Elizabeth Hovde of the Washington Policy Center explains how we’ll have to wait and see who actually gets to join the nearly 500,000 people who escaped the LTC payroll tax by having private insurance

Elizabeth Hovde
Washington Policy Center

Right now, the only people who can opt out of the WA Cares Fund, a new long-term-care (LTC) program that is supposed to be fueled by a payroll tax on workers, are those who had private long-term-care insurance (LTCI) purchased by Nov. 1, 2021. Their numbers are below.

Our 2019 study on the then-proposed law found that between 2022 and 2053, taxpayers would pay more than $30 billion for the state to realize net savings of just over $1.2 billion. We look forward to a new actuarial report that will be featured at a Nov. 10 Long-Term Services and Supports Trust Commission meeting for another look. (The name of the commission overseeing this law is as long as the bill is high).

The return on investment will still be awful and the program will still have solvency concerns before it even begins. One needs to look no further than the money-borrowing Paid Family and Medical Leave payroll tax to see how this is going to go.

The bad return is joined by disingenuous marketing that tells workers to have “peace of mind” that the WA Cares program has their backs. It won’t, necessarily.

Many people will not benefit after years of paying 58 cents for every $100 they make. The payroll tax is especially cruel to low-income workers who need their wages going to bills they have today, not bills that they might not have someday. In some cases, their money will be going to wealthier people who may or may not need help with long-term care. No one should have “peace of mind.”

Even if you qualify for Wa Cares’ lifetime benefit of $36,500, it will likely be inadequate for your long-term-care needs.

The tax, which begins in July of 2023, if it isn’t stopped, is nothing more than a taxpayer-funded jobs program and a new tax stream for the state. And I don’t think taking money away from workers, some of which would have qualified for another safety net used for long-term care, Medicaid, is going to go well. Lawmakers need to stop building safety nets for people in need and those not in need.

In January, more people — some military members and military spouses, non-immigrant visa holders and workers who live outside of Washington state — can individually apply for exemption from the tax, as those groups can never expect to benefit from WA Cares. I expect those who know about their ability to opt out will. The exemptions, however, to be true exemptions, should have been automatic. They’re not. They’re “voluntary.”

I just heard from the Employment Security Department today that as it makes rules for the law allowing for more exemption groups, they cannot adjust the law in such a way that an automatic exemption is granted. Unless the law is amended by the Legislature — again — these people are stuck with voluntary exemptions — and the feel-good tweak to the law looks like it was mostly for show. Read more about my concern for our agricultural workers here.

We’ll have to wait and see who actually gets to join the nearly 500,000 people who escaped the LTC payroll tax by having private insurance.

As of Sept. 15, the Employment Security Department reports the following WA Cares exemption numbers:

Total opt-out requests submitted: 479,100
Total opt-out requests approved: 475,436
Total opt-out requests processed: 479,038
Applications processed as a percentage of total: 99.99%

The window remains open for the rest of the year for these LTCI policyholders. See application instructions here.

Elizabeth Hovde is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is a Clark County resident.

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