Private long-term care insurance all but impossible to get ahead of new state tax

Hoping to get a private long-term care insurance policy so you don’t have to pay the WA Cares tax? You’re likely going to be out of luck.

“There are 12 companies [in the state] that can sell long-term care stand-alone policies, and 22 can sell riders, and we’re finding that none of the companies are writing new business right now,” said Kara Klotz, communications manager for the state Office of the Insurance Commissioner.

The tax, which starts in January, will collect 0.58% of people’s income to go toward long-term care benefits. A person who has paid into the tax for 10 years can collect up to $36,500 in benefits if they are still living in Washington state.

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Residents have one opportunity to permanently opt out of the tax this autumn. To get the one-time opt-out chance for the new tax, people need to have their own long-term care policy in place through a private insurance company by Nov. 1.

However, the insurance companies have wised up to the fact that some people are planning to get insurance for only a year, long enough to forever get out of paying the tax.

“A lot of insurers are expecting people to buy a policy and then drop it, and that’s not good for their business,” Klotz said.

She explained that while the Insurance Commissioner’s Office can regulate insurance companies to the extent of making sure they are following state law, it cannot, in a free market, persuade privately-run companies to sell a certain type of insurance.

“We’ve heard from thousands of consumers who are really frustrated,” Klotz said. “We totally understand why they’re frustrated, but we’re in a tough spot, because we don’t really have the authority to help people either way. … That’s just not our role, to compel them to sell something that’s not financially viable.”

She advised people to not give up, and to keep calling around to see if they can find someone willing to take on a new client before the Nov. 1 deadline.

“Call the companies that are authorized to sell and see if you can find one, … talk with your employer, some employers are offering plans like that,” she said. “I know that’s not what people are hoping to hear, but that’s kind of the reality.”

To learn more about if your long-term care insurance plan qualifies as an exemption to the tax, visit the Office of the Insurance Commissioner’s website.

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