Could the WA Cares Fund regulation (or something close to it) end up in your state too?

Recent regulation in the state of Washington is now being considered in the states of California, Oregon, Minnesota, Michigan and Illinois. Could your state be next? Legislators in other states are talking about rolling out similar statutes in other states and taking on this new guideline could cost you .05-1% in taxation. Since our Washington clients are a bit alarmed by this, we wanted to bring awareness to all of those within our network. All State of Washington full-time employees over the age of 18 years, have been given a deadline to participate in a personal Long-Term care plan; as an incentive to motivate workers to have a basic level of Long-Term Care protection. Although this encourages workers to plan for their Long-Term Care needs, this may be a higher overall financial obligation, more than some may like. Additionally, if workers do not have a plan in place and paperwork filed for the exemption approved by October 1st, even a larger tax bill due to the upcoming deadlines. Since we have a heavy focus in insurance planning and a team that is proficient in current Long-Term Care products available in the marketplace, we wanted you to be sure you were aware of the facts as we know it today. This article is to serve as a general outline to bring attention to important dates in the state of Washington as well as to offer assistance for those who have concerns about their personal options; especially if other states pick up this regulation in 2022. **Highlights and key dates below are sourced from the WA Cares Fund website here.** Highlights:

  • The WA Cares Fund will provide a public long-term care (LTC) insurance benefit to eligible Washington state residents who are vested in the program.

  • LTC benefits will be paid in $100 stackable units, with a $36,500 lifetime maximum: adjusted for inflation otherwise known as Cost of Living Adjustment/COLA.

  • Eligible beneficiaries can access benefits beginning in January 2025.

  • The benefit will be funded by a 0.58% payroll tax that begins in January 2022.

  • There is no cap on the amount of wages that may be taxed. Participation is mandatory for all W-2 employees in Washington; whereas other business entities may opt in. Please note: All mandated rules and guidelines are not completely clear as of now.

Key dates for Washington state residents:

  • Tax will be collected by January 1, 2022, unless you have opted out.

  • If you opt out, you will have to have a policy in place by November 1, 2021.

  • If you have a policy in place, you have to apply for an exemption from October 1-December 31, 2021.

  • Opting out will permanently disqualify an individual from WA Cares Fund eligibility.

Recent Updates Although the window of time is still open to get a policy in place, if Washington residents haven't applied for a new plan yet, the time frame to apply has now passed. This means that the insurance carriers who offer life insurance products in the State of Washington can still offer life insurance, but the products that qualify for the WA Cares Fund have been temporarily removed from the product shelf. This means that if you were interested in applying to make the 2021 deadlines, you are not able to now. The carriers are reporting that new insurance applications may be available starting in November of this year, but this will mean that those who didn't apply prior and those who are moving into Washington, have not met the deadline. Therefore, we don't know how this will play out for anyone that is relocating in that state other than they may be subject to penalty or tax in the future. Our suggestion is to apply once the carriers open up for business again and get the coverage if possible; then apply for what we think will be an opt-out window for 2022. There are insurance strategies that allow for a return of premium on a % of the premiums paid into one of these policies. In the event things change in the future and you have a plan in place, you can get access to some money back if you so choose to cancel at some point in the future. There are many uncertainties at this time as to what the overall permanent benefits will be, other than a $36,500 lifetime maximum benefit that adjusts for inflation. That being said, we encourage everyone to work with their tax advisor and/or financial planner on how this may affect their overall situation as we are not providing legal or tax advice here. We want to bring awareness to all of our clients and their colleagues, so that every individual can take necessary steps to take action with their future planning needs. So, what can you do now at this point? Get informed and get your product education. Since a handful of other states may take on this precedent, it is important for you to learn about what is available to you based upon your age, health, budget among other variables. MD Disability Quotes' Long-Term Care Curriculum offers those who are interested in learning more about these products, an educational session on the current products available in the marketplace. Our educational format is designed to help you decide which path you may take towards your future planning; whether it is to buy a specific product or to self-fund your potential Long-Term Care needs. In our complimentary sessions, you will learn:

  1. Basic fundamentals on how Long-Term Care plans work and what triggers benefits

  2. Why this product is not just for the older generation

  3. How cash indemnity vs. reimbursement works and what may be best for you and your family

  4. How modern hybrid life insurance products offer solutions to long-term care needs while also offering the ability to receive a return of premium if you don't use the plans

You may schedule your consultation with Amber here and to request your proposal in advance, please email info@mddisabilityquotes.com or Amber@MDDisabilityQuotes.com as she is the Long-Term Care Advisor in our office. We are here to answer any questions you might have in regards to this issue.

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