While 70 percent of people will need long-term care at some point, most of us don’t have a way to pay for it. Here’s what you need to know about planning for long-term care.
Long-term care can be provided in your own home
Long-term care is help with activities of daily living like bathing, eating, dressing, preparing meals, grocery shopping, and more. It does not include medical care, like doctor’s visits and treatment for medical conditions.
While people often think of care in a residential setting like a nursing home or assisted living, long-term care can also include care provided in your own home. In fact, most people with care needs can stay in their own homes with the right support. WA Cares is designed to empower you to choose your care setting.
Costs and ways to pay for long-term care
Costs vary significantly depending on the type of long-term care you get, but generally, it is expensive. In Washington, it costs about $33,000 per year to get 20 hours of home care per week—roughly the average needed by current Medicaid long-term care clients. Care in a residential facility costs significantly more.
While it’s a predictable cost, most people don’t have a way to pay for it. Because it’s not medical care, long-term care is not covered by health insurance or Medicare, except in very rare circumstances. Long-term care can be covered by Medicaid, but first you must spend down your life savings to only $2,000.
You can pay out-of-pocket for long-term care, but this is rarely affordable for those who no longer work. The median household income for older adults in Washington state is $56,000 per year and half of Washingtonians nearing retirement have no 401(k) or pension income.
While private long-term care insurance is available, premiums average more than $2,000 annually and continue after retirement until you die or need care. Premiums often go up significantly over time and women pay up to 50 percent more for the same coverage. Even among those who can afford private insurance, 30 percent would be denied coverage due to pre-existing conditions.
Typically, private insurance plans require people to pay out-of-pocket for the first three months of care. Often there are daily or monthly caps on usage afterward. Some have benefit amounts that are not adjusted for inflation and their purchasing power can erode over time. If you purchase a private insurance policy, it’s important to make sure you fully understand the policy requirements and limitations so you can plan accordingly.
The WA Cares Fund makes long-term care insurance affordable for all Washington workers as they age.
How the WA Cares Fund works
Washingtonians enrolled in WA Cares earn $36,500 in lifetime long-term care insurance coverage (adjusted annually for inflation) by contributing 0.58 percent of their wages in premiums during their working years.
You only contribute to WA Cares while you are working. Everyone pays the same low rate, regardless of gender or pre-existing conditions. After meeting the contribution requirements, when you need care, you’ll get unlimited access to your benefits right away with no deductibles and no co-pays.
You can meet the contribution requirement through one of three pathways:
- Lifetime access: Once you contribute for at least 10 years (without a break of five or more consecutive years), you can access the full benefit amount at any point in life when you need care.
- Early access: If you have contributed for three of the last six years at the time when you need care, you can access the full benefit amount. This ensures you can get benefits if you have a sudden care need during your career or soon after leaving the workforce, even if you don’t yet qualify for lifetime access.
- Partial benefit for near-retirees: If you were born before January 1, 1968, you will earn 10 percent of the full benefit amount for each year you work, available at any point when you need care. This allows workers who are near retirement as the program begins to get lifetime access to some benefits, even if they aren’t able to meet the 10-year requirement to access the full benefit amount.
Contributions to the program began July 1, 2023 and benefits will become available July 1, 2026.
The State is working to develop a market for supplemental private long-term care insurance policies for those who want additional coverage. WA Cares supplemental policies would likely be more affordable for most workers than standalone private long-term care insurance coverage and would be required to comply with strict consumer protections.
Learn more about the program at wacaresfund.wa.gov.
You can find more information on planning for long-term care from these resources:
- Information from WA Cares on planning for your care
- Long-Term Care Planning for Near-Retirees (YouTube, 1:01:08)
- Long-Term Care Planning for Younger Workers (YouTube, 45:02)
- Long-term care planning resources (AARP)
- Private long-term care insurance (Office of the Insurance Commissioner)
- Find your local Area Agency on Aging and other local resources (Community Living Connections)