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Know your options for private long-term care insurance

W-2 employees in Washington have until Nov. 1, 2021 to opt out of a 0.58% tax as part of the newly passed Long-Term Care Trust Act. Sponsored by Leverage Planners

Long-term care insurance covers costs of services to help policyholders with activities of daily living at home or in an assisted living or skilled nursing setting. Washington state’s Long-Term Care Trust Act will provide a benefit of up to $100 per day for a maximum of 365 payments, or $36,500 maximum lifetime benefit.

“Understand that $100 a day is only going to cover so much,” said David Donhoff, founder and senior advisor of Leverage Planners Wealth Management. “In today’s pricing, long-term care can easily be $300 to $500 a day.”

The best insurance programs in the private industry are paying between $200 and $500 or more per day.

“That can protect the surviving spouse,” Donhoff said. “If a family has accumulated a retirement nest egg and the first spouse has a critical care, chronic care event, all those plans can go down the drain when they have to spend their nest egg to support the ill spouse.”

For Washington state residents looking for more long-term care benefits than the state can provide, there is an option to opt-out of the state program. You must have a private, qualified long-term care policy in place by November 1, 2021. The state reserves the right to check your coverage until December 31, 2022. Anyone with private coverage in place by the deadline will be permanently exempt and opted out of the state program.

There are two types of long-term care insurance to choose from:

  • Traditional long-term care: This is almost identical to regular health insurance with co-pays and network restrictions. This picks up costs after regular insurance runs out after about 60 to 90 days. You pay a monthly premium to have this coverage in place.
  • Asset-based long-term care: There are typically no regular costs, charges or fees. You make a deposit to an insurance company, and the insurance company guarantees a multiplier of that deposit. If you change your mind and cancel your policy, in most cases, you can walk away with all of your money. 

Donhoff says that for anyone making a higher wage, the benefits of a private policy far outweigh those provided by the Long-Term Care Trust Act.

“It’s forcing people who would otherwise not be thinking of it yet to get their ducks in a row now,” Donhoff said. “That’s a great incentive.”

To learn more about private long-term care policies, visit the Leverage Planners website to schedule a meeting with an advisor. 

Sponsored by Leverage Planners. Segment Producer Suzie Wiley. Watch New Day Northwest 11 AM weekdays on KING 5 and streaming live on KING5.com. Contact New Day