Stop, rethink state's long-term care law

Time is short, but action is necessary!

Gov. Jay Inslee and Democrats who control the state legislature need to postpone implementing the sweeping “Long-Term Services and Supports Trust Program” to determine its future financial viability and find better alternatives for coverage.

The new law, also known as the Washington Cares Act, is a mandatory, public, state-run long-term care insurance program. Beginning Jan. 1, 2022, Washington employers must withhold a new payroll tax ($58 per $10,000 of wages) to fund it. Even then, some paying the tax will not benefit.

Employees have until Nov. 1 to find alternative insurance or they will be automatically enrolled in the state program with no future opportunity to opt-out. Taxes will be sent to the state’s Employment Security Department (ESD) where they are placed into an insured person’s account.

The WA Cares Fund will provide up to $36,500, or $100 a day, for services and support to those who qualify for long-term care, including in-home care, assisted living facility stays, memory care, transportation, adaptive equipment, and respite for family caregivers, Virginia Thomas wrote in Spokane’s Journal of Business.

Qualifying for benefits is complicated and some paying the tax won’t receive a dime in payments. For example, if they plan to retire in the next four years, they would be taxed, but wouldn’t qualify for benefit payments, which start in 2025.

Another problem is funding.

“The State Actuary of Washington concluded that the program will not raise enough money to pay the promised benefit, making further tax increases and larger cuts into employee wages inevitable,” wrote Dr. Edmund Schweitzer, founder of SEL, Pullman. The program is underfunded by $15 billion.

The need to address long-term care is growing. According to estimates, the Dept. of Health and Human Services (HHS) figures 69% of the U.S. population will require long-term care services in their lives for an average of three years. Washington Care covers one year.

The U.S. long-term care market was roughly $430 billion in 2019 and is expected to increase by nearly 7% a year through 2027, Grand View Research determined. Demand for long-term care has increased with the growing recognition of unmet elderly needs which were fulfilled by hospitals.

The American Association of Long Term Care Insurance estimates more than 8 million U.S. citizens have long-term care insurance. However, it is expensive. The average long-term care insurance policy costs $2,466 per year for a couple at age 55, but, if that same couple purchases a policy at age 60, their prices rise almost $1,000 to an annual average of $3,381.

Long-term care needs to be portable. It needs to stay with the person regardless of state residence. Washington Cares requires Washington residency.

“Many of our Washington-based employee-owners are Idaho residents. They would pay the tax, but not ever benefit from it. Unlike participants in a true, private insurance program, these employees will have their monthly premiums collected, then distributed by the state to others,” Schweitzer added.

“This law has created a dynamic where people are buying insurance, not for planning purposes, as they’re intended to be used, but for tax avoidance purposes,” Spokane-based insurer David Wolf told the Journal’s Thomas.

If the message Inslee and lawmakers was to get serious about long-term care coverage: Mission accomplished! However, there needs to be opportunities for alternatives, which gives those paying the premiums better certainty and coverage.

Having greater options, which better fit people’s needs, should take precedent and not hastily buying insurance to beat a deadline. Our state elected officials would be wise to implement a pause and rethink the law’s intent and impact.