Questions Remain About Washington State’s New LTC Insurance Program
In January, workers will face a new payroll tax to fund the state’s new program, called the WA Cares Fund.
Workers will pay a premium of 0.58% of their wages, or 58 cents per $ 100. A worker earning $ 50,000 a year would pay $ 290 in annual payroll deductions.
Self-employed workers can register for the program.
Starting in 2025, eligible workers will be able to access program funds to pay for long-term care services such as home care, nursing home stays, equipment, home modifications, trips to the home. doctor and to pay family caregivers.
The maximum benefit that a person can access during their lifetime is $ 36,500.
When the legislature established the program in 2019, the state was the first in the country to create a public long-term care insurance program.
Seven in 10 people will need long-term care as they age, and most cannot afford private long-term care insurance, according to a fact sheet from the State Department of Social Services and health. The department notes that the program will help reduce the state’s Medicaid spending.
The program includes an option for individuals to opt out of payroll tax payment if they purchase a qualifying long term care insurance plan in the private market. Those who choose to opt out will be permanently ineligible for state benefits.
The deadline to purchase a private plan is November 1. The state opened the application period for those wishing to apply for an exemption on Friday and will accept applications until December 31, 2022.
The website to request an exemption crashed on Friday, but was functioning again on Saturday.
Some have expressed concern that the state deadline does not give people enough time to get a private plan and that plans are no longer available due to increased demand.
There are also questions about who is eligible to receive benefits. One of the problems is that workers who pay the wage premium will lose access to benefits if they move or retire in another state.
With the new payroll tax looming and many unanswered questions about the program, a group of 23 state senators – 20 Republicans and three Democrats – last week called on Gov. Jay Inslee to put implementation on hold. from the program.
“Your intervention to suspend the tax and insurance purchase deadline would provide temporary relief to employees facing a major new tax and give the Legislature time to work on a solution,” the report said. letter from senators of September 22.
State Senator Keith Wagoner, R-Sedro-Woolley, who signed the letter, said he had heard many voters talk about the program. He said many had not been able to find a private plan that meets state guidelines in time for the November 1 deadline.
âWhen the bill went into effect, I don’t think a lot of people knew about it,â he said. “It started to get attention and we got a lot of feedback. I don’t know how many hundreds of emails came in about long term care.”
In a September 9 letter to Inslee, the Association of Washington Business (AWB) raised similar concerns, saying the deadline to buy a private state plan had caused a “collapse” in the market. private insurance and that companies no longer sold coverage.
Dozens of companies, chambers of commerce and unions have signed the AWB letter.
The letter also raises eligibility issues, for example whether “short-term retirees” or those who work in Washington but live in border states are eligible for benefits.
Wagoner, who did not back the 2019 legislation, said he believes the private insurance market is better suited to meet the long-term care needs of residents.
His concern now is that people contribute to the state system and never get more out of it.
He said Inslee should use his emergency powers to put the program on hold in order to have more time to address those concerns.
âIt’s nothing more than a break to bring relief to people during the (pandemic) and find more ways to get out of it,â he said. “There are so many details that we didn’t understand.”
Democrats agree political adjustments are needed, but have no interest in suspending the program.
State Representative Alex Ramel, D-Bellingham, said the state’s program is needed to provide long-term care insurance as the population ages.
He said without the program people would have to spend all they have to qualify for Medicaid and the private long-term care market is insufficient.
Ramel said suspending the program would not only delay the collection of wage premiums, but delay when residents can access benefits.
Ramel, who was not a state representative when the legislation was passed in 2019, said he understood concerns about contributing to the system and not receiving any benefits.
âWhen the system first starts up, it has to collect income for a few years before it can provide benefits to people,â he said. “Unfortunately, this is how finances work to make the system financially solvent.”
Ramel said he would like to see a national long-term care insurance system so those who work here and move don’t lose their benefits.
The State’s Long-Term Service and Support Trust Commission is working on ways to improve the new program.
State Senator Karen Keizer, D-Des Moines, a member of the committee, said the group plans to make proposals to the Legislature during the session that begins in January.
The goals are to address issues such as allowing workers who live in border states but work in Washington – and those who work in Washington and move – to access benefits.
âWe are working on solutions to these oversights,â Keizer said. “These are really technical fixes.”
Some have raised the question of whether the maximum benefit of $ 36,500 is sufficient to cover a person’s long-term care needs.
Keizer said the benefit is designed to cover home care, “aging in place,” rather than paying for more expensive nursing home care.
She called long-term private insurance a “failed market” which has seen significant rate hikes in recent years.
It is known that rate increases fluctuate between 20% and 79% in a year, according to the Office of the State Insurance Commissioner.
There are other differences between the state program and what you can get on the private market.
Keizer said that one benefit of the state program is that you can use the benefits to pay for a family caregiver.
In addition, those with private plans must continue to pay premiums to receive care. Under the state program, those who retire and no longer contribute to the WA Cares Fund can access benefits at any time, provided they meet the eligibility requirements.
To be eligible, workers must work and contribute to the fund for at least 10 years, with a break of up to five years during this period; or have worked at least 500 hours per year for three of the last six years at the time of claiming benefits.
Regarding concerns about the opt-out process, Keizer said when passing the 2019 legislation, the idea was to allow those who already had private insurance to opt out so they wouldn’t be “double billed”.
During the 2021 legislative session, a Republican-sponsored amendment was passed to extend the time limit for purchasing a private plan from the date the bill came into force on November 1.
âThe opt-in / opt-out amendment has created this incredible ‘binge eating’ and a real concerted effort by the insurance industry to sell plans,â Keizer said.
State Senator Curtis King, R-Yakima, also a member of the long-term care committee, said he was proposing to further extend the deadline for purchasing a private insurance plan.
He agreed with other Republicans that the program should be put on hold so lawmakers can make adjustments.
Without a break, workers will pay payroll tax from January, even if changes are implemented later.
âAt the moment, they couldn’t get that money back, and I don’t think that’s fair,â King said.
Mike Faulk, spokesperson for Inslee’s office, said the governor backed and signed the legislation in 2019. He said the governor’s office was aware of concerns about the program and was monitoring the trust group’s progress for long-term care.
“The governor has stated that he has no intention of delaying the implementation date set by the Legislature and we do not believe he has that authority,” Faulk said.
There may be more important questions about the long-term funding of the program.
At the expected tax rate of 0.58%, the program is expected to run out of money to pay for expected benefits by 2075, according to a December 2020 study commissioned by the state.
The report also describes the impact of different scenarios, such as allowing people who leave the state to access benefits. This scenario would require more income and a higher tax rate.
Keizer said there are ways to better fund the program and allow more to participate. One idea is for the state to invest the long-term care tax funds in private stocks. To do this, the state must pass a constitutional amendment.
A voting measure that would have allowed the state to invest long-term care funds in stocks was rejected by voters in 2020.
You can find more information about the program at wacaresfund.wa.gov.
– Journalist Jacqueline Allison: [emailÂ protected], 360-416-2145, Twitter: @Jacqueline_SVH
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