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Washington is about to launch a program that could become a national model for long-term coverage. With less than three months remaining, the skeptics aren't convinced.
The WA Cares Fund will fund the program through a payroll premium (some refer to it as a tax), of 58c per $100 earned. This will begin appearing on Washington workers' paychecks in January 2022. This is unless they choose to opt out.
The thing is, to opt out you must first have your private long-term care insurance in place by Nov. 1. This can be difficult and expensive.
Long-term care costs
The WA Cares Fund will offer eligible workers up $36,500 in care at home and in long-term-care facilities starting in 2025. The lifetime cap of $36,500 is not adjustable and will increase with inflation. However, those who have paid long-term care costs know that $36,500 is not enough.
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A Genworth 2020 survey, a policy provider and analyst in the industry, found that Washington's average annual cost for in-home care is $72,000. A room in an assisted living facility costs $69,000 per year, while a room at a nursing home is about $123,000.
Director of WA Cares Fund Ben Veghte says that the plan wasn't meant to cover the entire cost of long-term healthcare. It is intended to supplement recipients' personal savings, Medicaid, and other assets.
Veghte states that the status quo in long-term care management is "broken." "Most people cannot afford to plan for this, even if they wish to."
Plan for my future and my family
What could individual savings be worth? Let's take me, a 28 year-old male, as an illustration.
According to U.S. Census data, I earn approximately $74,000 per year. This is on par with Washington's median household income.
My WA Cares premium is estimated to cost $429 per year by the state. The average premium for private long-term care insurance would cost me about $2,700 per year.
Because the cost of long-term healthcare is on the rise. Around 2056, I will reach retirement age. This is 35 years away, but a lot could happen between now and then.
Genworth estimates that in-home care in Washington will cost me $230,000 in 2056. If I have to move into a nursing facility, it will cost me $370,000. This means that I will need more than my WA Cares Fund in order to pay for long-term care.
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WA Cares is my best option, even though it's expensive annually. However, there are some caveats that make opponents of the program mad.
To use the money, you must be a resident of Washington. If I choose to retire in Oregon, I won't be eligible. Oricum, not as the law is today.
Washington Policy Center's Worker Rights and Health Care Centers director Elizabeth Hovde wrote an abrasive op-ed for the Seattle Times in August. She called WA Cares "a socialized one-size fits all, long-term care entitlement program that many workers don't want and need -- and that some people won’t use even after paying into it for years."
Veghte said it was fair to criticize the fact that some people who have paid into WA Cares might not be available when they need it. He notes that officials are already considering this: After all, the goal is to have WA Cares replicated across the country.
WA Cares will continue to be of benefit to my mother, who lives in Washington.
She is 57 years old and moved to Florida recently to be closer to my brother, me, and our growing family. She sold her house and the proceeds are her retirement fund. My mother does not plan to quit working. She can't afford it, so she might continue to work after she turns 65. It's still not much time to save for a potentially expensive future.
She'll be here and work towards eligibility for coverage if she needs it.
It could be a good idea for me and her.
Future caregivers
Kate White Tudor is an independent lobbyist who helped to create the WA Cares legislation. She says that the program is not only for recipients but also their families who could become their caregivers.
She says that even with the help of family caregivers, they often have to sacrifice their retirement savings and take time off work to care for loved ones. They may also find it difficult to pay for their caregiving expenses. The average family caregiver spends approximately $7,000 annually on care, according to AARP.
White Tudor laughs, "We don’t have a long-term care system in the U.S." "We rely on [unpaid, familial] caregivers."
The federal/state Medicaid program for low-income individuals, what about that? White Tudor calls it "a safety net no one wants to get caught by". This is because Medicaid covers low income individuals who have not exhausted their savings.
White Tudor states that "the levels of poverty you must get into [for Medicaid] is ridiculous." "Our population is growing, and the greatest risk to our society is lack of long-term healthcare."
The plan is not supported by everyone.
Washington Policy Center and other opponents have maintained that the WA Cares tax is more harmful than beneficial. Approximately 72,000 Washingtonians agree. Veghte states that this is roughly the number of people who had applied to be exempted from the WA Cares premium, as of Oct. 7.
He anticipates that between 10% and 15% (of the state's 3.5million workers) will apply for an exemption before the deadline.
Veghte said that many of them are in their 20th year of work.
While Washington's conservative wing has been loudest about their opposition to WA Cares, moderates also called for a delay. 23 state legislators, some moderate Democrats included, called for Washington Governor. Jay Inslee (a Democrat) requested that the tax's effective dates be delayed.
They wrote, "Please don't hesitate to offer tax relief to employees. Give them more time for finding insurance that best suits your needs."
They refer to one of the "key problems" they have with this program in their letter: the opt-out, which is an issue of their own making.
How WA Cares got the 'opt-out'
Opponents of WA Cares are still asking lawmakers to repeal it, despite having successfully lobbied for major changes to the legislation earlier in the year. The state legislature modified it to allow people to search for private long-term care insurance policies by November 1, and then apply to be exempted by December 31, 2022.
The exemption is not available to those who apply for it.
Washingtonians are unlikely to be able to obtain a private long term-care insurance policy in the time they want.
Some insurers have been refusing to accept new customers since the beginning. Northwestern Mutual Life Insurance posted the following warning on their website: "We are temporarily suspending any standalone long-term care (LTC), sales in Washington State."
For at least the last month, Washingtonians have heard from groups like the American Association for Long-Term Care Insurance that all insurance companies have stopped accepting new applications.
White Tudor declares, "Everything is gone haywire."
The approval of the opt out period in the legislature caused a surge of long-term care customers, something that insurance companies weren't ready for.
Some applicants are turned down outright. Some may accept applications but they won't always be processed on time. Others have profited from the confusion and turned the opt-out period into a "money grab" for their "broken industry."
Even program opponents aren’t satisfied with the opt-out. Hovde and other advocates have asked lawmakers to slow down or stop the program completely.
Hovde ended her most recent op-ed by this:
"The only good thing about this law is the increased conversation and planning around long-term care. This conversation was a good role for legislators; being able to initiate it was not.
When they meet again in Olympia [Washington], the legislators should repeal this unjust, costly and inappropriate law as well as its associated payroll tax.
Long-term-care insurance prices are on the rise
The American Association for Long-Term Care Insurance claims that some long-term care insurance companies are charging very high prices for policies, if any, if they offer them.
Veghte also noted that most long-term private insurance policies require customers continue to pay for them after they retire.
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According to AARP, 70% of Americans will require some type of long-term care in the future. The vast majority of Americans don't have long-term care insurance. Only 7% to 14% of Americans have private coverage. Veghte states that insurers had the opportunity to make changes in four decades, but policy growth has stagnated.
He acknowledged that the Washington state legislature could adjust the WA Cares program to make it better.
However, it is highly unlikely that the Democrat-controlled legislature will repeal it. It's even less likely that Inslee would allow it, even though the legislature might try.
I ask Veghte if lawmakers might consider adding more options to opt out in future. And what this could do for the program.
He stops. He pauses and then says: "Extending [the opt-out] option would be a step towards eliminating the program."
Who is eligible to receive benefits from the WA Cares Fund? You must have contributed at least 10 years to the WA Cares fund during your entire life, without any breaks of more than five years.
Three of the six previous years, at the time that you apply for the benefit.
These years, at least 500 hours per year. SOURCE: www.wacaresfund.wa.gov
Katie Campbell is a journalist and producer in Seattle, Wash. You can find her byline at KUOW, Seattle’s NPR news station. Katie earned a journalism degree from the University of Florida and was a journalist for almost five years until she moved to Seattle.
This article is part of The Future of Elder Care initiative by Next Avenue with support from The John A. Hartford Foundation. This article was reprinted with permission from NextAvenue.org, (c), 2021 Twin Cities Public Television, Inc.
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