December 02, 2021

Will You Be Forced to Buy Long-Term Care Insurance?, Ep #74Â

24 minutes

Is it possible that you could be FORCED to buy Long-Term Care Insurance? Well, it's happened in the State of Washington. Could your State be next? I can't predict which States will follow suit or in what time frame, but I do believe this is only the beginning of this kind of legislation… and I think it's a BAD idea, at least the way Washington has implemented it. This episode will address what's wrong with the Washington plan, and I'll also answer three listener questions about retirement date funds, Long-Term Care Insurance in general, and gifting money from your IRA.

You will want to hear this episode if you are interested in...

How you can successfully navigate the retirement planning path [0:54]
Is Long-Term Care Insurance going to be required in your State? [6:21]
A 7% Long-Term Capital Gains tax goes into effect in 2022 [9:24]
Why I don't like retirement date funds [12:37]
Is Long-Term Care Insurance something you recommend? [18:22]
Can I gift a portion of my IRA to my son? [21:02]

The State of Washington leads the way in new Long-Term Care legislation

The State of Washington is the first state ever to create a State-sponsored, mandatory Long-Term care program. That means if you work in the State of Washington, you're going to be forced to purchase the State's Long-Term Insurance. It's called the Washington Cares fund (WA Cares Fund). And it has some significant problems.

First off, the money you put into the WA Cares fund can only be utilized for care in the State of Washington. So think about that… if you participate in this fund and decide to retire to Florida (for example), you'll only be able to use the funds in the WA Cares fund if you have your medical services performed in the State of Washington. That's not very practical at all, is it?

What you need to know about "retirement date funds" in 401Ks

Retirement date funds are typically used to pigeon-hole investors into easier-to-manage categories offered through 401K plans and other retirement vehicles. These are age-based buckets that they toss all investors into, implying there is a "one size fits all" approach to retirement planning, which in my book, is an imaginary thing. Every investor has different goals and dreams for their retirement. They need the flexibility to choose the strategies that match their goals. These kinds of funds don't allow freedom like that. In my opinion, that's a disservice to the people I'm trying to serve. These funds often put more money into international stocks than I prefer as well.

Do I recommend Long-Term Care Insurance?

This is another issue where I don't think there's a "one size fits all." Not everyone needs Long-Term Care Insurance because they can afford to self-pay for the care they need in their older years. But there are many people who can't afford the increased medical care and care facility costs that are required in their older years. So you need to consult your advisor to determine if you have the resources to self-pay or if Long-Term Care Insurance makes sense for you. One thing to consider is that the premiums for Long-Term Care as well as the costs at retirement facilities can go up and up over the years. Make sure you consider that when you're making your decisions about this.

Resources & People Mentioned