You have to give Washington’s legislators credit. They figured out a way to get a whole lot of new tax dollars and once the program is in place this coming January, well, it’ll be hard to cancel it I suspect. Unfortunately, while you do suggest long-term care insurance is an option, many of the leading insurers have already ceased sales in Washington (at least for now). So, anyone interested shouldn’t wait too long. We show some examples of what policies can cost in Washington at link to aaltci.org. It’s a quick read for those interested.
And one more thing. I understand the thought that one should buy coverage and drop it. That might not be sound advice as I suspect the legislature will close that loophole (they ain’t dummies) and once that happens, you’ll never qualify again for that exemption. Just a thought.
Jesse Slome, Director
American Association for Long-Term Care Insurance
Art
2 years ago
I think this is actually intended to introduce a Washington State income tax. The ‘long term care insurance’ is really just a cover, the defects could be a feature.
Washington State does not have a state income tax, in fact, a state income tax is forbidden. Washington State also has an initiative process, which has been used by the people many times in the past decades to vote down tax increases. The votes in favor of striking down tax increases have been very consistent and with impressive majorities. The Washington State Supreme Court has consistently found excuses to strike down these initiatives, using reasoning that has over time become more and more absurd.
This ‘insurance’ is structured as an income tax, including introducing state-level employer tax withholding. This new law gives the Washington State Supreme Court an opportunity to allow a state income tax, by calling it something else. Given the obvious defects in the law, they could even strike down specific provisions as a demonstration that they are paying attention. As long as they let the tax itself stand in some form, they have allowed a state income tax. Once the mechanism is in place, it will be easy for the state government to add many more taxes structured in the same way.
A state income tax has been an ongoing battle in Washington State for decades.
ed_retired_actuary
2 years ago
I suspect that the state is projecting that a substantial fraction of the benefit costs will be offset by savings to Medicaid, which currently pays for long term care to the indigent. There is a cottage industry of elder care planners who counsel those in the middle class how to qualify, for example by transferring essentially all family assets to a spouse who does not need long term care, making the current system rife with gamesmanship.
Mish
2 years ago
@TCW has this ass backwards: “There’s a reason it’s only specified for ’employees’. Most people think they’re an employee, but, by definition, are not. I would encourage everyone in Washington to look up the definition of ‘Employee’ in the statutes. If Washington operates like the federal government, then that term has a specific meaning that does not apply to most people. This is why a law suit won’t work – it’s an excise tax that really only applies to those who work for the government and it will be found fully Constitutional and legal.”
Those under collective bargaining (government workers and unions in general) are exempt and do not pay into the system.
Self employed and the already disabled are the only other groups exempt.
You stated, “Employers are not required to contribute to the Program, though they are
required to collect premiums from employees and remit them to
Washington State ESD.” My post was intended to clarify just who an ’employee’ is, as it’s not what most think.
Jojo
2 years ago
Washington also offers the highest state max weekly unemployment benefit:
Perhaps a year in a lower cost assisted living facility, if moderate impairment consistent with that level of care qualifies. However $100 per day (or $36,500 per year) covers only the fraction of the cost of nursing care. Most insurance companies who have written long term care insurance have suffered large losses (partially offset by premium increases) due to a combination of higher than actuarially anticipated utilization, longevity while in care, and low interest rates.
RonJ
2 years ago
Klaus Schwab’s Build Back Better, Great Reset, will solve all problems. We will own nothing and be happy.
At least that is the narrative.
The long term debt cycle is marching ever closer to the 360 degree mark. Then the next cycle begins. What is the end of the cycle going to look like this time? Last time was the Great Depression and WW2. What is going to be left standing by the time we get through to the other side of this mess?
Where is the money for long term care, or anything else going to come from? Klaus says we will own nothing. Effectively, the state will own everything.
All the best wars are over resources, and we have so much less to fight over this time, which will drive us to waste most of it fighting over what’s left.
TCW
2 years ago
There’s a reason it’s only specified for ’employees’. Most people think they’re an employee, but, by definition, are not. I would encourage everyone in Washington to look up the definition of ‘Employee’ in the statutes. If Washington operates like the federal government, then that term has a specific meaning that does not apply to most people. This is why a law suit won’t work – it’s an excise tax that really only applies to those who work for the government and it will be found fully Constitutional and legal. They should take a copy of the definition to their (attorney) human resources department and show how it does not apply to them for this tax or any other excise (income) tax. The following is how the federal government implements the scam:
26 USC § 3401(c) Employee – For purposes of this chapter, the term
“employee” includes an officer, employee, or elected official of the United
States, a State, or any political subdivision thereof, or the District of
Columbia, or any agency or instrumentality of any one or more of the foregoing.
The term “employee” also includes an officer of a corporation.
26 USC §7701(c):(c) Includes and including – The terms “includes” and
“including” when used in a definition contained in this title shall not be
deemed to exclude other things otherwise within the meaning of the term
defined.
Under this rule, the term “includes” provides for what courts have described
as a “calculated indefiniteness”. This is the expand-ability of the meaning of
a statutory term to things not listed in the definition (indefiniteness), but
to only things of the same character as those listed(calculated).
IE, if you are flipping burgers, your job doesn’t have the same character as those listed in the definition, therefore you are not an employee. Also, if you own a facility not dealing in government contracts (Joe’s Burger Joint), you don’t owe the excise taxes since the character of your job is not the functions of a public office and by definition you don’t own a ‘business’ –
26 USC § 7701) (26) Trade or business – The term ”trade or business”
includes the performance of the functions of a public office.
I really appreciate the thought-process you outlined, but I don’t think it reflects the reality of the program.
In the website and documentation, it is fairly obvious that this applies to WA residents across the board – not just those employed by the state/government. It also has several documents written to ’employers’ in the state – and context of those documents strongly suggests that this means any business with employees in the state of WA – again not just government entities.
numike
2 years ago
“Disease is the biggest money maker in our economy.”
― John H. Tobe
Zardoz
2 years ago
Sounds like the thin edge of a wedge to get state income tax infrastructure set up.
Think of all the jobs implementing a healthcare redistribution system will create too!
KidHorn
2 years ago
The problem with health care is it costs too much. Nobody ever addresses that. Instead they keep trying to find ways to pay for the absurdly inflated costs. The healthcare industry owns congress. Both sides of the aisle. You can buy many drugs overseas for 10% of what they cost here. Trump tried to fix this early in his term, but had no support from congress. The lame argument about drugs won’t be developed unless the drug companies can make a profit. As if the drug companies will shut down if they only make $5b/yr instead of $10b/yr.
Exactly and same argument applies about doctors too. Will doctors stop practicing if the government completely withdrew all the subsidies? Does paying more for a service somehow make the doctor smarter and better able to treat patients?
The people that already have degrees won’t stop, but the kids deciding a career won’t be so eager if the big bucks aren’t there. Without the money, it’s not a very good job…. unless you’re brim-full with the milk of human kindness.
Well, yes and no. Yes, smart people want a high return on their “smarts”. Now if the government got out of that marketplace (1/2 of government spending goes to healthcare, I believe), there would be a lot less money floating around, inflating the currency, so the dollar would get stronger. A doctor would make less, but most of the working population would make less since healthcare is typically part of one’s compensation. Also, the purchasing power of the dollar would be greater due to the smaller level of inflation.
As Mish has stated many times “Inflation benefits those who have first access to the newly minted money” (or something like that). In the healthcare industry case, the money printed from thin air benefits the entire industry to varying degrees.
You could be very well be correct regarding attracting native talent. However, let’s assume our leaders 30 years ago had decided to treat the healthcare industry the way it treated the technical sector; i.e.; We brought in 25,000-50,000 doctors & associated professionals per year since 1991 and eliminated all subsidies. We also allowed foreign nations to come here and open up hospitals. The native talent would have gone into something else, perhaps insurance or big government. Former doctors in their 50’s would now be walking the streets (along with the present day native technical workers) and out of work younger ones would be driving Ubers, most likely. However, you would hear complaints about the price of healthcare about as much as we complain about the price of consumer electronics today, that is, not much to complain about! Being out of work wouldn’t be so bad then…
Blurtman
2 years ago
The governor is a Democrat party appartchik buffoon. He appointed a party fundraiser to head up the state’s unemployment insurance deparment. Zero relevant experience, and 100’s of millions of dollars given out to Nigerian fraudsters later, she is now in the Biden administration.
The state has voted in an illegal capital gains income tax.
WA state is a sanctuary state meaning that somebody has to pay for the care of the illegals and their extended families.
Can’t speak to the fraud claims, but Inslee did show buffonish tendency when he claimed ignorance about the existence of CHOP/CHAZ in his state’s most populous city and then later claimed to know about it because he deployed the nat guard.
Ziggy
2 years ago
Is this Long Term Care Insurance where you would be required to be in a nursing home to collect or is it Long Term Disability Insurance where you can collect if you can’t work?
Last I checked for my mom, it was about 8k a month. I suspect we’ll see people lasting about 4 months before expiring in ‘long term’ care.
whirlaway
2 years ago
“Although you can opt out between October 1st, 2021 and December 31st,
2022, you must have purchased other long-term care insurance before
November 1, 2021.”
So, expect the free market to spawn a lot of fly-by-night scammers selling so-called long term care insurance with “competitive premium rates” very soon!
PostCambrian
2 years ago
Having taken care of my mother, who had LTC insurance, until her death, I can state that the benefits in the Washington state plan are totally insufficient. My mother’s benefits (which had no lifetime cap only a monthly cap of around $8,000) were over $360,000 in the six years that she used them. She paid about $65,000 in premiums over 20 years from age 60 to age 83 when she started using the benefits.
For an income of $50,000, this will mean an annual premium payment of $290. Over 23 years, that is $6670, about 10% of the total premium described above. The benefit will be capped at $3000 a month, which is 37.5% of the benefits that you mention.
My mom had AARP supplemental medicare insurance. Thank god for that. She had to stay in a rehab hospital. Medicare paid 100% for 20 days and 80% for the next 80 days. The supplemental insurance covered the other 20% for the next 80 days. 20% may not seem like much, but it cost $400/day to stay there just for room and board. She passed away after spending about 90 days there. I agree $36,500 is chump change for any real expense. Would have paid for about 3 months of nursing home care.
“My mom had AARP supplemental medicare insurance.”
Probably preaching to the choir here, but your mom would not have needed supplemental insurance had our country never gone down the path of government intervention in the medical marketplace.
You do know that in order for insurance to work is that a significant portion of payees never use the stated benefit. The larger the pool, the less the premiums.
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required to collect premiums from employees and remit them to
Washington State ESD.” My post was intended to clarify just who an ’employee’ is, as it’s not what most think.
“employee” includes an officer, employee, or elected official of the United
States, a State, or any political subdivision thereof, or the District of
Columbia, or any agency or instrumentality of any one or more of the foregoing.
The term “employee” also includes an officer of a corporation.
“including” when used in a definition contained in this title shall not be
deemed to exclude other things otherwise within the meaning of the term
defined.
Under this rule, the term “includes” provides for what courts have described
as a “calculated indefiniteness”. This is the expand-ability of the meaning of
a statutory term to things not listed in the definition (indefiniteness), but
to only things of the same character as those listed(calculated).
26 USC § 7701) (26) Trade or business – The term ”trade or business”
includes the performance of the functions of a public office.
“Disease is the biggest money maker in our economy.”
― John H. Tobe
2022, you must have purchased other long-term care insurance before
November 1, 2021.”
So, expect the free market to spawn a lot of fly-by-night scammers selling so-called long term care insurance with “competitive premium rates” very soon!