Mandatory LTC Insurance

[minnesotapaintlady]

So, recently we've been given this "Exciting opportunity" to get life insurance with LTC benefit through work. 

I was pretty perplexed that this is being offered since we already have life insurance available as a benefit and the LTC add wasn't that fantastic, but after further research I see it's to get exempted from a payroll tax for state sponsored LTC. 

The state of Washington implemented the first public long-term care program funded through an additional payroll tax for all working residents. A California task force has recommended a payroll tax of up to 2% of your income with a private insurance opt-out provision. Life Insurance with Long-Term Care may satisfy the state's requirements for tax exemption. There are 25+ additional states who may follow Washington’s lead in creating a long term care payroll tax for all working residents.Premiums are based on age - the younger you are when you enroll, the more benefit you receive for the same premium.During this enrollment period only, you have a special opportunity to elect up to $150,000 in coverage for yourself, without answering medical questions. Spousal coverage is available, up to $75,000, by answering a few medical questions.

We don't have a facility there, but we do in CA, which is why this is being rolled out I suppose.  I looked up the states looking into it and MN is right behind CA. 

www.ltcnews.com/articles/multiple-states-considering-implementing-long-term-care-tax

So, any from WA care to weigh in?  Did you go with the payroll deduction or opt out with your own insurance.  I really do not want to buy LTC and I definitely don't want to pay for life insurance, but if I'm going to be forced to I want to spend the least amount possible on it. 

[CCL]

So where would the tax money go? To help support Medicaid or something? Or would they contribute the 2% to some sort of individual account? Or maybe something akin to SS where the more you earn and pay into it, the higher the benefit you receive later?

Sorry. I didn't take time to read the article. Figured you can explain it better, anyway.

[minnesotapaintlady]

Sept 29, 2023 21:09:28 GMT -5 CCL said:

So where would the tax money go? To help support Medicaid or something? Or would they contribute the 2% to some sort of individual account? Or maybe something akin to SS where the more you earn and pay into it, the higher the benefit you receive later?

Sorry. I didn't take time to read the article. Figured you can explain it tter, anyway.

It sounds like everyone in WA is eligible for the the same benefit.  But it's really low at only 36K lifetime benefit.  WA only charges 0.58% of income, but I think I would still rather self-insure than pay that.

I was hoping someone from WA would chime in about how this works.  Like, does it cover everyone in the state even if they've never paid in or are retired and no longer paying in?

The Walk of the Penguin Mich do you have any insight?

[The Walk of the Penguin Mich]

Yes, TD is getting hit by this, but he will never collect as you have to pay into it for a minimum of 10 years.  So he gets to pay, but since he is mostly retired (he says he’s only gonna to this retired/not retired thing until 2025, or likely our next WC).  

[Tiny]

From the article:

The tax is intended to help fund the Medicaid program, the country's primary payor of long-term health care expenses. You must have little or no income and assets to qualify for Medicaid. Many people fail to plan for long-term health care. There will be future declines in a person's health due to illness, accident, or the impact of aging. As a result of the consequences of aging, many people will need help with daily living activities or supervision due to dementia. Having no long-term care plan means they must pay for their own care or have family members become caregivers.



The stress on Medicaid is tremendous and is expected to grow in the coming decades. There is debate whether Washington, or other states, are interested in promoting Long-Term Care Insurance, but they are interested in finding resources to pay for care for those with little or no assets.

The article also mentions that many Boomers will need long term care and that many of them have not planned for the expense.

The article points out that the 36K lifetime benefit isn't very good. Currently care a month (based on 44 hours a week) is like 7K. But a month of nursing home care is 12K. The lifetime benefit doesn't go far.


States (and the Federal government) need to play the long game...

While it does look like a "money grab" it does seem like it's intended to bolster the social safety net Federal plans (SS Medicare/Medicaid) in the future. Once state's adopt it, it can be modified in the future (say 5,10,15,20 years down the road.)

In 23 years the oldest Millennials will start turning 65. The youngest Boomers will be 83.


I'm not for or against this.  Just pointing out why so many States are  may be contemplating it. 

[Tiny]

The article says it's .58 for every $100 dollars earned. I hate it when I have to do math to figure out what the numbers really "mean" in the real world. (I'm not all that good at it. and I can't do this in my head or on the fly)

Does this mean 100,000 yearly wages / 100 = 1000. 1000 * .58 = $580.00 in an additional payroll tax.

OK, I guess you could just go 100,000 * .0058 = 580 dollars. so 60,000 * .0058 = 348 dollars.

I said I wasn't good at math. (maybe it's that I'm not confident with math.) I assume everyone else can do this off the top of the head.

[Rukh O'Rorke]

Sept 30, 2023 10:48:28 GMT -5 Tiny said:

From the article:

The tax is intended to help fund the Medicaid program, the country's primary payor of long-term health care expenses. You must have little or no income and assets to qualify for Medicaid. Many people fail to plan for long-term health care. There will be future declines in a person's health due to illness, accident, or the impact of aging. As a result of the consequences of aging, many people will need help with daily living activities or supervision due to dementia. Having no long-term care plan means they must pay for their own care or have family members become caregivers.



The stress on Medicaid is tremendous and is expected to grow in the coming decades. There is debate whether Washington, or other states, are interested in promoting Long-Term Care Insurance, but they are interested in finding resources to pay for care for those with little or no assets.

The article also mentions that many Boomers will need long term care and that many of them have not planned for the expense.

The article points out that the 36K lifetime benefit isn't very good. Currently care a month (based on 44 hours a week) is like 7K. But a month of nursing home care is 12K. The lifetime benefit doesn't go far.


States (and the Federal government) need to play the long game...

While it does look like a "money grab" it does seem like it's intended to bolster the social safety net Federal plans (SS Medicare/Medicaid) in the future. Once state's adopt it, it can be modified in the future (say 5,10,15,20 years down the road.)

In 23 years the oldest Millennials will start turning 65. The youngest Boomers will be 83.


I'm not for or against this.  Just pointing out why so many States are  may be contemplating it. 

I'm not neccessarily opposed either, but I would prefer they include a medicare component rather than only medicaid. Even if it is somewhat less generous than the medicaid program.

So maybe if someone on medicare needs LTC, they get 30 days under medicare, and then goes to a $200 a day copay situation like they currrently have for rehab facilities - but rehab is capped at 100 days, and only for intensive therapy where improvement is expected. Whereas LTC is more the custodial aspect.

This would still be like 6k a month for medicare copay, but that is something that would be somewhat doable for many in the middle class, so if they are getting 2k/month in soc sec, then they are paying 4k from other funds. Those who were on the margins might quickly go into the medicaid situation, but for those with a healthy spouse at home, it would/could be more manageable and not leave the other spouse completely destitute.

The 6k from medicare patients could also keep the facilities in better shape than if they only had medicaid patients and so are always just scrapping by on the finances and the quality goes down hill fast in that situation.

[Rukh O'Rorke]

On the medicare perspective as well - would be great to include for workers too - like if they qualify for the disabilitythey could also get some LTC if needed....

[Rukh O'Rorke]

Personally - I am not going to ever buy LTC insurance. It has always seemed like something that so few ever get to actually use and I'd feel like I'd be the type to pay into it for 20 years and then either forget to pay or company goes belly up a few months before I need it!

My mother is in a position to maybe be able to use a LTC policy right now if she had one. She will be 100 in a few weeks, so would have been decades of premiums, and then they don't pay the full bill anyway, do they? And then they have to "approve" the stay?

Insurance is like vegas, the house always wins. 

Luckily - being single - I don't need to worry about a household being maintained if I am not in it. I think I'll regard my house as the LTC or AL piece of my protfolio, and sell or rent if need be for additional funds.

[minnesotapaintlady]

Sept 30, 2023 15:50:08 GMT -5 Rukh O'Rorke said:

Personally - I am not going to ever buy LTC insurance. It has always seemed like something that so few ever get to actually use and I'd feel like I'd be the type to pay into it for 20 years and then either forget to pay or company goes belly up a few months before I need it!

My mother is in a position to maybe be able to use a LTC policy right now if she had one. She will be 100 in a few weeks, so would have been decades of premiums, and then they don't pay the full bill anyway, do they? And then they have to "approve" the stay?

Insurance is like vegas, the house always wins. 

Luckily - being single - I don't need to worry about a household being maintained if I am not in it. I think I'll regard my house as the LTC or AL piece of my portfolio, and sell or rent if need be for additional funds.

I have no interest in LTC insurance either which is why this whole thing annoys me a little. 

MN is looking to push it through before next year's election, but of course, that doesn't mean it will happen.

A 36K policy is pretty useless for most people.  So you go a few more months before you're broke I guess. 

[TheOtherMe]

A few months is all it would get a person.

The equity in my house would pay for at least a year but I hope I have enough wits about me to off myself before I have to go live in a nursing home. 

[NomoreDramaQ1015]

36k would get you three months here.

I'm going to assume the state will force nursing homes to admit people and take the $36k and then deal with it if patients don't have anything beyond that l.

Around here they are pushing for having 18 months of private pay before they will accept a patient.

That would be almost $200k if anyone is wondering.

Most won't take LTC either because most policies aren't covering $200k+. Many aren't taking Medicaid either.

I'd be pissed if I had to pay into this. I'm better off being forced to do a retirement account I can't touch that will grow big enough to hopefully buy my way in.

[trimatty471]

Sept 30, 2023 15:50:08 GMT -5 Rukh O'Rorke said:

Personally - I am not going to ever buy LTC insurance. It has always seemed like something that so few ever get to actually use and I'd feel like I'd be the type to pay into it for 20 years and then either forget to pay or company goes belly up a few months before I need it!

My mother is in a position to maybe be able to use a LTC policy right now if she had one. She will be 100 in a few weeks, so would have been decades of premiums, and then they don't pay the full bill anyway, do they? And then they have to "approve" the stay?

Insurance is like vegas, the house always wins. 

Luckily - being single - I don't need to worry about a household being maintained if I am not in it. I think I'll regard my house as the LTC or AL piece of my protfolio, and sell or rent if need be for additional funds.

I keep asking around and I am hearing that LTC insurance does not pay.
I plan to use my ROTH IRA for LTC.

[Rukh O'Rorke]

Oct 8, 2023 7:38:11 GMT -5 trimatty471 said:

Sept 30, 2023 15:50:08 GMT -5 Rukh O'Rorke said:

Personally - I am not going to ever buy LTC insurance. It has always seemed like something that so few ever get to actually use and I'd feel like I'd be the type to pay into it for 20 years and then either forget to pay or company goes belly up a few months before I need it!

My mother is in a position to maybe be able to use a LTC policy right now if she had one. She will be 100 in a few weeks, so would have been decades of premiums, and then they don't pay the full bill anyway, do they? And then they have to "approve" the stay?

Insurance is like vegas, the house always wins. 

Luckily - being single - I don't need to worry about a household being maintained if I am not in it. I think I'll regard my house as the LTC or AL piece of my protfolio, and sell or rent if need be for additional funds.

I keep asking around and I am hearing that LTC insurance does not pay.
I plan to use my ROTH IRA for LTC.

by not pay - are you talking about they don't approve the stay, or their payout is too low to be a real value?

[NomoreDramaQ1015]

Thinking of this thread while looking at my grandma's bill.  Last month was $8400.  Due to rate increases it has shot up to $9300 for October.  That is almost a $1k increase in only 30 days.  

That is $9300 PER MONTH.  And it has been warned that they may need to raise their prices again for one reason or another. 

I don't foresee insurance companies leaping at paying $200k+ out to people.  Insurance companies do not make money by paying out.   You're going to be lucky if $200k gets you a year in a home at the rate the prices are increasing. 

We'd be better off instead of trying to force responsibility onto us peons (though you should save) looking into why nursing homes are charging so much when they are sitting 70% empty like my grandmother's home is.  If you are sitting 70% empty then where is all that money going?  If you need it for overhead why aren't you filling your beds so you can spread the costs? 

And revamp Medicaid so there is more incentive for homes to accept it.

There is just no way your average human is going to be able to save their way into nursing home care.  Granted a good number of the policy holders will likely die before pay out but still.   I'm already counting on the stock market still existing in 30+ years you're now going to make me hope this insurance company and my policy exist that long too? 

[Rukh O'Rorke]

The cost of long-term care insurance varies widely, but the average 55-year-old man will pay $1,700 per year for a three-year policy that covers $164,000 in care.1 The average 55-year-old woman will pay $2,675 for the same coverage.2

what does this mean? So if you go into long term care, they only cover for 3 years? and is the 164k mean up to 164k each year.....or a maximum of 164k for the entire policy? So in drama's gma case, it would cover maybe 18 months and then you are on your own?

[azucena]

Without knowing the source, I think it's $165k paid out for qualifying ltc expenses spread over 3 yrs. There's usually a daily dollar amount listed in the policy too.


LTC insurance premiums aren't guaranteed and can and have increased. Actuaries can't price it as accurately as life insurance bc you're either alive or dead and we have hundreds of thousands of death data to study.

LTC has to outline qualifying events that trigger coverage like and sometimes doctor sign-off. These items can be subjective. The data for these items is being collected but not nearly enough to study or as easy.

Also policyholder behavior comes into play as to the timing of when they elect to use the benefit. When they buy it and how long until they make a claim.

Plus trying to peg the amount of coverage needed as long term care costs increase quickly.

[NomoreDramaQ1015]

Oct 10, 2023 20:41:58 GMT -5 Rukh O'Rorke said:

The cost of long-term care insurance varies widely, but the average 55-year-old man will pay $1,700 per year for a three-year policy that covers $164,000 in care.1 The average 55-year-old woman will pay $2,675 for the same coverage.2

what does this mean? So if you go into long term care, they only cover for 3 years? and is the 164k mean up to 164k each year.....or a maximum of 164k for the entire policy? So in drama's gma case, it would cover maybe 18 months and then you are on your own?

Reading it it looks like that's a lifetime cap.

I'm guessing the assumption is after 18 months you go on Medicaid.

Which is what we're doing but holy mother of Christ. I worked for a university, my mom worked in health insurance and still the level of red tape involved has me going Grey.

Grandma is lucky she has me. Most nursing homes now no longer help patients file. Social workers are about strong arming and bullying family for more out of pocket profits.

I can't fathom what old people who have no family to assist do. So you buy yourself a year what happens after that? I can't Navigate Medicaid alone and I'm 40.

Expecting an old person to? Not happening.

[trimatty471]

Oct 8, 2023 11:25:36 GMT -5 Rukh O'Rorke said:

Oct 8, 2023 7:38:11 GMT -5 trimatty471 said:

I keep asking around and I am hearing that LTC insurance does not pay.
I plan to use my ROTH IRA for LTC.

by not pay - are you talking about they don't approve the stay, or their payout is too low to be a real value?

Payout too low.