In or out, Washington’s long-term care tax is for life — and the deadline is looming

Heidi Hagen’s view of Washington’s upcoming long-term care tax is pretty clear:

“It is bad law to start with.”

Starting January 1, 2022, a point-five-eight percent tax will be levied on Washington employee wages. That’s 58 cents per hundred dollars earned.

For Hagen’s family in Orting, it’s an $80 dollar-a-month hit.

“I live paycheck to paycheck. $80 is actually a big thing to me when your gas is going up, your food is going up, my garbage bill is going up. My water bill is going up. And do you think my wages are going up? No,” says Hagen.

This tax will provide a $36,500 lifetime benefit, according to Ben Veghte, director of the WA Cares Fund.

“It gives families the ability to stay in their own homes as they age, or when they need long-term care or go to a facility,” says Veghte.

Washingtonians like Heidi have a single chance to opt-out by November 1 of this year — if they have a qualified long-term care policy in force by the deadline.

Want out?

But that’s a near impossibility, according to Stacy Walker, an agent with Alliance West Insurance in Tacoma. She has been handling long-term care policies exclusively for months.

“One company alone had 36,000 applications go through in one week,” says Walker. “So a lot of the companies are at capacity. They really are. They’re just at capacity.”

Over the summer, she says, companies stopped offering policies altogether. Walker says Alliance West only has three carriers out of 22 that still offer a policy.

And If you can find a carrier, she says you may have to pony up to $36,500 dollars upfront to opt-out

Something Heidi Hagen found out after hearing about the exemption deadline.

“Well, I’ve been trying to shop for a long-term care policy to buy a private one,” says Hagen. “Can’t find one. Can’t find one that is reasonable for somebody on a budget that needs something that would be that would actually cover what truly would cost long term care.”

What’s the benefit?

According to a study by Genworth Financial, the average annual cost for long-term care in the state for 2020 starts at a high of $131,000 a year for a private room in a nursing home. The study found it’s about $72,000 for a home health aide for 40 hours a week. And $69,000 for an assisted living facility.

Ben Veghte acknowledges WA Cares won’t cover everything but says private insurance costs thousands more than the state plan over a lifetime.

“We’re a much better deal than private long-term care insurance,” says Veghte. “If you had twice the premium you’d have twice the benefit. But I think what the state was trying to do here is have a modest premium with a significant but modest benefit.”

State Senator Doug Ericksen, a Republican from Ferndale, is one of 23 legislators who signed a letter to Governor Jay Inslee asking for the tax to be delayed.

Senator Ericksen’s laundry list of issues begins with the Employment Security Department; they’re handling long-term care exemptions while still dealing with problems concerning unemployment benefits.

“Nothing against the rank and file people that work at that department. Lots of good people there. But the management and the governor’s office have not done a good job of running that department,” says Ericksen.

There’s more: you can’t cash out; move out of the state and you won’t get a cent; V.A. benefits don’t exempt you from the tax; if you’re over 55, you may not collect full benefits.

Will there be a delay?

“But now here’s a chance where you have Republicans and Democrats coming together and asking the Governor to delay it. Use those emergency powers because of the COVID-19 pandemic to push this back in terms of implementation,” says Ericksen.

Now, Heidi Hagen is preparing to pay and not receive the benefit because she wants to retire out of state. Until then, she expects Washington to just keep on taxing.

“So instead of 58 cents this year we’re going to go to ‘oh well we need 68 cents.’ ‘We need 75 cents.’ And it’ll never stop,” says Hagen. “There is a need for something to be done to help people in long-term care. Is this the answer? No.”

Any changes to the tax will have to come through the legislature.

When we asked the governor’s office if there would be a delay, we got a statement that said, in part:

“We are hearing about the concerns and discussing options, as well as working with our state agencies and monitoring the work of the LTC Trust workgroup in reviewing any recommendations. But, the governor has said he does not intend to delay the implementation date as set out by the legislature.”