What's the cheapest long-term care insurance that qualifies for the Washington state long-term care payroll tax exemption?

Submitted by Franck_Dernoncourt t3_112ejat in Washington

I'm a Washington state tax resident. I had to subscribe to an expensive but qualifying long-term care (LTC) insurance that was included as a rider on a life insurance/annuity to be able to opt out at the last minute from the long-term care payroll tax in Washington in 2021. I'd like to cancel my expensive LTC insurance and switch to a cheaper qualifying LTC insurance.

What's the cheapest long-term care insurance that qualifies for the Washington state long-term care payroll tax exemption?

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doktorhladnjak t1_j8jwokk wrote

Technically, you can just cancel without a new policy and keep your exemption. They could change the law but that’s how it works today

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atlantic_pacific t1_j8jyuwg wrote

Was on webinar with an insurance employee who keeps track of this topic in the WA legislature and they said that lawmakers are currently aware of the loophole that people could have signed up for a private LTC policy, gotten the exemption, and then cancelled the policy. Lawmakers are aware of this and it seems very likely that they will plug the loophole in the future by requiring some sort of ongoing proof that you have an active policy.

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Franck_Dernoncourt OP t1_j8k41s7 wrote

> ongoing proof that you have an active policy.

Can one change one's LTC insurance and still be tax exempt? I'm guessing so but I couldn't see the info in the law.

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explore509 t1_j8xw4ct wrote

I have heard this from the legislature as well. They are working on a re-certification process to make sure people are keeping their private policies.

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AnonymityIsForChumps t1_j8jylt5 wrote

The current law is a mess.

It will probably change. But if it doesn't, there is no policy that you can currently purchase that grants an exemption. To qualify for an exemption, you must have purchased the coverage prior to November 1, 2021.

However, the law also doesn't require you to maintain coverage, so technically you could cancel and keep your exemption. I think this part is one of the most likely to change, so I wouldn't do that until July at earliest (when payroll deductions start).

Just wait a few months before you change anything.

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Franck_Dernoncourt OP t1_j8jz9ex wrote

Got it, thanks. Given the high price I'm paying currently for the LTC, I'd like to switch ASAP to some cheap insurance and just cancel it if the law change confirms one can drop it.

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happytoparty t1_j8l7vf0 wrote

Technically true, however when you went to sign up for the exception you only needed to “affirm that you could provide proof” to receive the exception. I know a lot of people who did that and have that exception from the state of WA.

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AnonymityIsForChumps t1_j8ll4l9 wrote

Yes this does work if you're comfortable commiting tax fraud. Although the odds anyone will ever be investigated for it is near zero.

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Delicious-Adeptness5 t1_j8kdlx9 wrote

That Opt out option has Sunset. If you have a policy prior to Nov 1, 2021 then hold onto it.

There was a ton of policies sold during that time frame and several states are moving forward with their programs.

When I talked to the legislatures in January there was no plans to make a change even though the taxes start being collected July 1st. The other option that you have is going self employed as we have to opt in if we want it.

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Franck_Dernoncourt OP t1_j8ke7ig wrote

Thanks!

> then hold onto it.

so it means one can't change one's policy?

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Delicious-Adeptness5 t1_j8oew7g wrote

If you want to use the exclusion then I would keep the policy with that date. You can always have multiple policies.

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Franck_Dernoncourt OP t1_j8ouo28 wrote

> If you want to use the exclusion then I would keep the policy with that date.

Got it, thanks

>You can always have multiple policies.

No thanks, my goal is minimizing expenses.

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Scared_Calligrapher t1_j8jwjm3 wrote

You might wanna double check what happened after everyone made their choice. I believe the whole thing fell apart in the legislature and we are not required to carry LTC at this time. We made the choice to not opt in - hoping it would fail in the end.

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atlantic_pacific t1_j8jzdtb wrote

This is a common misunderstanding. The WA Cares law has not been repealed. It is on the books and is not likely to go anywhere. What was delayed was the collecting of the LTC tax from peoples paychecks. That tax collection was delayed, but it is scheduled to begin in 2023.

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Scared_Calligrapher t1_j8kcg3p wrote

Oh yes. I should have said that more clearly. At this time it is not required, but it is still on the burner. I personally think that the “plan” will not come together any better in 2023, than it did the last time around. So, personally I am still waiting to see if opting out in the first place was the correct decision. We will see what happens.

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Franck_Dernoncourt OP t1_j8jzfan wrote

Thanks, they are still planning to implement that tax, from July 2023 last time I heard about it but the state legislators keep changing their minds.

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1flyNOVAguy t1_j8kudf5 wrote

Interested in this as well. Currently paying $33/month with TransAmerica.

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Rocketgirl8097 t1_j8lla8w wrote

Thats a pretty good price. What I'm going to end up paying with the payroll deduction is something like $65 a month. Because I make a little more, I pay more. Which I think is bs because the health care I would receive doesn't cost any more for me than someone that pays less than me. That's another flaw in this plan. It should be a flat rate. Also I'll never see it because I'll retire before its funded and they still haven't fixed that.

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SereneDreams03 t1_j8k4w4r wrote

Depending on how much you earn, it is likely cheaper just to stick with the WA Cares fund, than to go with LTC insurance. It's $0.58 per $100 earned, that's about $25 a month for the average worker in the state.

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Franck_Dernoncourt OP t1_j8kb91p wrote

One can get insurance for less than 25 USD/month, eg https://www.reddit.com/r/Washington/comments/112ejat/whats_the_cheapest_longterm_care_insurance_that/j8kayl0

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SereneDreams03 t1_j8koct2 wrote

Interesting, that would be by far the cheapest I've heard for stand-alone LTC insurance. I wonder if that's just the cost of the rider. The lowest cost I've heard is $79 a month. And like I said, it depends on how much you make, $25 a month is just the average cost for Washington residents.

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Franck_Dernoncourt OP t1_j8kq0yy wrote

Yeah I wish we had a clear table of prices for each qualifying LTC insurance. This law and its implementation are very poorly thought-out. Policymakers were either bribed by insurers or profoundly stupid.

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