Washington lawmakers this year made some necessary changes to the WA Cares fund that was scheduled to begin in January. But more work is needed before the now-delayed program is implemented in July 2023.
WA Cares was passed in 2019 and is designed to help Washington residents with the costs of long-term care. The program will be funded by a payroll tax of 58 cents for every $100 of gross pay — $290 annually for a worker who makes $50,000. That money will go into an account invested by the state treasurer.
The fund will provide a benefit of up to $36,500 for seniors and those with disabilities, defraying some of the costs of long-term care. Benefits will be available to those who have worked at least 10 years in the state without a break of more than five years — or three of the previous six years — and have worked at least 500 hours each year.
As the expected implementation of WA Cares drew near, complaints about its shortcomings increased. Lawmakers early in the session delayed the program’s start date and later addressed some of the concerns.
Changes to the program include allowing partial benefits for those paying into WA Cares but nearing retirement; under the original rules, they would not be vested in the plan. Another change allows military personnel and spouses, as well as those who work outside Washington but pay taxes in the state, to opt out of the program.
More than 400,000 Washington residents opted out of the program, demonstrating that they had private long-term care insurance. But that became more difficult as insurance carriers stopped offering policies in this state because of the coming program.
Given the problems, it is clear that the original plan was not well conceived and that delay was necessary. But that does not mitigate the need for long-term care and the need for state government to be involved.
According to a 2019 report by the U.S. Department of Health and Human Services, about 7 in 10 Americans ages 65 and older will require long-term care. This might include residential care or special provisions such as in-home care or wheelchair accessibility for them to remain in their homes.
The median retirement savings for seniors is about $136,000, but those over 65 can expect average costs of $260,000 for long-term assistance. Medicare covers little of that, and Medicaid becomes applicable only after a person’s savings have been depleted to the poverty level.
Washington’s plan, with a cap of $36,500 to be adjusted for inflation, will not completely cover those expenses. It is not meant to; it is designed to offer assistance that can help people stay in their homes longer or allow a family member to leave work and provide full-time care for a time.
An actuarial report requested by the state determined that the program will be able to cover benefits through 2075, but sustainability can be enhanced. The state constitution allows the investment of public money only in secure, low-yield funds. Previous amendments have allowed for the investment of other funds, such as public employee pensions and state workers’ compensation, to be managed by the state investment board. This has resulted in higher yields that make those funds more solvent.
In addition, further tweaks should allow anybody who pays into the system to be eligible for benefits, even if they have moved elsewhere.
WA Cares is a well-meaning plan that was poorly designed. But it can be fixed to benefit all taxpayers and their families.
