Opinion: Good news concerning law that creates a state-run, long-term-care program to be funded through workers’ paychecks

Elizabeth Hovde of the Washington Policy Center provides an update on the payroll tax to begin soon to fund the WA Cares Fund

Elizabeth Hovde
Elizabeth Hovde

Elizabeth Hovde
Washington Policy Center

There was some good news today (June 23) coming out of a meeting concerning a 2019 law that creates a state-run, long-term-care program to be funded through workers’ paychecks starting in January. 

In case you’re not in the loop, a payroll tax of 58 cents per $100, with no income cap, begins soon to fund the WA Cares Fund. W2 workers earning $50,000 a year will pay $290 annually, those who make $100,000 will contribute $580 each year and so on. Some workers who pay in for a set number of years will one day be eligible for a lifetime long-term-care benefit of $36,500, should they need long-term care and regardless of how much money they put in during their working years. (Long-term care refers to non-medical care for patients needing assistance with basic daily activities. The state will require that a person needs assistance with three daily-life activities to be eligible for benefits through its program, while private long-term-care plans usually require needing help with just two.)

Elizabeth Hovde of the Washington Policy Center provides an update on the payroll tax to begin soon to fund the WA Cares Fund.

The state web page for the commission working on this new entitlement program admits that the WA Cares Fund creates “a long-term care insurance benefit for all eligible Washington employees that will cover SOME of the cost of long-term services and supports” (emphasis added). Many people know $36,500 will not cover the costs usually associated with long-term care. Many do not.

Meanwhile, the state’s new website — built in part to create “affinity” for the fund — erroneously states that the WA Cares Fund addresses the need and gives Washingtonians peace of mind. “By contributing a small amount from each paycheck while we’re working,” the site says, “we can all pay for long-term care when we need it.” That’s not so. But it is good marketing. 

What the fund should help do is save the state Medicaid dollars by having workers pay for more of the safety net program that some people do end up using for their long-term-care needs. Even low-income workers don’t win with this tax, however, as their paychecks are lowered during their working years for a benefit they might never use — because of need or eligibility. And the inadequate lifetime benefit will put Washingtonians without long-term-care plans right back on Medicaid reliance when the $36,500 is gone. 

But back to the good news: The Long-Term Services and Supports Trust Commission, which consists of legislators, administering agencies and stakeholder representatives, established an eligibility work group to deal with some of the glaringly unfair provisions in the law. We’re glad the commission is hearing and acknowledging the numerous complaints being raised across the state.

Eligibility problems written into the law include vestment periods that will mean money is taken from some soon-to-be retirees who will never qualify for benefits. People who pay in for years but then retire to sunny Arizona will forfeit their benefit, as it is not portable. And workers who live out of the state but work for a Washington employer will be taxed but never eligible for the long-term-care benefit as long as they live out of state. 

There is opt-out language in this law: People with their own, private long-term-care insurance policies will be able to avoid the tax. Read more about the limited, fast approaching opt-out ability here.  

Even a newly formed eligibility work group and possible eligibility changes can’t make this law likeable. Taking away people’s choices about how they spend and save their money isn’t popular.

Washington Policy Center is suggesting lawmakers repeal the law, given its many practical and philosophical problems. They should do what they should have done in the first place: use their bullypuplipts to sound the alarm that some of us need to prepare better for long-term care. It is something a lot of us will need at some point in our lives. Lawmakers now have the attention of many Washington workers and can spread that message.

Elizabeth Hovde is a contributing writer at the Washington Policy Center.

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Doug K
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Doug K
2 months ago

Only Bernie Madoff could have come up with this scheme!

James Wood
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James Wood
8 days ago
Reply to  Doug K

Did you hear they plan to bet all the money in the stock market! And if they run out of cash they are either going to raze the rate or welch on the whole deal!

I think Bernie would approve!

Tina Goeman
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Tina Goeman
2 months ago

There is nothing fair nor equitable about this new tax. It is one that I have never heard of until now! I do not remember voting for this tax! Repeal. Repeal. Repeal!!!!

Linda Siegel
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Linda Siegel
1 month ago
Reply to  Tina Goeman

Your state representatives, the majority Democratic Party reps anyway, passed this new law when nobody was paying attention. Voters need to pay attention; these people don’t know what they’re doing–well they do but hope you’re not looking–and are dangerous.

Roy
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Roy
2 months ago

Only an Inslee plan could take 2 years to implement and be this woefully ineffective.

Kenjo
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Kenjo
1 month ago

Income tax.

Karla Eskro
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Karla Eskro
1 month ago

OMG…..here we go again, with state employees getting screwed with this ‘tax’ if they are over 55 y/o. You have to pay into this plan for a Minimum of 10 years before you can utilize benefits. Private LTC insurance would cost me over $200/mo at my age. How is this fair? This is outright discrimination! So, I get to pay $590/year for something I will not be able to benefit from??? And, oh yes, there’s no cap so I’m sure this 0.58/$100 will be higher next year.

James Wood
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James Wood
8 days ago
Reply to  Karla Eskro

unless we let them bet all the money in the stock, and then they win they are planning on raising it.
Senate Joint Resolution 8212 would allow a portion of funds from the Long-Term Care Trust Act to be invested in stocks and bonds for higher returns.”

The plan boils down to. Get everyone’s money, bet it on the stock market, if nothing goes wrong, you might get to live in a $100/day government run nursing home for 10 months.

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