Now that twelve states are considering following the State of Washington with a punitive tax if state residents do not own a Long-Term Care Insurance policy, obtaining Long-Term Care Insurance coverage is getting the attention of more people nationwide.

Washington's tax is a payroll tax of 0.58 percent on 100% of earned income for anyone aged 18 and older in the state. The state says this will fund a 'long-term care benefit' for those who do not own a qualified Long-Term Care Insurance policy. However, the benefit is minuscule. It offers a maximum lifetime benefit of $36,500 in a state where the average cost of one year of in-home care is already $73,729 a year (based on a 44-hour week) according to the LTC NEWS Cost of Care Calculator Cost of Care Calculator - Choose Your State | LTC News).

The twelve states are:

• Alaska
• California
• Colorado
• Hawaii 
• Illinois 
• Michigan 
• Missouri 
• Minnesota 
• North Carolina
• New York
• Oregon
• Utah 

Some experts think other states may jump on board based on the success of these states in instituting the tax. The increased demand for long-term care services due to longevity and demographics is placing pressure on state Medicaid budgets. 

Health Insurance, Medicare, Medicaid, and Long-Term Care

Medicaid will pay for long-term health care only if you have little or no income and assets. Health insurance, including Medicare and supplements, pays a fairly insignificant amount of long-term care. Long-Term Care Insurance will pay for these services, but too many people ignore the problem until they are ineligible to purchase coverage due to health or attained age.

While many financial and insurance professionals will be focusing on the tax and saving money, a leading expert on long-term care planning and LTC Insurance says the focus should be on the family.

Long-Term Care Planning All About Family

Speaking to a group of financial planners and insurance agents on a Zoom conference call, Matt McCann says long-term health care is more than just about money - it is about the family.

"People plan for the costs and burdens of aging for many reasons, but one of the most heard items specialists hear is consumers do not want to be a burden on their families. Yes, they want to safeguard income and assets from the impact of costly long-term care services. But it is more than just about money - it is about their family," McCann said.

McCann explained that he views long-term care as two things - a cash flow problem and a family problem. 

"You have to address both cash flow concerns as well as the consequences future long-term health care will have on those you love. Adult children often become default caregivers, when no planning has been put in place. Family caregivers face stress and anxiety in addition to a job that is physically demanding. Clients tell me that they want their loved ones to have the time to be family and not have to be caregivers," McCann said.

Even if an individual has substantial assets to self-fund some or all their future long-term health care needs, a family member would still have to manage the care, decide which accounts to liquidate and decide the type of care services to arrange for their parent. 

"Managing a parent's care, even if they have the funds, is still stressful. Plus, they may not make the same decisions about your care or your finances as you would make," McCann noted.

Insurance Agents & Financial Advisors Often Lack Understanding of LTC Impact

McCann said many financial advisors and insurance agents will be looking for ways to avoid the tax without understanding the risks and impact long-term care will have on family and finances.

He said most professionals do one of three things when discussing long-term care planning:

• They ignore the problem by suggesting if it happens, personal funds can be used to pay for care.
• They recommend the smallest benefits available just to get out of the tax and ignore the fundamental issues of long-term care.
• They recommend benefits that are more than what most people require making the premium out of reach for most people.

LTC Insurance is Custom Designed

"Long-Term Care Insurance is custom designed. Most states participate in the partnership program that provides dollar-for-dollar asset protection. Most long-term health care is delivered outside of nursing homes with in-home care and assisted living, and those costs are less expensive than nursing home costs. Long-Term Care Insurance specialists design affordable plans to make a catastrophic situation manageable," McCann said.

Many consumers and financial professionals will look for the least expensive way to get out of the tax instead of taking advantage of a way to safeguard assets, access quality care options, and reduce stress and burden otherwise placed on family. 

Being Proactive is Vital

"Being proactive with planning is vital. What is not known as states enact this tax is if they will give any time for state residents to obtain coverage. Many residents of Washington ran out of time. Some states may provide little or no time for people to obtain new coverage," McCann said.

McCann suggested that financial advisors and general insurance agents work with qualified Long-Term Care Insurance specialists who represent the top companies to help clients find appropriate coverage at the best value.

"Every insurance company has its own underwriting criteria, and premiums can vary over 100%. It is expected that states will follow Washington's lead by requiring tax-qualified Long-Term Care Insurance policies that meet federal guidelines under Section 7702(b) to avoid the tax," McCann added.

Long-Term Health Care Costs Rising Rapidly

Long-term health care costs are increasing rapidly throughout the United States due to increasing demand, higher labor costs, and labor shortages in some parts of the country. These costs vary depending on location and the type of care services required.

The LTC NEWS Cost of Care Calculator shows the financial impact throughout the country based on state and metro area. When you look at the next 20 to 30 years, these costs will adversely impact income and assets.

"Yes, long-term care is a financial issue that needs to be addressed. But remember, it is a family problem as well. Whether a person lives in one of these twelve states or elsewhere, having a long-term care plan is a key part of retirement planning," McCann said.

Consumers Should Work with LTC Insurance Specialist

McCann works with consumers nationwide plan for the costs and burdens of changing health and aging. He also works with financial planners and insurance agents, helping them assist their clients. He represents the top companies that offer long-term care solutions.

He says working with Long-Term Care Insurance specialists like himself is essential in finding the best coverage at the best value. LTC Insurance is medically underwritten, and premiums are based, in part, on your age, health, family history, and other factors.

McCann's website has many resources to help consumers and their financial advisors. You can get free and accurate quotes from the top companies along with professional recomemndations - www.mccannltc.net/quote

With November being Long-Term Care Awareness Month, it is a great time to learn about the available options.