Update: Washington State’s Pioneering LTC Coverage Plan is Being Re-Tooled, with Payroll Deductions Coming Next Year
Remember the WA Cares Fund? If you live in Washington State, chances are you do: it marked the first time that any state in the U.S. decided to launch a state-sponsored long-term care assistance plan. As this official website explains, WA Cares was signed into law in 2019 and was supposed to launch this year with a mandatory payroll tax to generate the money to fund the plan. Once all the pieces were in place, qualifying state residents would have just over $36,000 available to help pay for long-term care – not much, but enough to make a difference, advocates argued.
But the launch date was delayed, as WA Cares was hammered by a blizzard of unanswered questions. Payroll taxes of 58 cents per $100 earned were put on hold as elements of the plan were retooled by the state legislature. Now WA Cares is back, with payroll deductions slated to begin in the middle of 2023. As this Kaiser Health News article suggests, many states are watching with anticipation as the revamped program rolls out. We wanted to update you on this important development. Reporter Michelle Andrews penned the Kaiser story.
State Aid Would Have Made a Big Difference
Andrews spotlights 71-year-old Patricia Keys of Vancouver, Washington. Because of a stroke, Keys needs help with many everyday activities, such as dressing and bathing. Her daughter Christina, lives nearby and serves as her mom’s evening caregiver. On top of that, the daughter pays about $3,000 a month for help from other caregivers.
“Christina Keys, 53, was thrilled three years ago when Washington state passed a first-in-the-nation law that created a long-term care benefit for residents who paid into a state fund,” Andrews writes. “She hoped it would be a resource for others facing similar challenges.”
As noted above, the program has a lifetime limit of $36,500. In spite of the relatively modest amount, WA Cares “would have made a big difference during the first year after her mom’s stroke, Keys said. Her mom needed a ramp built and other modifications made to her house, as well as a wheelchair and hospital bed. The extra money might also have made it easier for Keys to hire caregivers. Instead, she gave up her technology sales job to look after her mom.”
Keys speaks from frustrating first-hand experience about the colossal burden of caregiving. “People are under this cloud of delusion that between your insurance and your retirement [income] you’re going to be fine,” she told Kaiser’s Andres. “They don’t understand all the things that insurance doesn’t cover.”
Program Put on Hold While Lawmakers Tweak the Rules
2022 was expected to be the year the plan would begin with payroll taxes being collected from all employees who don’t qualify for a waiver (more on that in a moment). “But relief for Washington families will have to wait,” says Andrews. “The WA Cares Fund, which was set to begin collecting money for the program with a mandatory payroll tax on workers in January, has been delayed while lawmakers made adjustments during the current legislative session.”
Instead of beginning last January, payroll deductions will start in July 2023, and benefits will become available in July 2026. The program and its related issues are attracting national attention. “Other states are watching Washington closely as they weigh offering coverage for their own residents,” Kaiser reports. California, Illinois and Michigan are among the states considering LTC plans of their own.
In Spite of Adjustments, Questions Remain
Needless to say, ambitious programs like WA Cares are controversial. “Supporters of the Washington program say it just needed fine-tuning and note that social programs like Medicare and the Affordable Care Act also underwent tweaking,” the Kaiser article states. “The program’s long-term solvency, however, is in doubt and the cost to workers who buy into the program is in question.”
Still, the need for relief is very real. “What’s not in doubt,” Andrews writes, “is that it is critically important to address long-term care needs.” According to HHS, about 70 percent of people who turn 65 will require some type of long-term care services, Kaiser states. “Many will need help such as an at-home assistant, while others could face a stay in a nursing home, which on average costs more than $90,000 a year.”
But the reality is that few can cover the expense on their own. “Medicare’s coverage is very limited, while Medicaid generally requires people to impoverish themselves before it picks up the tab,” says Andrews. “Private long-term care insurance policies are unaffordable for most people.” This leaves many people dependent on unpaid family members to help with medical and personal care. It’s a difficult burden to bear.
Demographics Create a Tsunami of Need
Moreover, the demographic trend lines, says Kaiser, look grim. “The problem is getting much worse,” writes Andrews. “The number of people 85 and older is projected to more than double within the next 20 years, while the number of Americans living with Alzheimer’s disease and related dementias is expected to double as well, to 13 million.” Already-strapped families will find fewer resources to meet rising costs.
Apart from Medicaid and the Veterans Administration, government programs to meet long-term care costs have never gotten off the ground. Kaiser describes one program, called the Community Living Assistance Services and Supports Act (the “CLASS Act”), originally passed as part of the Affordable Care Act. The law “created a voluntary long-term care buy-in program,” Kaiser explains, “but it was never implemented because of concerns it wouldn’t be financially sound. Since then, policymakers in Washington, D.C., have had little appetite for addressing the problem.”
“We don’t have a solution at the federal level, so states are taking it on themselves to experiment with solutions,” California consultant Bonnie Burns told Kaiser’s Andrews. Burns, an expert on long-term care, worked with Washington State lawmakers help develop a supplemental long-term care insurance product to be offered alongside the state benefit, which is intended to cover a year’s worth of home care at 20 hours a week.
Middle-Class Families Face the Biggest Challenges
As the Kaiser article points out, the families most in need of care are those in the middle class. “Although wealthy people likely can afford to pay for their care and the poorest families qualify for Medicaid, middle-class families might burn through their savings trying to cover such bills,” says Andrews. That’s why advocates of WA Cares support the program.
“It doesn’t solve all the problems, but with a modest premium and a modest benefit it eases the problem for families,” one official said. Having the extra cushion could give some families time to develop a plan for long-term care needs after their benefits expire, he added.
Mandatory Tax Had Many Seeking to Opt Out
“Although the law passed in 2019, it remained below many people’s radars until the mandatory payroll deduction approached,” Kaiser observed. The tax of 58 cents per $100 earned wasn’t overly burdensome – for someone earning $52,000 annually, the annual hit would have been about $302. Still, says the article, “As people realized they were about to have to start paying into the program, some pushed back.”
The chief way to qualify for an exemption was to prove that a worker already had private long-term care insurance. As a result, “thousands of people scrambled for that coverage before the November 1, 2021, opt-out deadline,” Andrews writes. As one adviser, Gary Brooks of Gig Harbor, told Kaiser, “We did have a good number of higher-earning, younger folks who wanted to buy a policy.”
But a host of other people also raised objections, says the article, because they would have to pay into the system but wouldn’t benefit. “These included people who work in Washington but live in a neighboring state, the spouses of service members who are unlikely to make Washington a permanent home, people planning to retire before the three years needed to qualify for benefits, and some workers on temporary visas,” Andrews explains. “The commission overseeing the long-term care program has estimated that the number of people from these groups eligible to opt out is about 264,000.”
“In January, Gov. Jay Inslee signed legislation that addressed many of these issues. It allows certain groups to opt out and people nearing retirement to receive partial benefits based on the number of years they paid into the program.” The situation for those who pay into WA Cares but retire elsewhere hasn’t yet been resolved. According to state statistics, 473,000 workers have already opted out of the program to date, and that number will go higher.
WA Cares May Be on Shaky Fiscal Ground
Considering all those eligible to opt out, say WA Cares officials, about 3.1 million workers will begin paying into the program next year, out of a total of 3.6 million. That has some people worried. “Some critics are concerned that allowing more people to opt out of the program puts it on increasingly precarious financial footing,” says the article.
As one critic, Seattle attorney Richard Birmingham, put it, “The solvency issue just gets greater and greater. Any change they make further increases the cost.” Birmingham, a partner at the Davis Wright Tremaine law firm in Seattle, is representing employers and workers in a class-action lawsuit that claims the law violates federal and state statutes governing employee benefit plans.
Meanwhile, program boosters remain unfazed by the delays. “We know that as the first state to do this that it may not be perfect going out of the gate,” senior advocate Jessica Gomez told Kaiser. “It may have to be fixed, but we’ll fix the problems and go forward.”
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(originally reported at www.khn.org)