The long-term-care crisis headed states’ ways is a real issue. The United States has a graying population, and many people will require assistance with the activities of daily life at some point. Someone turning age 65 today has almost a 70 percent chance of needing some type of long-term services and support in their remaining years. There are also many people using state-federal Medicaid programs for long-term care needs, and too few people plan and save for the possible life event.
In 2019, the Legislature passed a law to create a new payroll tax and impose a mandatory long-term-care (LTC) entitlement program on Washington state workers. Governor Jay Inslee signed House Bill 1087 on May 13 of that year. The program the bill created was named the WA Cares Fund. A misguided payroll tax for WA Cares was initially planned for collection starting January 1, 2022.
As seen with other state-imposed programs funded by payroll taxes, tax rates tend to increase over time to keep programs viable, and there has been considerable debate as to whether WA Cares is unsustainable before it even begins.
Public opposition and glaringly unfair details of the long-term-care law caused the governor to ask the Legislature to delay the tax collection until after the 2022 election and make some changes to the law.
Lawmakers agreed and implemented an 18-month delay until July 1, 2023, after hundreds of thousands of people sought exemption from WA Cares and the payroll tax created to fund it. The Employment Security Department reports a total of 484,704 people applied for exemption from WA Cares during an exemption window that existed for people with private long-term-care insurance. Now that window has closed, but more exemptions are expected, as lawmakers created additional exemption categories for workers who don’t live in our state, people on non-immigrant visas, some disabled veterans and military spouses. A possible partial benefit for some near-retirees was also afforded. These changes were made in House Bills 1732 and 1733. Both pieces of legislation were fast-tracked in the first weeks of the 2022 legislative session, and the governor signed the bills into law on Jan. 27, 2022.
The new payroll tax will shift some of Medicaid’s future long-term-care costs onto the backs of today’s workers. In July, most workers in the state will start paying 58 cents on every $100 they earn with hopes that, if someday they need long-term-care services, they might qualify for money that can be used for those services. The regressive nature of the tax means some low-income workers will be forced to hand over a portion of their income to benefit others with higher incomes and who may not actually need assistance. Still other workers won’t qualify for the benefit regardless of how much they pay.
Telling people this fund brings them “peace of mind,” as the state is doing, is not only false, it’s dangerous. Proper planning for this potential life need requires a realistic view of expenses and resources.
The state-imposed program will not give workers the financial security being promised, as not all will qualify for WA Cares funds and an inadequate lifetime benefit of $36,500 won’t be enough for most people’s care, even if they do qualify. Someone assuming they can rest easy because of this state benefit could easily find themselves without resources when the real need arises.
Service Employees International Union 775, which represents 45,000 long-term-care workers, lobbied hard for and supports this law, which includes a training requirement for the use of WA Cares funds for caregivers. SEIU could end up with an exclusive contract for that training.
The long-term-care law has proved deeply unpopular, and its many shortcomings have been exposed, causing legislators to delay implementation. Washington state voters recommended its repeal in Washington Advisory Vote 20, with a vote of nearly 63 percent.
Some lawmakers are responding to this sustained and overwhelming constituent feedback and have proposed repealing the program. House Bill 1011 would repeal HB 1087, which created WA Cares and its payroll tax of 58 cents for every $100 a worker earns. Repeal is the best policy. Instead of imposing this program and tax on Washington workers, lawmakers should get rid of them, continue to create awareness of the long-term-care problem, encourage savings, protect Medicaid, cut the tax on insurance products and remove limits on purchasing those products.
Repeal might seem like a step backward for those concerned about long-term-care needs, but when you’re headed in the wrong direction, the best way to start advancing again is to turn around.