Editorial: Needed fixes made for long-term care program

By The Herald Editorial Board

Among the early accomplishments of the recently completed session of the state Legislature were reforms to the state’s long-term care benefit program — dubbed WA Cares — as well as an 18-month delay to its implementation.

That’s meant that the payroll deductions for almost all workers in the state — 58 cents for every $100 of gross pay — which was to have started at the first of this year, are now delayed until July 2023. That’s also delayed the availability of benefits for a year and half, but the pause allowed state lawmakers to make some needed changes to the program and for workers in the state to get a better understanding of WA Cares and what it could mean for them later in life.

The payroll tax, when it begins, will go into a special account invested by the state treasurer. That fund will provide a benefit to those participating up to $36,500 — in effect, up to $100 a day for a year — for expenses for long-term care for seniors and those with disabilities. Those funds would be available 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.

One of the changes adopted this session by the Legislature expands the program to allow partial benefits to those paying into the program and nearing retirement and who would not have been vested under the original rules.

The other legislative change allows those in the military and their spouses and those who work out-of-state to opt out of the program.

First adopted in 2019, the program also allowed workers to opt out of the payroll deduction and the benefit if they had obtained private long-term care insurance as of Oct. 31, 2021. More than 475,000 workers — of about 3.6 million workers in the state — went that route.

That’s a significant number bailing on the program and points to unfamiliarity and uncertainty about a benefit program that while discussed in other states was first to be adopted in Washington.

However, there should be no doubt that many Americans are unprepared for the costs of long-term care.

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.

Among the criticisms before and since passage was that the benefit provided by WA Cares isn’t enough to cover total costs of long-term care. It wasn’t meant to; the intention, studied by state lawmakers and the state Department of Social and Health Services for years prior to the law’s passage, was to provide a helpful benefit through a reasonable payroll deduction. While the benefit’s $36,500 — which will be adjusted for inflation — isn’t intended to cover all costs most will experience, it can provide a base level of care many will need.

For example, the benefit is expected to support up to five years of respite care for those provided care by unpaid family members, one year for part-time in-home care, eight to 12 months of assisted living care, six to eight months of adult family home care or four to eight months of care in a skilled nursing facility. The benefit also can be used to pay for equipment or modifications, such as a wheelchair ramp, that can keep people in their homes longer.

There’s also concern — considering those who have opted out of WA Cares — that the program won’t be financially sustainable over the long term. However, an actuarial report requested by the state found that at the current tax rate, the program will be able to pay 100 percent of benefits through 2075 and — assuming no adjustments are made — 85 percent of benefits through 2096, when those born this year will be about 10 years into retirement.

That sustainability can be further strengthened if the Legislature makes another reform in the next few years. Currently, the state’s constitution allows for investment of public funds that offer returns of only about 2 percent. But previous amendments to the state constitution have allowed for the state’s public employees pension fund, its workers’ compensation fund and others to be managed by the state investment board in stocks, bonds and other funds that can provide better returns on investment. Previously, the investment board has has achieved an average annual investment return of 8.8 percent, regardless of bear and bull markets.

Another consideration for taxpayers is what WA Cares can mean for the state’s share of Medicaid costs in the future. Analysis estimates that the benefits provided by WA Cares will reduce annual Medicaid spending for the state and federal government by $70 million in its first year, by $140 million annually by 2035 and by $410 million by 2050. Over the next 75 years, the total reduction in Medicaid spending is estimated at $18 billion.

The reforms adopted by the Legislature will provide more fairness for many while allowing a needed benefit — and ultimately a break for taxpayers — to proceed.