Beginning July 1, most workers in Washington will see smaller paychecks as the WA Cares Fund goes into effect. Although benefits from the nascent fund will not be available until 2026, lawmakers must keep a close watch on its growth and must ensure that everything is going according to plan.
Since being approved by the Legislature in 2019, the WA Cares Fund has rested in the category of a good idea beset by poor execution. The idea: Provide financial assistance for longtime Washington residents who need long-term care. The execution: The payroll tax that was scheduled to begin in January 2022 was delayed until mid-2023 as legislators worked to fix problems that should have been foreseeable.
Now, as the tax shows up on pay stubs in the coming weeks, many Washington workers likely will question the payroll deduction and where it is going.
The WA Cares deduction will take 58 cents for every $100 of gross pay for workers throughout the state. For somebody making the state’s median wage of $50,100 a year, that works out to about $24 a month.
That money will go into a fund to help with long-term care costs for seniors and those with disabilities. Taxpayers who have contributed to the fund for 10 years will be eligible for up to $36,500 (in current dollars) to help with in-home care, residential facility care, medical equipment, respite for family care providers and home modifications such as wheelchair ramps.
It is a first-of-its kind program that recognizes the growing need and increasing costs associated with long-term care.
Analyses estimate that about 70 percent of Americans will require long-term care; those turning 65 this year will incur average long-term costs of $121,000 over the rest of their lives. Few people carry insurance covering such care, and Medicare does not pay for most services. Medicaid is available only if a person has depleted their savings to the poverty level.
That leads to questions about whether a maximum of $36,500 will be adequate (the amount will be adjusted for inflation in coming years).
As Ben Veghte, director of the WA Cares program, told The Columbian: “Private insurance is a great product for high earners, because it’s very expensive. If you can afford it, and you can afford to pay until the day you die or need care, that’s a good product for you. It’s not always a great product for the middle class.”
Indeed, the program can make a difference. But problems with the initial legislation and the need for a delay are causes for concern.
For example, Washington workers who live in another state and military spouses were originally subject to the tax although they likely would not derive benefits; nonresidents may not claim benefits. For another example, Native American tribes were not included in the legislation. And for another, some workers might pay into the program for several years but retire before becoming eligible for benefits.
Shortly before the program was to be implemented, Gov. Jay Inslee called for a delay in the tax collection. The Legislature then passed a series of reforms, increased opt-out options and pushed the start date to mid-2023. The fact that it took lawmakers two years to recognize the flaws is not encouraging.
Last fall, an analysis by the Office of the State Actuary projected that the WA Cares Fund will be solvent through at least 2098. That is a positive sign, but the system will warrant close scrutiny from lawmakers, state executives and taxpayers.