Opinion: State factsheet not helpful for long-term-care crisis

Elizabeth Hovde says state lawmakers got it wrong with this program, bringing its residents a payroll tax that hurts workers

Elizabeth Hovde
Washington Policy Center

A factsheet from the state about WA Cares, the state’s new program for a long-term-care benefit that many people will never be eligible to receive, is misleading and irresponsible. It could add to the financial crisis the state sees headed its way when it comes to helping people with their long-term care.

The state says with rose-colored glasses, “WA Cares Fund helps ensure that all of us can afford long-term care when we need it.” Except that It won’t.

Why? Let’s assume “all of us” means all the workers who pay the payroll tax of 58 cents for every $100 they earn. The payroll tax must be paid for 10 or more years without a break of five or more years. Caregivers who don’t have formal work won’t achieve the lifetime benefit, nor will those who cycle in and out of the formal workforce.

The program is also not for people who can’t meet a number of qualifications. Leading the “that’s not fair” list is the requirement that you live in Washington state when you need services that qualify, regardless of how many thousands of dollars you paid into WA Cares over your working years. So if you retire in a state with more sun or somewhere else in the nation where your children live, you won’t be eligible for WA Cares’ lifetime benefit.

Speaking of the lifetime benefit, it is $36,500 in today’s dollars. That is not enough for most people’s long-term care and makes the claim that this “helps ensure that all of us can afford long-term care when we need it” debatable.

Next up, the factsheet says that the new state-imposed program is unlike private long-term-care insurance (LTCI), as it doesn’t require you to pay in after you retire and that you only contribute to WA Cares while you work.

There were long-term-care-insurance products that didn’t require you to pay in after you retire, even in a state that limits which insurance products can be sold. Quality LTCI can cost more than the new state payroll tax will cost an individual (though in some cases, for some ages, policies sold didn’t), but the benefit accompanying the private offerings is also usually substantially higher. Some LTCI products even come with a survivor benefit if you don’t need or use long-term care. WA Cares does not. Its benefit is use-it-or-lose-it.

All this comparative talk the state likes to do aside, choices about planning for possible long-term care should have never been between private LTCI and the state program. Many ways exist to save, invest and plan for possible long-term care.

This last factsheet message isn’t misleading or fact-challenged, but it shows how misguided and reckless WA Cares is. The state actually encourages Washingtonians to be government dependent instead of self-sufficient. “Use your WA Cares benefits – not your 401k or life savings – to cover your long-term care needs,” the factsheet says.

Encouraging people not to use their savings for life needs and to instead rely on other taxpayers — some with far fewer resources — is irresponsible and won’t bring the state the most desirable result: people saving and planning for possible long-term care, especially when $36,500 won’t likely be enough for an individual. A person will often need to rely on their own savings or Medicaid, which is supposed to be a safety net for people in need.

State lawmakers got it wrong with this program, bringing its residents a payroll tax that hurts workers. State agencies should try to get the messaging right.

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.

Elizabeth Hovde says state lawmakers got it wrong with this program, bringing its residents a payroll tax that hurts workers

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