State Rep. Peter Abbarno has announced his intent to introduce a bill during the 2022 legislative session that would repeal the new long-term care insurance program and payroll tax.
Abbarno, R-Centralia, said the new state program will force some people to pay into a program they will never receive a benefit from.
He joined Rep. Joe Schmick, the ranking Republican on the House Health Care and Wellness Committee, in drafting legislation that would address deficiencies in the program. The legislation would make the payroll tax an opt-in option. The legislation would also ensure that those who pay into the program reap the benefits, regardless of whether they live in Washington state, stated the release.
Abbarno noted the maximum lifetime benefit of $36,500 is only available to care provided in the state for Washington residents and is not transferable.
“If you plan to retire in sunny Arizona or Florida, you will lose your entire contribution into the system,” Abbarno stated in the release. “Military families who work in Washington will pay the tax, but will receive no benefit if they are transferred out of state. Spouses will never realize their community share of the benefit upon retirement. And those people who live out of state but work in Washington will pay the tax, but are ineligible under the current rules to get the benefit."
Abbarno also said that those who plan to retire within the next 10 years will not receive a benefit for their contribution, because people must work 500 hours a year for a decade to be vested.
“Therefore, if you retire in nine-and-a-half-years, you will lose your entire contribution,” Abbarno stated. “None of this is fair.”
The new system was created by the passage of House Bill 1087 in April of 2019, but goes into effect at the start of 2022. Washington workers will pay up to 58 cents per $100 of earnings for the program, so someone making $50,000 annually will pay $290 a year.
Starting on Jan. 1, 2025, each eligible worker in Washington will be able to receive the benefit to access services and support costing up to $36,500, stated the release.
"This is a regressive payroll tax that gives working families the illusion that their long-term care needs are satisfied with this 'short-term' limited care program. The reality is that private investments provide greater benefits with greater flexibility in long-term care," stated Abbarno in the release. "Encouraging people to explore the benefits of long-term care insurance is a good idea. Forcing workers into a new program and payroll tax is a bad idea."
Nov. 1 marked the deadline for Washington workers to secure a qualified, private long-term care insurance policy, which allows workers to apply for an exemption to the program.
Abbarno said many people were unaware of the new program until it was too late to opt out of it.
“By September, all insurance companies in Washington stopped selling long-term care insurance because they were overwhelmed with applications and also concerned people would likely cancel as soon as they were exempt from the payroll tax,” Abbarno stated. “So you can't get private long-term care insurance until after (the) deadline.”
Abbarno said he was told the program will not be able to pay for itself with the new taxes that are collected, which means people in the program would later be forced to pay higher taxes or have their benefits reduced, stated the release.
During an advisory vote on the program, nearly 63% of voters last year said it should be repealed, Abbarno said.
“We can try to fix it, but it has so many flaws that it really needs to go away,” Abbarno stated. “The real solution is to follow the will and the vote of the people by repealing the payroll tax program and address long-term care by incentivizing investments, not punishing and marginalizing working families. The state needs to hit the reset button on this tax and program.”