Genworth launches first LTC insurance plan in 5 years as Washington state residents consider ‘crazy’ plan that could end mandatory program

The one-year anniversary of the effective date of Washington’s first-in-the nation mandatory, tax-based long-term care insurance program passed on July 1, but voters will have the opportunity to make the program voluntary come November.

Under the program, workers in the Evergreen State are assessed a monthly mandatory payroll tax of 58 cents on every $100 in income, which pays for “a comprehensive array of long-term care services and supports,” including assisted living, skilled nursing, in-home care and expenses such as meal delivery or construction of wheelchair ramps. When the program was announced, it was to allow vested state residents to claim up to $36,500 to help cover such expenses.

Transitioning to a voluntary system would be a mistake, according to economist Alicia H. Munnell, director of the Center for Retirement Research at Boston College. Relying on voluntary contributions, she said, would sound the death knell for the program’s coffers. Younger workers would be disinclined to enroll in a program they are unlikely to need for decades, if at all, Munnell noted.

“We will learn an immense amount from WA Cares about establishing a social insurance program for long-term care, which will be invaluable when the federal government eventually addresses this gaping policy hole. It would be crazy to kill it,” she said.

Genworth launches new LTC insurance plan

Meanwhile, private companies are beefing up efforts to provide long-term care insurance plans. Genworth Financial, for example, has launched its first long-term care plan in five years, under its CareScout Insurance business.

CareScout has begun sending information about its long-term care insurance plan to the Insurance Compact Commission, which standardizes insurance filings among 39 states, Washington, DC, and Puerto Rico.

“The first CareScout LTCI policy is expected to have a maximum benefit of $250,000; options for 1%, 2%, 3% and 5% compound inflation protection; extremely conservative investment-return assumptions for the assets supporting the policies; and a strategy of implementing small, frequent premium increases, when increases are necessary, rather than imposing the kinds of 100% and 200% increases facing the holders of many of the LTCI policies sold in the past,” ThinkAdvisor reported.

The long-term care insurance industry “obviously got it wrong on the legacy business,” Genworth CEO Tom McInerney said Tuesday, as reported by ThinkAdvisor. “We think we’ve now got a product that’s priced right.”