LTC insurance?

[livingalmostlarge]

Does anyone have LTC insurance? What do you pay for it? How much coverage do you have? What made you buy it? Where we lived passed a law charging people LTC tax if you don't have your own policy to opt out of. The tax is .58% or $580/100k of salary. The kicker is you must reside in WA state when you retire. You get a maximum of $36k paid out and it will be only after 10 years. IF you retire elsewhere then you get $0.

Hence the desire to potentially buy a portable independent LTC policy. Obviously I had no plans for this because we plan on self insuring, We would be paying around $1200/year January 1, 2022. But now what?

There are so many different options and benefits. It is not a straightforward decision.

Do we get 2 or 3 years? Do we get a policy with 3% COLA annual adjustment. So for a 3 year plan at $190/day = is $1766 Omaha or $1507 National General. Payout is a maximum $208k with 3% COLA ajustment. Or for $139/year we could do a $50/day $36.5k plan without a COLA. None of it seems wonderful to be honest.

What are your thoughts? I don't want to buy it but think of it more as a tax avoidance. I am unsure if we'll live where we are when we retire. Probably not. Even at a $1500/year premium the chances are we will pay that much with the tax. So anything around $500 seems smarter to avoid tax.

 

[Bryan Barnfellow]

This is a much discussed topic on the forum. Check out this excellent compilation of links posted by longtime sage/member, Nords:

https://www.early-retirement.org/forums/f47/long-term-care-ltc-and-ltc-insurance-updated-2020-a-30860.html

-BB

 

[PoorOldCountryBoy]

If tax avoidance is your goal, just find the cheapest option. A shorter term (1 yr coverage) and longer elimination period (90 days) will lead to the cheap options. Or move out of WA.

 

[The Cosmic Avenger]

I am paying $50/mo for mine with currently a $285K lifetime limit, no time limit. I do have inflation protection (5%) and it includes respite care. The monthly max for skilled nursing is $7,919 and for residential care it's $5,543. That's after 14 years of compounding, as long as inflation doesn't stay over 5% it'll be worth more when I need it....assuming it's still there.

I bought it because originally my employer paid part of the premium, and I was just getting into investing and knew that a 5% guaranteed rate of increase over 50 years was not bad. Originally my portion of the premium was under $20/month up until last year. Now I'm paying it all, but due to inflation it still seems like a good deal.

 

[RetireeRobert]

Where we lived passed a law charging people LTC tax if you don't have your own policy to opt out of. The tax is .58% or $580/100k of salary.

I don't want to buy it but think of it more as a tax avoidance. I am unsure if we'll live where we are when we retire. Probably not. Even at a $1500/year premium the chances are we will pay that much with the tax. So anything around $500 seems smarter to avoid tax.

Your original plan was to self-insure for LTC, so don't buy LTC coverage just to avoid Washington's new LTC tax.

You do not give your ages or health conditions, but now days, unless you have access to an employer group LTC policy, I doubt you or your wife can get any LTC coverage for $1500 A YEAR.

Question: How broadly does the Washington law define LTC coverage that gets you out of paying that tax?

 

[skyking1]

I just read up on the tax here:
https://www.jdsupra.com/legalnews/washington-state-s-new-long-term-care-4439885/

What a cluster! We are retiring in two years or so, so the impact on our income is minimized and we will be retiring here as well. Still, it is onerous for the OP and many others.
Thank you for posting, OP. We are currently figuring on self insuring as well.

 

[skyking1]

Washington LTC tax has been delayed to until at least April, and the law may get re-written. Good news for us near-retirees!