One of the most interesting trends in the insurance world so far this year has been a new law in the state of Washington that creates a state insurance program for long-term care. The law’s creation has led to such a demand for long-term care insurance that multiple carriers, struggling with the new volume of applications, have stopped taking on new applicants in the state as a result. So, what is this law and why has it created this demand?
Ballooning Costs of Care
The law in question creates a state-run long-term care program that is designed to help pay for nursing care and other services for those who are unable to care for themselves. The law allows residents of the state to claim up to $36,500 for these services, starting in 2025. It is the state’s direct response to a problem insurance professionals have been warning against for years: expensive cost of care and long-term care services are bankrupting people, and only getting more expensive with inflation as time goes on. The state-run program’s $36,500 claim will only help for a short period of time – the cost of a private room in a nursing home facility already costs $9,000 per month, meaning these funds would only last four months in a long term care situation.
Demand for Long Term Care Policies
As previously mentioned, this new law has created a massive spike in long-term care applications in the state. The spike is not simply because of a newfound appreciation of long-term care insurance, but rather is because the state is instituting a payroll tax of .58% for those who do not have coverage. In order to avoid this new tax, you must have a long-term care policy or a life insurance policy with a long-term care rider. This has obviously led to a large increase of new applicants for these types of policies attempting to avoid this tax. The applications have overwhelmed carriers to the point where they have stopped taking applications from the state altogether.
How Does This Affect You?
While to this point Washington is the only state to adopt such a program, many in the insurance community believe this will become a template for other states across the country. Costs of long-term care services are rising and starting to catch the eyes of politicians in other states who fear these rising costs will put a significant strain on our medical system in the not-so-distant future. If you were interested in or looking into long-term care coverage, now is a good time to begin the process.
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