SEATTLE – After a two-year delay, premiums for Washington’s fledgling long-term care insurance program will resume in July, likely setting off another round of debate over the payroll tax.
Facing pressure from businesses and politicians and the threat of a ballot measure to gut the program, Gov. Jay Inslee swiftly signed two bills in 2022 to slow the program’s implementation, expand the number of people allowed to opt out and allow some to become partially eligible for benefits.
The Washington Cares Fund started collecting premiums at the start of 2022, as originally scheduled, but the bills halted collection and refunded money to residents. Since then, legislators have largely let the ambitious and controversial plan quietly lie, making no changes this session.
A 0.58% payroll deduction from nearly all workers in Washington will fund the first-in-the-nation long-term care insurance program. It is intended to provide a lifetime benefit of up to $36,500 to people who need help with daily activities like bathing, eating or mobility through many services, including in-home care, transportation or nursing home services.
The median income earner making $50,100 will see a $24 monthly or $288 annual payroll deduction, unless they have already obtained an exemption approval letter by having private long-term care insurance. People who are self-employed are not subject to the deduction but can opt into the program.
The deadline to opt-out by obtaining private long-term insurance was at the end of 2022 and is no longer available. Around 490,000 people have so far received an exemption.
The legislative action to delay the plan last year revealed how unpopular it was, said Sen. Mark Mullet, D-Issaquah. When premiums resume next month, it could be another “wake-up call,” he said.
Mullet was one of the few Democrats to vote against the program in 2019. He supported efforts to allow voters to decide whether it should go forward.
“I think it’s pretty clear in its current form that the Washington voters don’t like the program. They don’t want the program. They don’t support the tax going live on July 1,” Mullet said.
Earlier this year, the Washington Cares Fund Commission issued a series of recommendations to address common criticisms. Those changes would make the program portable for people who move out of state, require people who opted out in 2021 to regularly show proof of a private long-term care insurance plan and offer new private insurance that supplements the Washington Cares Fund, among other changes.
However, more urgent issues such as housing took priority this past legislative session, leaving lawmakers to wait until next year to resume conversations about any adjustments to the program, said Sen. Karen Keiser, D-Des Moines, a member of the commission.
“Washington Cares is not going to happen overnight and it is a question of fine-tuning it before it goes into full implementation,” she said.
The politics of WA Cares
Since its onset, the long-term care program has been entangled in criticism and political fights.
In the past two years, the Washington Cares Fund survived a lawsuit, a ballot measure that threatened to gut the program’s funds and endless questions over its solvency, efficacy and fairness.
Proponents point to a lack of a safety net for people diagnosed with diseases like Alzheimer’s or dementia, and say the program will save on Medicaid costs and keep people from falling into poverty as the number of residents 75 and older is expected to double in Washington over the next two decades.
Although the money will be a drop in the bucket for some requiring years of in-home or nursing home care, supporters say it will offer some reprieve for caregivers burdened by caring for loved ones. In the U.S., most people pay out of pocket for long-term care.
Critics say it will not provide enough coverage for many in need of intense help for an extended period. The program is poorly designed, regressive or another unnecessary paycheck deduction, they say.
A central complaint is that, as the plan stands, many people will see money taken from their paychecks but won’t have access to the benefit, either because they might never become eligible or because they might retire outside the state. People are eligible after working a certain number of years and paying into the fund, and by needing assistance with at least three activities of daily living.
Mullet and Rep. Peter Abbarno, R-Centralia, also point to the messy politics of the program, which was largely passed along party lines in 2019 but saw bipartisan support to delay its implementation.
Mullet characterized the payroll tax as the cause of an interest group, specifically Service Employees International Union Local 775, which represents home health care workers.
Abbarno, who unsuccessfully tried to kill the program this session, said the results of a nonbinding advisory vote in November 2019 showed 63% of voters supported repealing the payroll tax to support long-term care.
What’s changed, what’s unknown
WA Cares Director Ben Veghte said the delay and changes made last year were done to “improve the equity of the program.” Namely, it expanded eligibility to allow people who are 55 and older and closer to retirement to become partially eligible for benefits.
Legislators also added a provision allowing additional people to opt out, including around 150,000 people who work in Washington but live in another state; military families rotating through Washington; and some disabled veterans with long-term care coverage through the Department of Veteran Affairs.
WA Cares is still determining how people will claim benefits, the exact metrics for eligibility and how the fund will pay out. Crucial questions remain on how many people will ultimately use the benefits.
Current actuarial analysis says the program will be solvent through 2098. In the case of a shortfall, the fund has three options: change the fund’s investment strategy, adjust benefits either by reducing or restructuring them or increase premiums. The last option, Keiser said, is unlikely since it would require legislative action, which would be politically unpopular and difficult to pass.