OLYMPIA — The Washington state Legislature on Wednesday fast-tracked a delay of the implementation of a long-term care program — and the payroll tax that pays for it — to address solvency concerns and other issues raised about the first-in-the-nation defined benefit.
The bipartisan 46-3 vote in the Democratic-controlled Senate comes a week after the House passed the delay on a 91-6 vote. It now heads to Democratic Gov. Jay Inslee, who is expected to sign the measure Friday.
Because the bill has an emergency clause, it would immediately take effect and delay the payroll tax —which was supposed to start being collected by employers this month — until July 1, 2023 and would refund any premiums that were collected before that date. Collection of the benefit to pay for things like in-home care, home modifications like wheelchair ramps and rides to the doctor would be delayed from Jan. 1, 2025 until July 1, 2026.
Additionally, people born before Jan. 1, 1968 who do not become vested in the program because they do not pay the premium for 10 years could qualify for partial benefits under the bill.
Democratic Senate Majority Leader Andy Billig called the underlying law an important program that’s “going to help Washingtonians age in place, which we know is important for the quality of their life.”
“But with such an important and impactful program and especially one that is so innovative, it makes sense to take the time to get it exactly right,” he said. “We’ve been listening. And what we’ve heard are a lot of good ideas on how to make this program better.”
The lifetime maximum of the benefit is $36,500, with annual increases to be determined based on inflation, and the program is funded by workers, who will pay a premium of .58% of total pay per paycheck.
The benefit is not portable, so people who pay into the program but later move out of state will not be able to access it, and it only covers the taxpayer, not a spouse or dependent.
While a majority of Republicans in both chambers voted for the delay, they did so while arguing that the program should be repealed so that the state could focus on working to make private industry plans more affordable for those who want to buy them.
“The math doesn’t work,” said Republican Sen. John Braun. “This is not political. This is just a good idea that doesn’t work.”
Under an update to the law passed by the Legislature last year, people who wanted to opt out of the state-managed program had to have a private long-term care insurance plan in place before Nov. 1, 2021 and then apply for an exemption.
Modeling by the consulting firm Milliman in December 2020 showed various scenarios of opt-out structures, with the baseline one finding that 3% of wage earners responsible for about 10% of wages in 2022 would opt out at the start of the program. Under that scenario, a premium assessment of .66% would be required to keep the program solvent through 2096.
More than 460,000 people — or approximately 13% of the state’s workforce — have opted out of the program.
Another bill that cleared the Legislature following a 38-11 vote in the Senate Wednesday would allow people who work in Washington but live in other states to opt out, along with spouses or partners of active military members and temporary workers with nonimmigrant visas.
