Washington's road to a payroll tax supporting long-term care has too many potholes for a smooth journey. Gov. Jay Inslee should suspend the program until legislators have an opportunity to level the path.
On Oct. 1, the first day residents could apply for an exemption, the state's webpage crashed for several hours. By Oct. 8, some 95,000 people had sought exemptions to the tax that is scheduled to take effect Jan. 1. Those should serve as signs that more thought is required before implementing the WA Cares program, which was passed in 2019 by the Legislature and signed into law by the governor.
Last month, 23 state senators — 21 Republicans and two Democrats — urged Inslee to use emergency powers to suspend the law. The governor should "provide temporary relief to employees who face a major new tax and give time for the Legislature to work on a solution," they wrote in a letter. On a Seattle radio show this month, Sen. Jeff Wilson, R-Longview, explained, "He, and only he, has the power to do this. ...With great power comes great responsibility. We're asking him to invoke his powers and to give us that relief that we need."
The WA Cares program will implement a new tax of 0.58 percent on a worker's total wages and will apply to nearly all employees throughout Washington. Those who are self-employed won't be automatically enrolled but can opt in, and federal employees are not included. An employee earning $50,000 would annually pay $290 into the fund.
The fund will act as a state-provided insurance plan for long-term care such as a nursing home, home-delivered meals and dementia support. There is a lifetime maximum of $36,500 in payouts, and eligibility requires contributing to the fund for at least 10 years overall or three of the previous six years.
Beneficiaries will be eligible to begin collecting in 2025, and the program is expected to save $3.9 billion in state Medicaid costs by 2052.
In addition to the fact that $36,500 does not go far toward long-term care, other bumps exist. Benefits may be used only in Washington and they are not portable; somebody who pays into the fund for 10 or 20 or 30 years and then retires out of state will not be eligible. Employees who live out of state but work for Washington-based companies also are ineligible despite paying into the fund.
Workers may apply for an exemption to avoid the payroll tax between this month and the end of 2022, but they must demonstrate that they have other long-term care insurance purchased by Nov. 1. Once somebody opts out, they are permanently excluded from coverage and benefits, even if their private policy is canceled.
The thinking behind the WA Cares is understandable. The number of people 65 and older in the United States is projected to nearly double by 2050, and many will require assistance with daily activities such as bathing or eating. State officials project that 70 percent of Washington residents over 65 will require long-term care and the cost of such care is prohibitive for many.
Medicare does not cover long-term care and the average premium for private long-term care insurance is about $3,000 a year.
While it is a well-meaning program, Gov. Inslee should use emergency powers to press the pause button on WA Cares. Some fixes are required — particularly the expansion of benefits to people who paid into the fund but then moved out of the state — before workers start seeing a deduction in their paychecks.