Opinion: Recap Dec. 10 meeting of commission on long-term care law

Elizabeth Hovde of the Washington Policy Center’ notes include an update of exemption numbers and assurances by the commission that implementation of the law and payroll tax are on track.

Elizabeth Hovde of the Washington Policy Center’ notes include an update of exemption numbers and assurances by the commission that implementation of the law and payroll tax are on track 

Elizabeth Hovde
Washington Policy Center

A few things of import happened in the Long-Term Services and Support Commission Meeting Friday, including an update of exemption numbers and assurances that implementation of the law and payroll tax are on track. 

Here are my notes: 

  • Members at the last commission meeting requested overviews of a cease-and-desist letter and a lawsuit concerning the WA Cares Fund. Bill Moss, the commission’s chair, said that the members will receive that overview in another format. Moss explained: “After talking with counsel … counsel offered to write a briefing memo that we’ll share with all of you, and you should see that in the next couple of weeks.” 
  •  An Employment Security Department (ESD) staff member gave a report that everything was on target regarding self-employed elective coverage available within the WA Cares Act. 
Elizabeth Hovde
Elizabeth Hovde

While W2 workers are automatically subjected to the payroll tax of 58 cents per $100 of income, unless they have private long-term-care insurance (LTCI) and have gone through the state exemption process, self-employed workers need to opt themselves into the WA Cares Fund to be included and taxed.

Staff has been acquired, rules are in place, FAQs continue to be refined and communication plans are being well coordinated between ESD and the Department of Social and Health Services (DSHS), commission members were told. 

When Sen. Curtis King, R-Yakima, asked how many self-employed people were expected to opt into WA Cares, ESD Director Kelly Lindseth said, “This option is similar to the paid family medical leave program, and we have seen very little to minimal uptake in that program and are anticipating very little uptake in January for this program.”

Good to know. That seems to offer more proof that Washingtonians prefer to keep their income for spending, investing and saving in ways that fit their individual needs, rather than have the state tell them how to save it (or give it away, in many cases). This is despite assertions that are being made that 51 percent of the state supports this fund. (This was a finding in a recent push poll conducted by AARP. Read more about that here.) 

If the state’s long-term-care (LTC) program was a good deal for individuals in our state, it seems the self-employed would be clamoring to be taxed for it.

  • Lindseth then went over the number of Washingtonians who have applied for exemptions. That number was 443,649, as of Friday. We also learned that the average hourly wage of people seeking exemptions is $63.60. 
  • Sen. Karen Keiser, D-Des Moines, also remarked that she was shocked to hear from the American Council of Life Insurers that a little more than half of the customers purchasing LTC plans in 2021 were people under 40 years old. “Normally people get around 50 or 55 when they think about long-term care,” she said. Then she explained why I don’t find this under-40 news shocking. People under 40 face being taxed for this fund all of their career years. They have a lot of money to lose, and they have no guarantee that they will ever see a return on their forced investment. 
  • Lindseth assured members that ESD was on track to make good on its November promise that those who submitted exemption requests before Dec. 1 would have their applications processed before tax collection for the WA Cares Fund begins. That does look promising. As of Friday, 90.5 percent of the exemption applications had been processed.
  • State Actuary Matt Smith gave an important reminder that the people opting out of WA Cares not only represent lost revenue to the fund, they also represent removed expenditures. That’s true, however the revenue was pretty solid income for the state fund. The expenditure of $36,500 in lifetime benefits per worker has always been something many will never receive. (I’ll be looking more at opt-out scenarios that were projected when considering this fund’s solvency.)

Unless you pay in for 10 years without a five-year break, you don’t receive the program’s benefit. If you’re retiring soon, no benefit for you. The benefit also lacks portability. Moving out of state some day? Say goodbye to your state-imposed “savings” or “investment.” (I’ve never had a savings account that could be given away to others. I wouldn’t call that a savings account. I’d call that a gamble.) Finally, even if you have paid in 10 years and live in the state when needing LTC, you have to have lost three activities of daily living (ADLs, as they are called in LTC circles) to access the benefit.

  • Smith rightly pointed out that we won’t know the full impact of the exemptions until the end of the opt-out window next December. While you had to have your own LTC plan purchased by Nov. 1 to be eligible for an exemption, you then have until December of 2022 to apply for the exemption. Some people could get to the task later, rather than promptly. Because of this, the fund’s solvency picture, tax rate and benefit payout remain murky. 

Public comment 

The meeting’s public comment time stood out to me. Some LTC industry types gave good cautions and suggestions. Several others expressed the need for more communication about the program from the state. They said people don’t understand what WA Cares can do for them, suggesting that if they did, they would be for it. 

While I agree that communication about the law and the coming payroll tax came all-too late, there has been a robust and one-sided campaign from the state for months now. If the communication provided continues to leave out the drawbacks and limitations of this program, it’s worthless. Creating a false sense of security among Washingtonians will not solve LTC problems.

On another topic, a person made the pitch that WA Cares offers a way to pay family caregivers under certain conditions. I would maintain that this is not an appropriate jobs program for which taxpayers are responsible.

A Service Employees International Union caregiver lamented that she has seen people have to “spend down their assets and savings to qualify for Medicaid or pay out of pocket for care, which absolutely ravages their savings and any future inheritance for their family.” I would argue that Medicaid is a safety net, not an insurance program for long-term care. Abuse of that safety net is part of the problem.

Washingtonians should be planning for and investing in or saving for our possible LTC needs. A state messaging campaign communicating this, rather than a law dictating which way to save, would have been more appropriate.

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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