WA Cares Fund: Now What?

Tyler Linsten Personal Finance, Taxes

I’M NOT MAD AT ALL ABOUT THE RIDICULOUSNESS OF THIS WHOLE DEBACLE, OLYMPIA, IT’S JUST A SOFTWARE QUIRK THAT HAS TURNED THIS INTO ALL CAPS AND INCLUDED THE FOLLOWING EXCESSIVE EXCLAMATION MARKS!!!


Now that we’ve all hit a pillow, what are Washingtonians supposed to do now, given that the Powers That Be have put WA Cares Fund on hold? Here are my thoughts:

If I were to handicap this outcome, I’d say there’s about a 50% chance the Cares Fund is doomed, either by being delayed into oblivion by the state Legislature or it’s made optional by Initiative 1436.

The remaining 50% chance would be of some kind of significant reform to the program, which has many qualities in need of significant reform. I also suspect this would bring opportunity for those locked out of the opt-out process, for one reason or another, to get another shot at bowing out.

If you purchased a long-term care insurance policy solely for the opt-out

I’d hold tight. Do not declare victory just yet. You certainly don’t want to cancel your private LTC policy, only to see the rules of the game change in 2022 and now you could be stuck in the program for life. It’ll be best to watch the headlines and see how this unfolds.

If you decided not to purchase a policy for the opt-out

This is your chance to reconsider that stance, especially if the rules are going to be modified. From my experience helping clients this year, there’s a certain level of “I just don’t want to deal with this,” but it very well may pay handsomely to Deal With This. Same conclusion: Let’s see how this pans out, and you can evaluate again.

If you weren’t able to opt-out, but wanted to

Happy Holidays! This is appears to be a huge gift coming your way. I can’t imagine a scenario where the program survives but they don’t allow for a new opt-out period, or some kind of other help. I have to think this gives you another shot at applying for a private long-term care policy to qualify yourself exemption from the tax. Again, let’s see how the news unfolds and then you can act accordingly. It won’t hurt to reach out to insurance carriers now so you have an established point of contact moving forward.

One big risk for all groups:

There’s a chance the favorable loopholes get closed. By all indications this program was going to be a one-and-done opt-out – you get your private policy, apply for exemption, then you’re out of the Cares Fund tax for life. But I don’t know if that will survive this reset, because it’s a huge loophole for wealthy individuals or those who have financial planners on the team. This means Washingtonians may have to keep their private LTC policies in place to continue with the opt-out, and possibly prove it’s in place yearly moving forward.

No matter your situation, the overarching conclusion is the same: Stay tuned, evaluate the developments according to the impact on your own personal finances, and act quickly when the news drops.