Washington workers might soon be in for a surprise. Under the WA Cares Fund, employees will begin paying into the state’s long-term care fund in January through a payroll deduction.
The fund was approved two years ago by the Legislature to address a growing concern: the costs of extended health care. According to AARP of Washington, 70 percent of residents 65 and older will require some assistance to live independently. But while the initiative is well-meaning and necessary, there are drawbacks that will require adjustments from lawmakers.
For now, however, the issue is the impact on salaries. Workers will pay a premium of 0.58 percent from their paychecks — $290 a year on a salary of $50,000, $580 a year on a salary of $100,000.
To avoid that deduction, employees may opt to secure private insurance rather than pay into the state fund. Those who wish to opt out must have a long-term plan in place by Nov. 1, and then apply for an exemption to avoid the automatic deduction from their paychecks starting in January.
Residents may apply for the exemption between Oct. 1 of this year and the end of 2022. As Jennifer Hanson of the Associated Industries of the Inland Northwest explained to the Spokane Journal of Business: “It’s a one-time opportunity to be grandfathered out of the program. Once that window closes, it’s closed.”
Private long-term insurance is uncommon. The Associated Press reports that 7 million to 8 million Americans have such care, which can be costly. Medicare offers limited coverage for long-term care, such as for skilled nursing or rehabilitation; Medicaid can cover long-term care, but qualifying requires the spending down of lifetime savings.
The Washington plan will establish a fund to begin payouts in 2025. People who require assistance with daily activities such as bathing or dressing will be eligible, with the fund helping to pay for items such as in-home care and reimbursements to unpaid family caregivers. The lifetime maximum is $36,500, with annual increases to be based on inflation.
As anybody who has dealt with long-term care knows, $36,500 does not go very far. One year of in-home care or an assisted-living facility typically exceeds that amount.
Rep. Nicole Macri, D-Seattle, said of the state program: “It is really structured in a way that is intended to ensure that people can retain their independence and remain in their own homes as long as possible. It will provide low-income and middle-income people access to long-term care that they otherwise would not have or would have to spend their money down into poverty in order to become eligible for Medicaid.”
Diligence will be required to ensure the program is working as advertised. The state has established The Long-Term Services and Supports Trust Commission, a compilation of legislators and stakeholders, to monitor the program. And lawmakers this year updated the provision allowing for private insurance.
Critics such as the Washington Policy Center have pointed out several shortcomings in the law. The vestment period means that money will be taken from soon-to-be retirees who will never qualify for benefits; the benefits are not portable for residents who retire out of state; and out-of-state employees of Washington companies will pay into the fund but not be eligible for benefits.
Those items will require consideration from lawmakers. But the immediate concern for workers is whether or not to pursue private insurance under a deadline that is fast approaching.