Paying for Long-Term Care . . . through Payroll?

Laurie Jinkins, a state representative in Washington state, has a mother-in-law who is 92, and who has dementia. She recently needed nursing home care, and qualified for Medicaid. Norm Johnson, also a state representative in Washington, used up much of his savings paying for in-home aides for his mother. His father spent so much on care for his wife that by the time he required care of his own, he, too, qualified for Medicaid.

Most seniors over 65 will eventually need long-term care (LTC) services, including help with bathing, dressing, toileting, and eating. As you are likely aware, long-term care is absurdly expensive, with the average cost being $260,000 over a lifetime in Washington state. (Click here for LTC costs in our area and throughout the U.S.)

Most people have not saved enough to pay for their own care, and Medicare does not cover one penny of long-term care services. To assist with the costs of long-term care, Jinkins (a Democrat) and Johnson (Republican) got together and came up with a plan. They introduced and almost got through a bill — The Long-Term Care Trust Act (HB 2533 / SB 6238) — that would have instituted a new payroll tax to help cover the cost of a long-term care in a nursing home, at home, or elsewhere in the local community.

This is how the Long-Term Care Trust Act would have worked:

  • It would have provided long-term care insurance for people employed in Washington state.
  • The program would have provided 365 days worth of coverage.
  • Vested Washingtonians would have received a benefit of $100 per day. The vesting period would have been three of the last six years, or ten years total.
  • The benefit would have covered the complete cost of one year of long-term care for the average Washingtonian who needs in-home long-term care.
  • The benefit coverage would have been financed by a 0.49% (less than half of one percent) payroll deduction on all workers (an average of $23.30/month).
  • Family members who leave the workforce to care for loved ones typically lose $300,000 in income and benefits. Women lose the most, an average of $324,044.11. Coverage would have reduced the burden on family caregivers, enabling them to continue working and save for their own retirement.
  • The program would have increased workforce and business productivity by reducing the number of family caregivers who must take time off work or quit paid employment.

Under the proposed Act, families would have gotten to choose the care setting that best met their loved ones’ needs. For instance, coverage could have been used on in-home care aides, adult family homes, assisted living, or skilled-nursing facilities. Beneficiaries could have chosen to use their 365 days of coverage consecutively or in smaller chunks, as they needed help.

What Went Wrong

Unfortunately for Washingtonians, the Long-Term Care Trust Act was not enacted. As the need to finalize the legislation approached, AARP, citing various unanswered questions, actually came out against the Act. Many of the questions involved who would qualify as a caregiver and could receive the $100 per day. According to The NY Times, which recently published an article about the Act, “no matter how great the desire to help America’s aging population, figuring out exactly who should get what and under what circumstances is an enormously complicated issue.”
Mr. Johnson, the state rep who introduced the Act with Ms. Jinkins, knows that younger adults might have resented the idea of elected officials reaching deeper into their pockets to pay for benefits that are probably decades away for them. “You never think you’re going to get old,” he said. “But guess what? I didn’t think that either when I had kids at home, and now I will be 80 in July.”

The way Ms. Jinkins and Mr. Johnson tell it, “AARP was supportive until suddenly it was not.” “The bill needed too much work, and we had too many questions and not enough answers,” said Cathy MacCaul, AARP’s advocacy director in Washington. Without those answers, AARP would not support the bill as written. And without its support, and with emails arriving from AARP members encouraging “no” votes, lawmakers chose not to move the bill to a full vote.

Currently, Hawaii is the only state that offers some monetary help to certain caregivers. The Washington bill would have established the first payroll tax where the proceeds go to long-term care more broadly. It could have been the difference between some families spending nearly all of their money and ending up on Medicaid or having something left after an older person’s death.
What do you think about The Long-Term Care Trust Act? Please let us know your thoughts and if you think something like this could work locally, or at the Federal level, in the comments of this post.

Paying for Long-Term Care

The Medicaid program is our country’s largest health and long-term care insurer, covering one in six Americans, including two-thirds of nursing home residents and one in five persons under 65 with chronic disabilities. Many seniors don’t consider Medicaid as an option, believing that they won’t be able to qualify or won’t get the same quality of care. The truth is that persons who have done Medicaid Asset Protection generally get the best nursing home care, because the money that has been protected can be used by loving family members to help preserve the dignity and quality of life of a loved one who is in a nursing home. Are you looking to plan ahead for yourself in the event nursing home care is needed in the future? Life Care Planning and Medicaid Asset Protection is the process of protecting assets from having to be spent down in connection with entry into a nursing home, while also helping ensure that you or your loved one get the best possible care and maintain the highest possible quality of life, whether at home, in an assisted living facility, or in a nursing home. Our firm is dedicated to helping seniors preserve dignity, quality of life, and financial security. If you have not done Long-Term Care Planning, Estate Planning, or Incapacity Planning (or had your Planning documents reviewed in the past several years), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, call us to make an appointment for an initial consultation:

Virginia Elder Law Attorney: 703-691-1888
Maryland Elder Law Attorney: 301-519-8041
DC Elder Law Attorney: 202-587-2797

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.