How Election Results Impact State LTCi Programs

As reported by the Seattle Times, the State of Washington’s mandatory (0.58%) tax to cover a small amount of LTC withstood a challenge that would have made it voluntary, which would have undermined its potential solvency. 55.5% of voters rejected the change.

Washington Cares Fund (WCF) provides a $36,500 lifetime benefit, starting in 2026 and intended to increase according to the state of Washington CPI. This benefit would likely cover less than 3 or 4 months in a nursing home by the time care is needed, however is more effective with home care. For more info, see https://wacaresfund.wa.gov.

The election of Donald Trump may make expanded federal coverage of LTC less likely and state Medicaid (Medi-Cal in CA) budgets are strained.

Therefore, additional states may move forward with legislation similar to WCF. However, beware of maps which exaggerate the chances of such legislation passing. Generally speaking, jurisdictions with a Democratic trifecta (governor, senate and house all under Democratic Party control) are more likely to pass such legislation. Per Ballotpedia, Democratic trifectas exist in CA, CO, CT, DE, HI, IL, MA, MD, ME, MN (possibly changing), NJ, NM, NY, OR, RI and WA.

Trustmark maintains an excellent website that monitors the situation. CA, HI, and NY appear to be the most likely states to proceed with a WCF-type program. MN might opt for a back-ended program with a two-year elimination period.

Higher taxes are unpopular, but funding LTC is a huge problem, and these programs provide an opportunity to tax high-income people to cover LTC needs of the less affluent without increasing income tax rates.

Washington allowed exemption for private LTCi coverage, even if bought between bill passage in 2019 and 11/1/2021. As a result, many high-income people got exempt “at the last minute”. Future programs are likely to permit exemptions, but only for policies purchased prior to passage of the law.

Thus, although no new state LTCi programs are imminent, the possibility of such programs creates an additional incentive for businesses and individuals to implement LTC planning in the near future. Small businesses could enact executive programs now to get nice tax breaks for 2024.

BackNine’s revolutionary Quote & Apply software shows stand-alone (traditional) LTCi side-by-side with linked-benefit LTCi coverage and life insurance with a rider. If you don’t already have a Quote & Apply website, click here then schedule a meeting with Claude Thau so he can help you customize it.