There was a time, before last year’s election campaign, when we could discuss issues unpolitical in nature, though only a little less disagreeable.
Matters like the country’s long-term healthcare crisis.
A serious issue, one that affects everyone’s lives. Believe it or not, I’m glad to return to this disquieting topic, if only to escape the gauche chicanery of national politics – just for a time.
Capitol Hill’s follies are perpetually disconcerting. I’m sure Congress’s inability to agree on a budget – its key Constitutional role – will return to this column soon.
The LT care crisis isn’t pleasing, a no-fun zone extraordinaire, but we have something new to consider: Washington state’s ingenious move to help solve the problem.
Yonder in the Pacific northwest, state lawmakers last year enacted the Washington Cares Act. The law introduced a 0.58% payroll tax on all incomes, great and small. The intake was allocated to a state entitlement program offering long-term healthcare coverage to qualified taxpayers, totaling $100 per day. That isn’t enough to pay for care, but added to other state and federal assistance and a citizen’s own savings, it’s a significant supplement.
The program contains a legislative curiosity, an opt-out clause, and here things get interesting. A Washingtonian could avoid paying the tax by simply buying a private LT care insurance policy before the now-crossed deadline of October 31, 2021.
Washington’s new tax takes just 58 cents per $100 dollars of income. Hold up your hands if you hate paying taxes; yes, that’s all of us, but if a levy starts after the decimal point – that’s livable, no? ‘Let’s just not worry’ – life’s old melodious tune, catchy as any virus – I’m not immune. You’d think few Washingtonians would bother to opt out.
Yet from the state’s taxable population of five million souls, there sprang a surprise: some 280,000 bought private LT care policies and applied for the exemption. Brothers and sisters, that’s a lot of new insurance customers.
One agent reports that statewide insurers ordinarily field a couple of hundred LT care coverage applications per year. When Washington Cares went live, in just a few weeks they received 13,000 new customer requests. Hybrid products, commonly life insurance policies or annuities that include LT care riders, leapt from about 10 applications per week to over 1,000. If only Cavalier was based two states to the north! I’d already be spending my bonus.
I like hybrid policies. They pay out in cash, a nice distinction from traditional LT care insurance, which covers only qualified invoices. This adds flexibility: you could pay a relative to care for you, for example, with no explanation needed to the insurer. Hybrid coverage is expensive, but the price is deceptive, as lifetime costs are similar to traditional LT care policies. Both types of coverage are worth investigating.
It’s good to see Washington state leading the way. Seventy percent of Americans who live to retirement will need LT care. Six personal care needs, covering daily activities, pertain: bathing, dressing, the ability to walk or move about, toileting, and continence issues. If you need help with two or more of these issues, you’ll likely need long-term care.
LT care can be administered in a nursing home, as adult daycare in a community center, or in your own home – the last one’s the preference of everyone who’s ever been asked, and LT care insurance customers almost universally purchase homecare riders with their policies.
I have family experience that might be helpful to share. In the last months of my father’s life, dad needed constant care. The thought of sending him from home, where the walls held his memories, was unbearable. This was in Massachusetts, which has good homecare services, so we had alternatives. A geriatric nurse came each day, changed dad’s bed, checked his meds, gave sound advice. That nurse was strong as a builder, gentle as any lamb, comforting as an angel.
Dear old dad was a tolerant fellow but nevertheless hosted the prejudices of his day. “I always thought male nurses were sissies,” he blurted one time, and I don’t think it was the morphine talking. Call it 1930s ‘humor.’
“Well, I am, Alec – just a bit. Tough enough to handle you, cranky old goat,” said Nurse Brian. I won’t say grumpy dad laughed, but he curved a slim smile – quite an accomplishment, we told Brian – through all that pain. People may have odd, intolerant ideas, but there’s usually a heart ticking down deep.
Long-term healthcare is expensive – our family was lucky, both parents qualified for state and federal aid. Dad’s needs were simple: he didn’t need homemaker services, where patients receive cleaning, cooking and other domestic aid – but no medical treatment. The median cost for homemaking was nearly $54,000 in 2020, up 41% on 2004. An assisted living facility stay cost $52k, up 79%, and a private nursing home room was $105k, a 62% boost over 2004. Costs are still soaring, year on year.
Medicaid covers nursing home stays, but with strict income limits to qualify, which vary by state. Generally, if you’re a senior and your income is less than 100-200% of the federal poverty level, you can get LT care benefits. If your retirement income is too high, you may not qualify. Medicare Part A covers 100 days in a skilled nursing facility, but for days 21 to 100, you make a co-payment – $176 per day in 2020.
Federal assistance isn’t sufficient and most citizens are still uninsured. Some states are taking Washington’s hint and mulling similar legislation, including Alaska, California, Colorado, Hawaii, Illinois, Massachusetts, Michigan, Minnesota, Missouri, New York, North Carolina, Oregon and Utah. Let’s hope the trend spreads.
Some pundits are chagrined because so many citizens opted out of Washington Cares and bought private insurance. They fear wealthier citizens bailed – that low tax rate does make a big difference when applied to a high income, a bonus, capital gains – and deprived tax coffers of substantial revenue. I suspect many people simply wanted to choose for themselves. To my mind, what happened out West was a win, for opt-outers and -in. Call it a brave first step.
See, I like insurance: it’s the gateway drug to financial health and I don’t care how you get hooked. If you worry about dying, leaving dependents adrift, a life policy sorts it all out. That gets a mind thinking: what about retirement? Tuition for junior? Hey, mutual funds sound appealing… and down the slippery slope we tumble. Before you know it, peace of mind and prosperity beckon.
There’s nothing like a really good scare – and the LT healthcare crisis is truly unnerving – to inspire a happy ending.