Long Term Care Insurance

When it comes to thinking about ourselves eventually getting old and needing extra help, most of us have a tendency to shy away. No one wants to envision ourselves as frail or sick, especially when we are young and in the prime of life. Unfortunately, when it comes to any type of insurance that relates to our health, that is exactly when we should be planning for the future. Just like retirement, the earlier you start planning and saving, the cheaper it is, and the more it will benefit you.

Washington State has recently passed a law requiring everyone to either pay a 0.58% tax to opt in to a statewide long term care insurance policy worth $36,000 in today’s money, or show proof of their own policy. If you purchase your own policy before this goes into effect, you can opt out of the state version. Once you opt out, you cannot opt back in. This has sent most of us into a scramble to learn about Long Term Care insurance, and try to figure out if the state policy is what we want.

It turns out, the state policy has some glitches. First, if you aren’t able to opt out, you will get charged automatically from you paycheck. The tax is a percentage of your earnings, so people who earn more pay more. It also is only good as long as you remain a resident of Washington State. Plus, you have to pay into the plan for 10 years (with some exceptions), before you can use it. If you never use the long term care insurance, you just lose the money you paid in. For these reasons, many people are looking into getting their own private policy.

While these policies vary, and they are not exactly cheap, most of them do offer some advantages over the state plan. First, they don’t require you to live in a certain state. If you move, they move with you. Many of them also come with a life insurance part which means that if you don’t use the long term care, it will convert to a set amount of life insurance in the event of your death. Some offer a higher benefit amount for a similar amount of money. Most do not have a very long period, if any, before the benefits could be used.

So far, the policies that I have found are a bit more expensive, but I am drawn to the benefits. I hesitate to use the state version because there is a good possibility I won’t live in Washington when I would need the benefits. This means I definitely need a private policy. My work is going to offer a policy, but as of this writing, I don’t know its details or its cost. As with any money decision, I will shop around and look at several options before making an informed decision. The one thing I can say for sure, though, is that any policy will be cheaper if you buy it when you are younger and healthier. The longer you wait, the more it will cost you, and likely the less benefit you will get. So, shop around now and save yourself some money and stress. Your future self will thank you.

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