As we navigate the complexities of aging and healthcare, long-term care (LTC) insurance has emerged as a crucial component of sound financial planning. This insurance type helps cover the costs associated with long-term care services, such as nursing homes or in-home care, which traditional health insurance often doesn’t cover.

Long-term care is incredibly expensive, though, with costs frequently reaching thousands of dollars per month. LTC insurance helps alleviate the financial burden for pennies on the dollar, ensuring that you can access quality care without depleting your savings. With LTC, you typically have more flexibility in choosing your care options; in fact, some nursing homes will not take you without it (or a precise funding plan). Whether you prefer in-home assistance, assisted living, or a nursing facility, having insurance can help you secure the services that best suit your needs.

Approximately 70% of individuals who turn age 65 can expect to require some form of long-term care at some point in their lives. There are those out there who prefer to gamble on that percentage because they have someone at home who can take care of them or they believe that they can self-fund. The fact of the matter is, in the majority of cases (especially for women who outlive men), facilities and services will at some point be needed. A private room in a nursing home can cost over $100,000 per year, and semi-private rooms are not much cheaper. There is no faster way to deplete your estate than a long-term care incident. LTC insurance helps protect your assets for you and your spouse.

Those with older standalone policies know that the price of insurance keeps increasing, resulting in many people dropping coverage right before they need it most. Now, though, we have hybrid plans built into life insurance. This rider allows policyholders to access a portion of their death benefit while still alive to cover long-term care expenses. This keeps the premium level and means that if you don’t need it, then the death benefit can be passed on to your beneficiaries.

As of right now, this insurance is not required, but it is undoubtedly part of any sound financial plan. However, in 2022, Washington state enacted a groundbreaking new law mandating a payroll tax to fund a state-run long-term care program, known as the Washington Cares Fund. This legislation aims to address the increasing need for long-term care support as the population ages.

Key features of the Washington Cares Fund include:

• Mandatory participation – most employees in Washington will automatically contribute to the fund through a payroll tax, making it a universal coverage initiative.
• Limited benefits – the fund offers a benefit of up to $36,500 for long-term care services, which may not cover all costs but certainly does provide a safety net.
• Opt-out options – individuals can opt out of the program if they have an existing long-term care insurance policy, potentially encouraging private insurance solutions.

Following Washington’s lead, several other states are exploring similar measures to address long-term care funding challenges. Almost all states are waiting for California to pass their own version of the legislation that should fix the issues found in Washington’s plan. Currently, the policy has been shelved until after November, but many government budget experts agree that a bill like this needs to be passed to protect state Medicare and Medicaid programs. But only time will tell what happens.