Opinion: Update on the long-term-care payroll tax

Elizabeth Hovde of the Washington Policy Center maintains repeal is the only real fix for this long-term-care mess.

Elizabeth Hovde of the Washington Policy Center maintains repeal is the only real fix for this long-term-care mess

Elizabeth Hovde
Washington Policy Center

As predicted, there was a whirlwind of activity in the first few weeks of the legislative session related to the WA Cares Fund. That’s the name of a new social program the state’s legislative majority created in 2019 — and that voters said “no” to in an advisory vote. It will soon bring workers in our state a new payroll tax of 58 cents for every $100 of wages.

Elizabeth Hovde
Elizabeth Hovde

A delay of the long-term-care law that mandates the program and its tax was secured in the passage of House Bill 1732. Gov. Jay Inslee and other Democratic leaders requested the delay. At the last minute, they finally acknowledged that the long-term-care law had many flaws and that they should stall the tax collection that was supposed to begin in January. Many of the law’s flaws remain, of course. Delay didn’t fix them. And after the delay vote, discussion about “fixes” for WA Cares largely stopped in a busy legislative session that has now ended. 

The discussion needs to start back up again soon. The long-term-care law was only delayed until July of 2023, and that doesn’t change how inappropriate the government-imposed program is. While some lawmakers and state agencies are trying to market WA Cares as a competitive and compassionate long-term-care insurance plan, it’s no such thing. It creates a regressive tax that, in some cases, will have low-income workers financing the long-term-care needs of people with more resources. And it doesn’t compete well with plans in the private market, offering workers false hope that their long-term care, should they need it, will be covered.  

Delay also doesn’t deal with the program’s long-term insolvency. A new actuarial report is required, in part because a landslide of Washingtonians — 476,878 of them as of March 14 — applied to opt-out of the program. Even more exemptions are expected, given new categories of people who just became eligible to opt-out. House Bill 1733, passed along with the delay bill, allows Washington workers who live out of state, certain veterans with disabilities, military spouses and workers who hold non-immigrant visas to apply for an exemption. 

That’s good news for those narrow groups. It’s bad news for people stuck in the program being sold a false bill of goods. Insolvency concerns have already brought talk of increasing the program’s tax or decreasing its lifetime benefit.

Repeal is rightly on the tongues of some lawmakers and was the topic of a handful of legislative efforts this past session. Those efforts, however, went largely ignored. That’s unfortunate: Repeal is the only real fix for this long-term-care mess that offers Washingtonians false security and takes away even more of a worker’s income for a benefit many will never see.

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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Rhonda Gibson
Rhonda Gibson
10 months ago

I agree this long term tax needs to be repealed. I use to work in long term insurance. This Wa Cares would not pay more than $100 a day which in no way covers long term care. Most insurance doesn’t cover it all either although it can help.

Craig Andersen
Craig Andersen
10 months ago

Instead of a tax, the feds should provide a tax credit for those who invest in long-term care.

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