In early January, the state of Washington was the first to pass, the Long Term Care Trust Act. This this means that all residents living in the state of Washington now have to pay 58 cents for every $100 they earn into the states trust for long-term care.
Although Washington state is the first in the country to offer this social-insurance program, it looks like they will not be the last. 12 other states are considering adding this tax. Is Maryland next?
In Washington, residents will have to pay into the state fund for ten years to be able to claim their longterm care insurance benefits in the future. The funds are intended to be used to cover the cost of assistance, whether it be with eating, dressing, bathing etc. There is one big problem with this program though, in addition to having to wait ten years to tap into their benefits, this new state insurance will only pay up to $100 at day with a lifetime cap of $36,500. If anyone has ever had to pay for a nursing home or for part/full-time adult care for their loved one, you know that this number doesn’t even make a dent in the costs.
To avoid paying this long-term care tax, residents can secure their own insurance policy giving them many more benefits and flexibility for its use in the future.
There are also tax advantages to buying your own long-term care insurance. Currently the state of Maryland provides each person who purchases a long-term care insurance policy, a one time tax credit up to $500. The federal government also provides additional tax advantages to buying a qualified long-term care insurance plan.
If you have any questions about purchasing a long-term care insurance policy or want us to review your current policy please feel free to reach out to Unity Insurance partner Heller Kowitz Insurance Advisors for a complimentary quote at insurance@hellerkowitz.com