Washington State’s new payroll tax funds long-term care and could serve as a national model.

Washington State's new payroll tax funds long-term care and could serve as a national model.

Washington State’s Innovative Approach to Long-Term Care

Elderly Woman with Caregiver Image source: HealthDay Reporter by Dennis Thompson

Vicki Bickford is a professional caregiver who has been increasingly concerned about her own aging. At 66 years old, she suffers from aggressive arthritis that has required hip replacements and has now spread to her knees, as well as degenerative disc disease in her spine. To allow her to continue living independently, Bickford has made costly modifications to her home, including installing sliding glass doors, a ramp, and a day basement, which have cost her over $30,000. However, even with these modifications, she struggles to keep up with the increased mortgage payments resulting from refinancing her home.

Fortunately, Washington state has begun a groundbreaking initiative that could revolutionize how America supports its elderly and disabled citizens while also providing assistance to individuals like Bickford who desire to maintain their independence. Known as WA Cares, this long-term care program is independently funded by the state. Starting from July 1, Washington now deducts 0.58% of each worker’s pre-tax paycheck and channels the funds into a state long-term care insurance fund.

According to Ben Veghte, the director of the WA Cares Fund at the Washington State Department of Social and Health Services, the current deduction amounts to approximately $24 a month for a typical worker earning slightly over $50,000 annually. By July 2026, the fund will have accumulated enough resources to provide long-term care benefits to any Washingtonian in need.

The introduction of the WA Cares program has garnered national attention because currently, every state in the US has a fragmented system in place to assist families in affording long-term care. Gretchen Jacobson, the vice president of the Medicare program at the Commonwealth Fund, emphasizes that long-term care expenses constitute a significant portion of Medicare beneficiaries’ out-of-pocket costs. As such, the WA Cares program offers the potential for a more comprehensive and cohesive solution to long-term care challenges faced by individuals and families.

How WA Cares Works

Washington residents who qualify for the program will be eligible for lifetime maximum long-term care benefits amounting to $36,500. This sum can be used at the discretion of the individual and their family, providing the flexibility to allocate the funds according to their specific needs. Veghte explains that the maximum benefit amount will rise with inflation, and by 2050, residents are projected to have access to more than $66,000 in lifetime benefits.

The WA Cares benefit is intended to support individuals in maintaining their independence. For instance, Veghte cites one case in which a family used the funds to make modifications to their elderly mother’s bathroom, including installing grab bars, raising the toilet, and lowering the shower threshold. These modifications cost approximately $10,000 in the 1990s. However, they allowed their mother to reside in her home for a longer period and increased her safety. Veghte believes that most families will follow a similar path and use the funds to adapt their homes and enhance safety.

To qualify for WA Cares benefits, individuals must require assistance with three or more activities of daily living crucial for independent living, such as eating, bathing, dressing, or mobility within their home. Washington implemented this program in 2019 due to projections that the number of individuals aged 85 and older would double within the state in the next 15 years. Veghte emphasizes the impending challenge facing society, as the ratio of individuals aged 45 to 64 to those aged 80 or older is projected to decline from 7 to 1 in 2010 to 3 to 1 in 2050. In the coming years, families will face the responsibility of caring for and supporting an increasing number of older adults.

Toughest for Those In Between

The United States has not adequately addressed the issue of long-term care for the elderly. Medicare and general health insurance do not cover long-term care expenses, and Medicaid’s long-term coverage only applies to individuals whose savings have been depleted to $2,000. Veghte points out that relying on Medicaid not only erodes an individual’s financial independence but is also an undesirable outcome for retirement plans.

Private long-term care insurance is available, but it comes with a significant price tag. Veghte highlights the stark reality that high-income earners can afford the average cost of $2,700 a year for such insurance. However, costs have been rising dramatically, with some individuals paying as much as $8,000 annually. As a result, there exists a substantial gap for middle-income earners who do not qualify for Medicaid but find private insurance unaffordable.

Washington’s WA Cares program offers a potential solution to this conundrum. For individuals approaching the age at which they might require long-term care, purchasing long-term insurance comes with risks. If they can no longer afford the premiums, the insurance company retains all the previously paid premiums, thus leaving individuals without coverage.

The financial burden of long-term care not only contributes to dire situations for the elderly and disabled and their families but also poses a threat to state finances. Veghte explains that Medicaid programs largely rely on state budgets, and in Washington, long-term care coverage already consumes 9% of the state budget. If caseloads double over the next 15 years, allocating 18% of the state budget to Medicaid long-term care becomes unsustainable. This situation would force states to either reduce spending in other essential areas or raise state income taxes.

Nonetheless, even though the WA Cares program will provide a lifetime maximum of $36,500 in benefits, it will not fully address the challenges faced by the elderly and infirm in 2026. Bickford, who has already spent nearly that amount to adapt her home to her progressive disability, serves as a prime example. Veghte acknowledges that solving the long-term care problem will require a combination of strategies, and no single program or initiative will be sufficient.

Long-Term Care Policies for the Middle Class

Washington state policymakers are collaborating with the private long-term care insurance industry to develop a supplemental private insurance market that can build on the foundation established by WA Cares. The proposed market would make long-term care insurance more affordable for middle-class individuals. Veghte suggests that the WA Cares benefit could be used as a deductible, allowing people to purchase supplemental insurance covering additional tens of thousands of dollars in long-term care expenses.

While these plans are not yet finalized, they could be implemented in the coming years. Jacobson believes that many states will closely monitor Washington’s program to determine its efficacy. Addressing long-term care challenges and supporting families caring for loved ones could significantly improve people’s lives.

Veghte is confident that other states will ultimately follow Washington’s lead. With demographic shifts resulting in an increasing number of older adults needing care, it is clear that families will face overwhelming responsibilities. As Veghte aptly expresses, “Most of us have someone in our family who is 80 or older, who needs care and some kind of support to live independently—and soon it’s going to be two people we’re caring for.”

For more information about Washington state’s long-term care insurance, visit the We Care for WA Cares advocacy group.

Sources: – Vicki Bickford, Caregiver, Vancouver, Wash. – Ben Veghte, PhD, Director, WA Cares Fund, Washington State Department of Social and Health Service, Lacey, Wash. – Gretchen Jacobson, PhD, Vice President, Medicare Program, Commonwealth Fund, New York City