total of 10 years, working a minimum of 5 consecutive years or 3 years of the last 6 years with a minimum of 500 hours worked each year.
A self-employed individual can opt in by filing a notice of election in writing with the Employment Security Department. Self-employed individuals must meet the same payment requirements mentioned above to be eligible for benefits. Self-employed individuals who have opted in may also withdraw from coverage by filing a notice of withdrawal with the Employment Security Department. The Employment Security Department may also cancel any policy for a self-employed individual who does not make the required payments or file the required reports.
Benefits become available on January 1, 2025. Qualified individuals may become eligible by filing an application with the Department of Social and Health Services. The Department of Social and Health Services is then required to evaluate that the individual requires assistance with three daily living activities such as personal hygiene, eating, medication management, dressing, etc. Once deemed eligible, the benefits will be paid to a registered long-term care provider at a rate of $100 per day. An eligible beneficiary may not receive more than $36,500 in benefits over the course of their lifetime, with the cap set to increase with inflation.
If you have any questions on how the Long-Term Care Trust Act might impact you, please contact us to schedule a consultation.
For more information about the Long-Term Care Trust Act: