Support for Washington state’s long-term care benefit program is divisive, but 51% of Washington residents support the program, according to an AARP poll published this fall.
A third of residents oppose the benefit program altogether, while 15% are not sure about it.
A 2019 U.S. Health and Human Services research brief found that nearly 70% of people 65 years and older will require long-term services and supports, but few people prepare for this reality.
In Washington state, 74% of people are somewhat or not at all confident they could afford long-term care services if they needed them, according to the AARP survey.
The Legislature created the Washington Cares Fund in an attempt to help, but as opposition grows to the tax, the Legislature will likely be adopting fixes this upcoming session.
In 2019, the Legislature passed a bill creating the program, which aims to help residents offset the cost of long-term care. It’s the first of its kind in the country.
The program requires workers to pay 0.58% of their wages into the fund beginning Jan. 1. Those who qualify can access the benefit – up to $36,500 – beginning in 2025.
Workers can opt out of the program, but they must prove they have purchased a private long-term care insurance plan. They must do so by Wednesday or they will begin paying the tax in January. Those who choose to opt out currently do not have the choice to opt back in.
As of Monday, the Employment Security Department had received 394,556 exemptions. Spokesperson Nick Demerice wrote in an email that the pace of exemptions coming in has slowed “considerably.” ESD is working through exemption applications now and plans to work after Wednesday to complete them by Jan. 1, when the tax goes into effect.
To access the benefit, a resident needs to have worked in Washington at least 10 years at any point in their life without a break of five or more years. Those who have worked and contributed to the fund for at least three of the past six years while working at least 500 hours per year can also access it.
To qualify, a resident must need assistance with at least three activities of daily living, such as medication management, personal hygiene, eating, bathing or dressing.
The benefit can be used on a number of services and supports, such as professional care in-home or at a facility, home safety evaluations, equipment, training for caretakers, meals or transportation.
These benefits cannot be paid for with Medicare or private health insurance (which differs from long-term care insurance). That means a person who does not have long-term care insurance has to spend down their own funds to live in a nursing home, for example, until they reach a certain income level that allows them to receive Medicaid, which will pay for those services.
In the AARP survey, 78% of respondents did not know this, however, indicating incorrectly that they believed Medicare, Medicare supplements or private health insurance would pay for home visits from a home caregiver to help with bathing, dressing or medications.
Providing a flexible option to age in place
The reason Washington state’s long-term care system can support a benefit program like this is in part due to work that’s been happening in the past two decades to focus long-term care where residents want it: in the home.
“We knew people wanted to age in place and they wanted to age with a minimal amount of supports,” Cathy MacCaul, advocacy director at the AARP Washington, said. “And the other thing we knew is it was far more cost-effective to pay for in-home support versus institutional support with Medicaid.”
Currently, long-term care makes up about 6.3% of the state budget, Bea Rector, director of home and community services for the state Department of Social and Health Services, told a Senate committee last week. That’s about $6.4 billion in the last two-year budget cycle.
This program could help offset that cost, supporters say.
While opponents of the program don’t want another tax, MacCaul pointed out that the payroll deductions do not just go to the state’s general fund. Instead, the deduction goes into the specific trust that will generate funds for eligible residents to use when they need it.
The alternative also costs taxpayers money as well, MacCaul said.
“If you’re not wanting to pay into the WA Cares fund, you’ll pay for it in your taxes because you’ll pay for it through the increasing demand on Medicaid,” MacCaul said.
The WA Cares Fund can be used once a person qualifies by worked years and residency, regardless of their age. So if a young, working person gets in an accident and needs at-home care or recovery time in a facility, they could tap into the fund .
An estimated 18,000 to 30,000 people will be able to access this benefit starting in 2025, and under the current law, a person can use the fund to pay a family member caregiver, a component AARP fought hard for.
“We did that because a lot of people, especially women, leave the workforce at their prime earning point to care for a loved one,” MacCaul said.
Spouses can also use the fund to pay their partner, should they become the primary caregiver.
Ultimately, supporters of the new program think that more education about how long-term care works, who will end up needing it (70% of people over the age of 65) and how Medicare and private health insurance won’t cover those types of supports are all vital to continue in the coming months. AARP’s survey results showed this, as support for the program grew with more knowledge about it.
“We found that interesting because it also emphasizes our role of getting more information out about long-term care and information out about the WA Cares fund,” MacCaul said.
A lawsuit and sustainability questions
Opponents of the tax filed a lawsuit in federal court earlier this month against Gov. Jay Inslee and heads of the Employment Security Department and the Department of Social and Health Services, claiming the fund violates federal law.
The lawsuit alleges the WA Cares Fund violates the federal Employee Retirement Income Security Act, which the lawsuit says forbids any state from passing a law requiring employees to participate in a plan that provides sickness or medical benefits. The lawsuit also alleges the fund violates the equal protection and the privileges and immunities clauses of the Constitution because people who work in Washington but don’t reside there must pay the tax but cannot access its benefits.
The plaintiffs in the case are three businesses and six individuals who did not purchase private long-term care insurance and will have to pay the tax come January.
Opponents also have concerns about the sustainability of the tax.
As of now, the program is fully funded through 2075, assuming the 0.58% tax rate and investment opportunities stay the same. After that, only a percentage of the benefit will be paid out.
Part of that is due to the investment ability of the fund. The state constitution allows the fund to only be invested in fixed-income investments, which are often more conservative.
A constitutional amendment that would have allowed the state to invest the trust fund into private stock failed in the 2020 general election. Lawmakers have already said they will likely try to push for another constitutional amendment in upcoming years to address these concerns.
Opponents are in the process of gathering signatures on an initiative to the Legislature that would overturn the parts of the law that determine eligibility and exemptions to the law. It would keep the program but allow people to opt into it, if they wish.
The initiative would need to get at least 324,516 registered voters by 5 p.m. Dec. 30 to be submitted to the 2022 Legislature. If enough signatures are gathered, the Legislature would either adopt the initiative as proposed, refuse to adopt it, which would send it to the ballot next November, or approve an alternative to the proposed initiative.
Lawmakers have already indicated they plan to address issues with the long-term care program this session.
Plans for law changes this session
Robyn Cole, who lives in Kootenai County, said her husband who works in Spokane will have to pay the tax but will not be able to receive benefits from it.
When she found out about the tax in September, she and her husband rushed to find a private plan so they could opt out. Insurers, however, told them they did not have enough time before the deadline to write a plan.
“I’m just puzzled as to how some of these stipulations were created,” Cole said. “Asking people to pay into a fund that they would never benefit from doesn’t compute in my head.”
As of now, Cole said they don’t have a private plan. She said they are responsible and have been setting aside funds for when they need long-term care down the road.
For now, Cole said they are hoping the Legislature provides fixes in the spring so they don’t end up having to pay for it.
Lawmakers have indicated fixing the plan is a priority. Their work will likely be informed by the Long-Term Care Services and Supports Trust Commission, which was formed to make recommendations regarding the fund.
“This is a top priority issue for us and something the House and Senate Democrats have been talking about,” Rep. Nicole Macri, D-Seattle, said at a press conference last week.
Macri said she expects this issue to be addressed early on in the legislative session, which begins Jan. 10.
One big concern from opponents is what border-state residents can do to opt out. Currently, residents of Idaho, Oregon and Canada who work in Washington must pay into the program but cannot receive benefits from it.
The commission estimates about there are about 150,000 people who are included in this category.
One suggestion from the commission is to automatically exclude individuals who don’t live in Washington from paying into the program. If they moved to Washington in the future, they would be included.
People who pay into the program cannot take the benefit with them if they eventually need long-term care in another state. The commission found there was no “feasible” option to recommend to the Legislature to address this issue.
According to discussions at a Nov. 10 meeting, the cost to provide fully portable benefits is high. If other states begin exploring similar programs, the commission said it can look into creating a multistate benefit for those who pay in.
The commission also recommends allowing temporary workers with nonimmigrant visas, military spouses and veterans who are 70% to 100% service-connected disabled to be allowed to opt out of the program without purchasing a private long-term care insurance plan.
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