Program caveatsWashington’s program isn’t intended to be a cure-all. It’s intended to help mitigate costs, not pay for all of them. That $36,500 will be indexed for inflation, but it’s currently a lifetime maximum. If someone needs LTC, it’s very likely it will cost more than $36,500.
That means you still need a plan!
There are lots of questions to go over before you decide whether to stay in the program or opt out:
- Is it likely you’ll be eligible? There are any number of reasons you might not be eligible – if you’re set to retire within a year or two, for example.
- Is it likely you’ll still be in Washington when it’s time to make a claim? Let's say if you pay into the system for the required amount of years. But if you retire in, say, Arizona, you aren’t eligible to receive benefits after leaving the state.
- How much do you likely to pay into the system…versus how much do you likely to get out? Interestingly, there’s no cap on how much income is taxed for this program. That means high net worth people could pay more than the amount of benefits they’d stand to receive.
- How comfortable are you with the “use it or lose it” aspect of the program? A lot of people don’t like the idea of a stand-alone LTC policy because they might not need its benefits. This state program works the same way. What if you pay into the system for years and never need care? You might be more comfortable with an annuity or life insurance rider that allows you to pay for care if you need it, but you aren’t losing any benefits if you don’t.
In next blogpost, we will discuss the alternatives you could consider.