By The Herald Editorial Board
The old saw, “Legislate in haste; repent at leisure,” doesn’t really apply to WA Cares, the program that is supposed to take a deduction from employee paychecks in Washington and use that to provide a stipend for long-term care when needed in retirement or in the event of extended illness or recovery from injury.
The legislation for the program — the first in the nation of its kind — had been discussed and debated for years by the state Legislature prior to its passage in 2019. That doesn’t mean, however, that they aren’t some fixes needed as the law is set to go into effect. And all the more reason for state residents to understand the program and know what they can expect if they choose to remain in WA Cares or seek to opt out.
And those fixes have prompted calls for a delay in the program’s effective date: Jan. 1, when deductions from paychecks are scheduled to begin.
The question now appears to be whether that delay is even possible.
Gov. Jay Inslee said last week that he would support a delay in the law’s implementation, suggesting that it made sense for state lawmakers to do so, “if the Legislature has a meaningful way to do that.”
At the same time, Democratic leaders in the state Senate requested Inslee take that action in advance of the Legislature’s consideration of amendments to the law while also recognizing the difficulty for some families to absorb the payroll deduction during the pandemic.
But it’s unlikely, given the few weeks between now and the end of the year, that the Legislature would be able to muster lawmakers for a special session. Inslee, Northwest News Network’s Austin Jenkins reported, deferred on whether he had the authority to suspend the law as part of his pandemic emergency orders, but said lawyers were looking into whether he could delay collection of the payroll tax until April.
If not, beginning Jan. 1, workers in Washington state will notice a 58-cent deduction from paychecks for every $100 of gross pay. Those funds go into a special account, invested by the state treasurer, that is intended to pay to those participating up to $36,500 — in essence, $100 a day for a year — for their expenses for long-term care. Those funds are available, beginning in 2025, to those who have worked at least 10 years without a break of more than five years; or three of the last six years; and have worked at least 500 hours each year.
Workers are allowed to opt out of the program if they can show proof they have obtained private long-term care insurance. So far about 395,000 residents have registered with the state to opt out. Those requesting to opt out have until Dec. 31, 2022 to do so but must have had private long-term care insurance in place by Oct. 31, 2021. At the same time, self-employed workers can opt-in to the program.
Among the issues the Legislature could address in its next session:
Older workers who would have to pay into the fund but will not have enough time before retirement to be vested in the program and collect the benefit.
Those who work in the state but live across the border, such as in Idaho, Oregon and British Columbia, who even though they are paying in are not eligible to collect the benefit.
Allowing those temporarily in the state, such as military spouses, some disabled veterans and those working on non-immigrant visas, to opt out of the program without having to show proof of long-term care insurance.
And how the state invests the money in the WA Cares trust fund. Voters in the last election, rejected Senate Joint Resolution 8212, which would have allowed the state’s investment board to make investments with better returns than currently allowed. Though better investments, the program could avoid future increases in the payroll deduction or a cut in benefits.
Provided lawmakers can provide some flexibility and resolution to those issues, WA Cares needs to get up and running as soon as possible, both for the financial health of Washington residents and the state and its taxpayers.
About 7 in 10 Americans, 65 and older, will need long-term care services during their lives, according to a 2019 report by the U.S. Department of Health and Human Services. The median retirement savings for seniors is about $136,000, but those over the age of 65 can expect average costs of $260,000 over the course of their lives for care services. Very few people carry insurance to provide that care, and Medicare doesn’t pay for most care services; and Medicaid only comes into effect after a person’s savings have been depleted to the poverty level.
For many, a family member is called upon to provide in-home care, but that can mean leaving a job and minimizing or eating into their own savings for retirement.
Currently, about 850,000 in Washington state are providing unpaid care to a family member.
Among the provisions in WA Cares, family members can be compensated through the benefit for the care they provide.
While the benefit — at $36,500, including future adjustments for inflation — won’t meet the full costs of care for many, the amount is not insignificant for most families and will supplement needs.
And for most, what they will pay in is likely to be a fraction of the full benefit, even for those just starting careers. A worker making $50,000 would pay about $5.58 a week into the trust fund, about $290 for the year. That same worker beginning the program next year at age 30 and working until age 65, would pay about $10,150 over her or his career.
There’s a significant benefit for the state and its taxpayers, as well: The state, which is currently paying $2.1 billion each year for Medicaid-funded long-term care, without WA Cares could expect to see that cost nearly double to more than $4 billion by 2040 as the state’s elderly population grows. In its first year, the Long Term Care Trust Act could reduce the state’s Medicaid costs by $19 million. At the peak of the wave of baby boomers needing long-term care by 2050, the trust act is estimated to save state taxpayers $440 million each year.
News about the start of the program’s deductions has provided an opportunity for those unfamiliar with WA Cares to learn more and consider their options. As well, there’s an window for state lawmakers to do some fine tuning.
But WA Cares needs to begin collecting funds as soon as possible to avoid a delay in benefits for many.
The costs or long-term care aren’t getting any cheaper; and we’re not getting any younger.
Correction: An earlier version of the above editorial misstated the requirements and deadlines for opting out. While exemption applications will be accepted through Dec. 31, 2022, a private long-term care policy must have been in place prior to Nov. 1, 2021.