Your Ultimate Guide to the Long-Term Services and Supports (LTSS) Trust Act of Washington
The Long-Term Services and Supports (LTSS) Trust Act program (aka WA Cares Fund) is a new publicly funded short-term care benefit that draws from a career-spanning payroll deduction. This payroll deduction is calculated on all W-2 compensation, which encompasses gross earned income, bonuses, stock compensation, vacation accrual and severance. This program limits you to a lifetime benefit of $36,500 for LTSS services, currently planned to be paid out at a Medicaid rate.
There is only one way to opt out of this tax: Own a qualified Long-Term Care plan before November 1st, 2021 and hold it.
WA state will be auditing the continuation of coverage to keep your exemptions.
Understanding The Basics
Long-Term Basics
Long-term care planning encompasses caregiving services for short and long-term support and the associated costs. Typically long-term care is needed when a significant ongoing health condition or disability arises at any age. These costs are not covered by private health insurance or Medicare. Medicare only covers rehab in a skilled nursing facility after a 3-day hospital stay, for up to 100 days of which the first 20 days are 100% covered, with days 21 to 100 requiring daily co-insurance. Long-term care services are usually provided in one of three stages: independent living, assisted living, and skilled nursing.
The primary types of care include home care/home health care (including hospice), community services, assisted living, continuing care retirement communities (CCRCs), and nursing homes. To qualify for a long-term care event, one must lose two out of six Activities of Daily Living (ADLs). ADLs include bathing, eating, getting dressed, mobility, transferring, and continence. The true purpose of this care is to give you and your family options to keep control of your health decisions while also protecting your family and assets from financial and emotional stress.
Medicaid Basics
Traditional Medicaid, signed into law in 1965 alongside Medicare, is the nation’s health insurance program for people with low income. Traditional Medicaid is administered by the state, according to federal requirements, and is funded jointly by the state and federal government.
As of 2014, the Affordable Care Act allowed for the expansion of Medicaid. What started out as a handful of states, is now up to 36 states and DC, with three more states planning to join this list in 2021. In states with Medicaid Expansion, you can qualify based on your income alone. If your household income is below 133% of the federal poverty level, you qualify. Washington’s current Medicaid Expansion program is Apple Healthcare.
Over the years, the nation has seen an increased use of Medicaid for long-term care costs, such as nursing homes and some in-home care. In 2015, according to the CMS.gov website, our total federal and state spending on long-term care services was over $545.1 billion. We will start seeing a rapid rise in this number as more baby boomers age and begin needing care. It is estimated that 7 out of 10 over 65 will need long-term care, with 90% not being able to afford it privately.
Cited Resources: While we have strived to give you a comprehensive and basic definition to help understand these complex programs, additional research is recommended. We have provided various links on our resources page to aid in your research on these topics. All of our sources for the information on this page are also linked on our resources page.
All about the Long-Term Services and Supports (LTSS) Trust Act Program
Governor Jay Inslee signed the Long-Term Services and Supports (LTSS) Trust Act into the law-making process (RCW 50B.04) on May 16, 2019. It was six years in the making and is the first of its kind, although many states are beginning to follow suit.
The Trust Act created the Long-Term Services and Supports Trust Commission (Commission) which consists of legislators, administering agencies, and stakeholder representatives. This Commission, run through the Washington Department of Social and Health Services (DSHS), makes recommendations regarding criteria for determining benefit eligibility, minimum provider qualifications, service payment maximums, actions needed to maintain Trust solvency, and monitoring agency expenses.
The Trust Act additionally created the WA Cares Fund. This fund was commissioned to aid workers against long-term care's economic and social risks while better positioning the state to cope with the fiscal and economic costs of the long-term care crisis. This crisis is compounded by the rapidly growing volume of an aging population.
One of the concerns is that Washington currently has 850,000 unpaid family caregivers, the majority of which are facing financial insecurity. Nationally, 20% of family caregivers spend an average of 20% of their own income on out-of-pocket caregiving costs. Family caregivers who leave work lose an average of $300,000 in income and benefits over their lifetime. By 2040, it is estimated that the pool of available family caregivers will be cut in half, leaving many scrambling for affordable care options.
-
Be age 18 or older to collect benefits.
Must be a resident of Washington State to collect benefits.
Meet the requirement of needed assistance with the state’s listed ADL's (Activity of Daily Living).
Must be a "vested" individual. A vested individual is someone who:
A permanently vested individual contributes for 10 years, of which 5 or more years were without interruption.
A short-term vested individual contributed for at least 3 years in the last 6 years.
An example of a short-term vested individual is someone who had an event such as a ski accident or had cancer prior to retirement.
500 hours of work counts as 1 year.
For more information on WA Cares Fund premiums, see RCW 50B.04.080 and RCW 50B.04.085.
-
$100/day, maximum of $36,500 per person (can be adjusted annually) for "vested" individuals.
Benefits will be paid through reimbursement direct billing or regular reimbursement.
Benefits are currently scheduled to be paid out at the Medicaid rate and must go through an approved facility or program, the exception being if it is paying a spouse's income.
Family members may qualify upon receiving 21-35 hours of formal training through an approved Medicaid program.
Benefits can be used for:
Professional personal care in your home, an assisted living facility, an adult family home or a nursing home.
Adaptive equipment and technology like hearing devices and medication reminder devices.
Home safety evaluations.
Training and support for paid and unpaid family members who provide care.
Home-delivered meals.
Education and consultation.
And more!
The National Long-Term Care Crisis
The math problem:
Aging population along with a loss of resources + a significant lack of personal (or private) funding due to a lack of planning + an increased use of government programs = increased shortfalls with funding in the private sector due to a broken payment system partially created by Medicaid
But wait, there’s more…
Increased shortfalls with funding in the private sector due to a broken payment system partially created by Medicaid = rapid unchecked rising costs to private pay individuals = rising unsustainable societal costs = national catastrophe
You can’t put a band-aid on a gushing wound
How far will the LTSS Trust benefit of $36,500 really take you? To answer that, we need to look at the real cost of long-term care.
According to Genworth and their CareScout® research team, the current average annual cost of care in the state of Washington ranges from $26,000 for adult daycare to $71,294 for homemaker services to $131,400 for a private room in a nursing home. It is estimated that by 2040, these same services will average $46,959 to $128,765 to $237,323. The average long-term care stay is currently averaging 3.9 years and with the advancement of medical treatments, this number is estimated to continue to rise.
Doesn’t seem like $36,500 is going to take you far, does it?
That is correct. Current statistics show that 7 out of 10 retirees are estimated to need long-term care. 90% of these retirees will not have the private means to cover the cost of long-term care, even with the LTSS program. These individuals and families will have to turn to look at Medicaid as a solution. Without additional planning, the LTSS benefit by itself will really only buy you about a year of in-home care with a family member as a caregiver.
While the state has good intentions with this program, it is simply a small band-aid.
Check the long-term care cost calculator on Genworth’s website.
The last contribution of the greatest generation will be a population crisis
With society’s largest generation ever known starting to hit their retirement years and end-of-life, we stand to lose significant members of society. Baby Boomers are our mentors, caregivers, leaders, and experts in a variety of critical industries.
One-half of the problem arises when Baby Boomers go from contributing to receiving in masses. They are among the highest-earning population that contributes the most to social programs like Social Security, Medicare, and Medicaid. As they retire from the workforce, there is not a large enough population following them to pick up the contribution loss and keep the system stable at its current pay rates.
The other half of the problem starts when Baby Boomers age and begin needing medical care. Many of our caregivers and healthcare professionals are Baby Boomers, causing an even larger gap in an already understaffed portion of the market. As the number of care providers decreases and the number of care consumers increases, it will directly impact families by tapping family financial resources and inevitably requiring family members to become caregivers.
This impact on finances creates what we call the sandwich generation - with you financially supporting your parents while also financially supporting your children, leaving you and a spouse little resources to put aside for your future.
The question you must ask yourself is what do you want your children to inherit - poverty created by a compounded long-term care problem, or financial freedom?
Learn more about this growing concern at AgingStats.gov.