The issue of long-term health care planning is not new; however, many people have been hearing more about long-term care in the past year than ever before. The consequences of the coronavirus, especially with older people, and its impact on long-term care facilities and home health care providers have been in the news consistently throughout the COVID-19 crisis.

One of the nation's leading experts on long-term health care planning, Matt McCann, told insurance agents and financial advisors who help consumers in the northwest, including in Washington, that state and federal bureaucrats have been discussing the issues surrounding long-term care services for decades.

"The impact of long-term care has been affecting families, finances, and government budgets for decades. Medicaid has become the primary payor of long-term care services in the United States; however, it requires an individual to have little or no income and assets. This is not a new issue," McCann said.

Many Families Find Themselves in Crisis

McCann said that since many families fail to consider how future long-term care will affect their savings and loved ones, they find themselves in a crisis when they need extended health care. Unfortunately, many families exhaust their assets and end up using Medicaid to pay for services.

People need long-term services due to changes in their health and body as they get older. Cognitive decline requires supervision, and as people get older, many people will suffer from some form of dementia.

Health insurance, including Medicare and supplements, pays little toward long-term health care. Medicaid will pay for long-term health care, but you must have little or no income and assets to qualify.

Affordable Long-Term Care Insurance offers guaranteed tax-free benefits that can pay for all areas of care, including in-home care.

Tax on Everyone with Earned Income

In Washington State, the Long-Term Services and Supports Trust Act was enacted, creating what they call a long-term care insurance benefit for all eligible residents that will cover some of the cost of long-term services and supports. The state is enacting a tax that everyone 18 years old and older will pay on 100% of their earned income.

"Let me assure you this is not long-term care. The state's lifetime benefit of $36,500 doesn't make a dent in most long-term health care costs and will barely help anyone who thinks they can depend on this program for their future long-term health care. This is a tax, and this program is funded by a payroll tax of 58 cents per $100. There is no question in my mind that there will be tax increases that will happen in the years ahead," McCann explained.

One Time Opt-Out in Washington - Other States May Not Have Opt-Out Period

Washington residents who own a qualified Long-Term Care Insurance policy have a one-time opt-out to avoid the tax but were given a short period of time to obtain coverage in order to do so. 

"I'm afraid that too many people will think this state plan will cover their future need for long-term health care, it won't, and too many people may fail to think about this issue again," McCann said.

Several other states are looking at what the State of Washington has done and may bring it to their state. California, Illinois, Michigan, Minnesota, New York, and Oregon are currently looking at options. Several additional states are starting the discussion.

"This program is not a solution for long-term care, and it is a tax to get more money for the Medicaid program. I understand why. There is a growing demand for long-term health care services, and many families are unprepared. The pressure and burdens are placed on their savings and their families," McCann explained.

When people have little or no income and assets, McCann said that Medicaid becomes the payor for their long-term care. The growing dependency on Medicaid creates a financial burden on taxpayers, and families lose their savings in the process. 

"One year of benefits totaling $36,500 is not a solution for long-term health care," McCann said.

Long-Term Care Costs Increasing with Greater Demand and Higher Labor Costs

The LTC NEWS Cost of Care Calculator displays the care costs nationwide. For example, in Seattle, Washington, the average cost of one year on in-home care, based on a 44-hour week, runs about $6100 a month in 2021, but in 2047 that same amount of home health care will be over $14,000 a month.

The base assisted living facility is already $5,750 a month in the Seattle area in 2021; however, in 2047, that same base cost will run nearly $14,000 a month. Remember that assisted living facilities will also add a surcharge on top of the base cost, depending on the amount of care and service you require. The actual cost would likely be much more than the base cost. 

Nursing homes are the most expensive, although the least used type of long-term health care service and average about $10,500 a month in Seattle in 2021, and it should rise to nearly $25,000 a month in 2047.

The Washington Care Fund plan will not address these costs, but the tax will hurt your pocketbook.

Actual Long-Term Care Insurance Key to Retirement Planning

McCann recommends that even those who did not obtain coverage ahead of the opt-out deadline should still have a qualified Long-Term Care Insurance policy to address the expensive costs of future long-term health care services.

Qualified LTC Insurance will offer inflation benefits, consumer protections, the availability of the Partnership program with dollar-for-dollar asset protection, and other services. 

Planning Early is Essential

If you live in a state considering a tax, better get ahead of it as you may not be given an opt-out period. 

"The tax is punitive, especially for those with higher incomes. Many affordable Long-Term Care Insurance options are available to help safeguard assets, provide access to your choice of quality care, and reduce the stress and burdens otherwise placed on your families. Qualified Long-Term Care Insurance in place before any tax law is implemented will help you avoid the tax and give you guaranteed tax-free benefits and services that will actually help you and your family address the costs and burdens that come with aging," McCann added.

Generally, McCann recommends obtaining coverage before retirement, ideally in your 40s or 50s, when you still have reasonably good health and can qualify for preferred health rates. However, for those living in states considering the long-term care tax, you would want to address this at any age over 18 if you have significant income and expect it to rise over time.

Premiums Vary Over 100% Between Insurance Companies

"Premiums vary over 100% between insurance companies, so working with a Long-Term Care Insurance specialist is essential to save you money and design an appropriate plan. Affordable Coverage is available," he said.

McCann recommended that financial advisors, general insurance agents, and consumers seek the help of a qualified Long-Term Care Insurance specialist who works with the top companies to find the right coverage.

Every insurance company has its own underwriting rules and premium var dramatically.

McCann's website has many resources to help consumers and their financial advisors - www.mccannltc.net/resources. 

Shop the top companies from one trusted source. Get free and accurate quotes along with professional recommendations - https://mccannltc.net/quote .