Washington Cares Act

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Today, I’d like to talk about new laws in the state of Washington. Even though most of us won’t be residing in the state of Washington, there is an interesting new law that is going into effect called the Washington Cares Act. This Act is the state’s long-term care insurance coverage, intended to provide a limited benefit for long-term care services for qualified Washington residents. It will be funded by collecting a 0.58% payroll tax from all employees with no income limit.

The Washington Cares Act is to begin in January 2022, unless the employee has applied, and is approved for, an exemption. The state has allowed employees an “opt-out provision” if they have purchased qualified long-term care insurance coverage prior to November 1st, 2021.

Washington is the first state that is saying, “We are going to charge a payroll tax to create a fund for people who need care but can no longer take care of themselves. At that point, based upon the rules of their contract, the state-provided long-term care benefits will kick in.”

Why is this important?

Many states are experiencing the same problem as Washington State. Medicaid is a federal program that is funded by both state income taxes and state taxes, as well as by the Federal Government. If the state that you live in is not in a good financial position, they may be facing challenges similar to Washington. In order to mitigate that, the State has put in this new law. If people don’t opt-out, they are going to be having an additional tax coming out of their paychecks.

That tax can end up being taken out of your pay for a lot of years. If you’re 30 years old and you work till 65, you’ll be paying 0.58% of your income to the state for this program for 35 years. It’s another reason why owning a personal long-term care policy might be worthwhile. And for those in Washington, I’m sure there’ll be a lot of people applying for long-term care coverage prior to the November 1st deadline.

People in other states should not ignore this. 

As more and more states are looking to protect themselves against the mounting number of baby boomers and others reaching the age of needing care, they may begin to implement these types of rules. I would much prefer to have a good, long-term care policy for which I could either make a one-time payment or pay up in 10 or 12 years rather than having to pay another tax throughout my entire work life.

Washington State’s action is just another reason why people really should prepare for retirement by having a good long-term care solution. They come in different shapes and sizes and could allow you to avoid the tax. There is a program we have called Care Choice, which is a single pay, long-term care policy. We also have Care Choice Select, which is a 12-pay long-term care policy. You can also get a rider on any of our whole life insurance policies that could be used as an alternative to paying a potential long-term care tax.

If you want to learn more about the Washington State Care Act and any of these long-term care solutions, give us a call. We’d be happy to answer any questions you have.

Registered Representative offering Securities through American Portfolios Financial Services, Inc. (APFS) Member FINRA/SIPC. Investment Advisory Services are offered through G&G Planning Concepts, Inc. which is not affiliated with APFS. Strategic Wealth Advisors Network and Gassman Financial Group are not affiliated with APFS.

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