Los Angeles, CA, April 02, 2021 --(PR.com
)-- The nation’s first public state-operated long-term care insurance program starts imposing taxes January 2022. Employed individuals in Washington who want to avoid the new tax have only a few weeks left to explore the only available option according to the American Association for Long-Term Care Insurance.
“Washington’s Long-Term Care Trust Act (Trust Act) imposes a payroll tax of 0.58 percent on employees,” explains Jesse Slome. “Someone earning $100,000 a year will see $580 a year deducted. It’s going to be a big surprise to many workers especially where both spouses or partners work.”
“If you are younger than 45, I’d really look at the only way to avoid the new tax,” Slome advises. “The State may not be happy with this advice because they are counting on workers to fund the program, but there are reasons to consider the opt-out option before the approaching deadline passes. “
The approaching deadline should encourage individuals to weigh the pros and cons of the new program. “On the positive side, the new state program will start paying benefits of up to $36,500 beginning in 2025,” Slome explains. “There are regulations in terms of how many years you must contribute in order to be eligible but for older workers especially, you’ll likely pay for a few years and then be eligible for benefits.”
“On the con side, younger workers who move out of Washington for five years or more forfeit benefits and premiums,” Slome notes. “The tax bite will go up as your income increases, or if the government plan finds itself in need of added funds down the road. And, perhaps more important, you can get better coverage today for less money that follows you should you one day move out of state.”
Deadline To Apply For Permanent Exemption Is Approaching
The State will allow those who own tax-qualified long-term care insurance to apply for a permanent exemption from the Trust Act. “Time is running out to take advantage,” Slome advises. “You must buy before July when the State plan becomes law.”
According to the Association’s 2021 Long-Term Care Insurance Price Index a 35 year old Washington male could pay $180-per-year for a long-term care insurance policy that will pay up to $50,000 in benefits. A same-age female pays $280 annually for a policy from a leading private insurer.
At age 45, annual costs are $195 for a male and $300 for a woman. Applicants who have some existing health issues will likely pay more.
“The State is counting on people missing the deadline to apply and thus be eligible to opt out of the Trust Act program,” Slome concludes. “Applications for insurance can take time to be approved so it’s imperative to act soon.”
The American Association for Long-Term Care Insurance advocates on behalf of consumers for the importance of planning and supports insurance professionals who market insurance options. To request pricing from a Washington long-term care insurance professional, call the organization at 818-597-3227 or visit their website at www.aaltci.org.