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Washington State Delays Long-Term Care Program Launch

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What You Need to Know

  • The state was going to impose a 0.58% payroll tax to pay for up to $36,500 in LTC benefits.
  • Workers could opt out by getting private long-term care insurance.
  • One criticism is that the state would have no way to verify that workers who opted out were keeping their private LTCI coverage.

Washington state leaders say they will delay the start of a public long-term benefits program until the end of the state’s 2023 legislative session, to give state lawmakers time to adjust it.

Gov. Jay Inslee announced the Washington Cares program delay Friday, together with state Senate Majority Leader Andy Billig and state House Speaker Laurie Jinkins.

The Washington Cares Fund program is supposed to use revenue from a 0.58% payroll tax to provide up to $36,500 in long-term care benefits for eligible program participants starting in 2025.

The state had planned to start collecting the payroll tax in January 2022. Workers could opt out by buying private long-term care insurance by Nov. 1.

One problem with the program was that so many workers applied for private LTCI that they swamped the LTCI issuers’ underwriting teams.

Private issuers were reluctant to accept the applications, arguing that Washington state had no mechanism in place to require workers who opted out of the Washington Cares Fund payroll tax to keep paying the LTCI premiums. They predicted that many workers who bought private LTCI would drop the coverage as soon as they had escaped having to pay the payroll tax.

Inslee said in his statement that the Washington Cares Fund premium assessment will pay for much-needed care and coverage for Washington state residents as they age.

“However, legislators have identified some areas that need adjustments, and I agree,” Inslee said. “We need to give legislators the opportunity to make refinements to the bill.”

In theory, Washington state lawmakers should have a relatively easy time passing legislation, because one party is in control of all branches. Inslee is a Democrat. Democrats have a 57-41 majority in the state House and a 28-21 majority in the state Senate.

What Could Change

Billig and Jinkins said in a joint statement that they want to improve provisions in the LTC program for disabled veterans, military spouses, nonresidents and near-retirees.

“A pause will also give the Long Term Care Commission the ability to study and make recommendations about residents who move out of Washington to retire and assure that those who have opted out of the program maintain their private insurance policies,” the lawmakers said. “These improvements will provide security and stability now and into the future for this critical safety net for our state’s seniors and people with disabilities.”

Jesse Slome’s Reaction

Jesse Slome, director of the American Association for Long-Term Care Insurance, said in a commentary that he questions whether the main purpose of the delay is to improve the program.

“I’ve seen this play before, and I’d say they are gauging consumer anger at being taxed,” Slome wrote in the commentary.

He noted that a federal long-term care program that was part of the Affordable Care Act disappeared quickly.

Slome estimated that an affected worker earning $100,000 per year would have paid $48 in extra taxes per month had the Washington Cares Fund program come to life in January.

“That doesn’t sound like a huge sum, but, for someone in their 20s and 30s, it’s money for a benefit they don’t think they’ll ever need,” Slome said.

Steve Moses’ Proposal

Washington is the home state of Steve Moses, director of the Center for Long-Term Care Reform, who has worked for years to make the case that Medicaid is crowding out private LTCI coverage in ways that often hurt the interests of people who need Medicaid benefits to pay for acute care.

If the state is going to require people to participate in a public LTC benefits program, then it should make sure that people have a real choice to opt to buy private coverage, Moses wrote in a commentary.

“Offer the opt-out early, so that as many people as want to can purchase private insurance to avoid the tax,” Moses said. “Establish a certain minimum amount and quality of private coverage to qualify. Review the coverage annually to ensure it remains in place. If private coverage lapses, revoke the payroll exemption.”

Those changes would make sure that everyone had mandatory public LTC coverage, while eliminating efforts to push people into a public program, Moses said.


Washington state Gov. Jay Inslee (Photo: Inslee)