Washington State Long-Term Care Insurance Program to Launch Saturday

Long-term care planners are about to get a better idea of how a state long-term care insurance program might work when Washington state’s new WA Cares Fund program begins collecting premiums from most of the state’s workers.

Starting Saturday, employers are supposed to begin paying for WA Cares by applying a 0.58% payroll tax to the paychecks of workers who did not have private long-term care insurance arrangements in place by Nov. 1, 2021.

Managers expect the program to start paying up to $36,500 in benefits to participants who need care starting July 1, 2026.

The program could serve as a model for California, where a Long Term Care Insurance Task Force is developing recommendations for its own public LTC program.

What It Means

The start of the WA Cares program will give you a chance to talk to clients about long-term care planning, and it will show clients that state officials agree that the need to pay for LTC services is one of the biggest threats facing people today.

The Background

Medicaid — a program funded by state governments and the federal government — pays for nursing home care for people who meet state eligibility criteria.

Medicaid will account for about $58 billion of the $201 billion in U.S. spending on nursing home care and similar types of facility care this year, according to projections reported by the Medicare Office of the Actuary.

States are looking for new ways to encourage residents to plan ahead for long-term care costs because of concerns about the effect of nursing home benefits on state Medicaid program budgets and worries about residents’ access to care.

Because Medicaid programs in most states pay far less than the amount nursing homes need to provide care, getting someone who will pay for care with Medicaid into a high-quality facility in a preferred location can be difficult.

WA Cares

WA Cares officials say they expect about 70% of state residents to eventually need some long-term care.

Workers in the program will be eligible for benefits if they have contributed for at least 10 years, or if they have contributed during three of the last six years and have a sudden need for care.

Participants born before 1968 can earn partial benefits for each year they work and contribute.

Concerns

Some critics of the program object to the principle of government agencies starting new long-term care benefits programs.

Stephen Moses, president of the Center for Long-Term Care Reform — which is based in Seattle — has long argued that Medicaid and other government programs should focus on helping people who are poor, rather than encouraging middle-income and high-income people to avoid planning for their own, easy-to-foresee care costs.

Moses argued in a recent commentary that WA Cares “turns LTC into a social insurance free lunch scheme,” and he predicts that, given the difficulty of running LTC benefits programs, the program is likely to become insolvent.

Washington state Rep. Mike Steele, a Republican who opposes the program, says one problem is that the payroll tax used to fund the program may pose a burden for low-income workers.

Another concern is that the program may give participants a false sense of security, he said.

“The maximum benefit of $36,500 is wholly inadequate and may give a false sense of security about future long-term care needs,” Steele said.

He also worries about the flexibility of the benefits. Program rules now require the future beneficiaries to use providers that have registered with WA Cares.

“Only providers that meet minimum qualifications will be registered,” according to WA Cares.

Steele suggested that the program’s provider network may not align with the benefits users’ needs.

A Private LTC Program Provider’s Take

Reframe Financial is trying to help people plan for long-term care by using cash-value life insurance from Federal Life and reinsurance for Federal Life from Swiss Re to provide an off-the-shelf LTC financing package.

Loida Abraham, the company’s chief commercial officer, said in an interview that she believes that the Washington state program is already influencing how other states approach LTC financing.

She’s hoping that Washington state and other states will provide an ongoing opportunity for companies like Reframe to provide an alternative to the public LTC insurance program.

Workers are paying more attention, both because of news about public program efforts and what they hear about the cost of care from their own friends and relatives, she said.

For employers, “rolling out products that provide long-term care coverage can be a strategy to boost recruitment and retention,” Abraham said.

Employers in Seattle are supposed to start deducting public long-term care insurance program premiums from workers’ pay starting Saturday. Credit: Shutterstock