Washington Initiative 2124 Fails, Leaving LTC Tax and 'Inadequate' Benefits in Place, Critics Say
Washington's Initiative 2124, which would have allowed residents to opt out of the state's long-term care tax, failed in the November ballot, leaving the existing mandatory program intact. Critics argue that the LTC tax gives Washingtonians a false sense of security, offering what they claim are insufficient benefits to cover the actual costs of long-term care.
The State of Washington was the first state to initiate a long-term care benefit, or what some opponents claim is a tax, to help Washingtonians pay for future long-term care expenses. Under the Washington Cares program, employees contribute 0.58% of their paycheck, with the potential of receiving up to $36,500 available for those who require assistance with three or more activities of daily living, such as transferring, dressing, or bathing.
Advocates argue that Washington Cares could ease the long-term care burden on families while saving Medicaid funds. However, critics contend the program's benefits are too small, considering the high cost of long-term care services in Washington, to make a meaningful impact and that Washingtonians need their earnings now rather than relying on a government promise of future assistance.
Washington Cares is Not Long-Term Care Insurance
Initiative 2124, the November ballot initiative that would have made the program voluntary, failed. This leaves the LTC tax in place, which, according to critics, may lead some residents to mistakenly believe they have comprehensive Long-Term Care Insurance when they do not.
Elizabeth New (Hovde), Director of the Center for Health Care and Center for Worker Rights, says paying for future long-term care costs is not the primary purpose of this fund. The benefits would not adequately fund most people's long-term care needs.
The purpose of the Washington Cares Fund is to give the state more money to work with and create more taxpayer-funded caregivers.
Voters Vote to Retain Washington Cares Benefits
Over 55% of voters rejected the idea of making the program voluntary, which, according to actuaries, would make it insolvent.
Ben Veghte, director of Washington Cares, states that the election results ensure that over 3 million Washington workers will retain access to affordable long-term care coverage while safeguarding the program's financial stability.
Washington Cares will provide an essential resource for Washington families who can't afford the high costs of long-term care and family caregivers who are struggling without support.
Medicaid covers long-term care services for individuals with limited financial means, while health insurance and Medicare typically cover only short-term skilled care. This leaves Washington Cares and Long-Term Care Insurance providing long-term care benefits.
In a post-election statement, Gov. Jay Inslee said that Washingtonians sent an unequivocal message.
When they or a loved one need long-term care, they want the WA Cares Act to be there for them.
Washington Care Benefits Fail to Meet Growing Cost of Care
While supporters of Washington Cares claim it is Long-Term Care Insurance, it is not. Cassandra Watson, President of Platinum LTC Solutions says that innovation in the long-term care space is laudable, and new ideas should be encouraged; however, Washington Cares has gotten it wrong
If the program works as intended, those who need long-term care will be able to get $36,500, hopefully with some inflation, though the state has not announced any details, to help defray the cost. However, millions of Washingtonians now believe they have comprehensive long-term care coverage. In reality, they will have a fairly small benefit with no assurance the tax won’t increase significantly during their working years.
Long-term care services in Washington rank among the most expensive in the United States. According to an LTC News survey on long-term care costs, the state's median monthly cost for in-home care, based on a 44-hour week, is $6,468. However, in some areas, like Seattle, the average is $6,913 monthly. In 20 years, the expected cost of in-home care will be $11,800 monthly.
The costs for assisted living, memory care, and nursing homes are even higher, making the Washington Cares benefit of $36,500 falling short of what is needed to pay for quality long-term care services.
Long-Term Care Insurance Offers Comprehensive Benefits
Watson says that when obtaining benefits from Washingtons Cares is harder than traditional private LTC Insurance.
Washington taxpayers need to show the state they need assistance with three activities of daily living (ADLs), which is more stringent than the two that federally regulated tax-qualified Long-Term Care Insurance policies require today.
Watson notes that actual Long-Term Care Insurance can be affordably designed to help cover escalating care costs, easing the financial and emotional burden on families.
Long-term care is poised to be a significant issue for Americans in the coming years, but other states might be well-served by encouraging their residents to explore private long-term care insurance options before enacting a program like Washington Cares.
Long-Term Care Insurance has provided Washington residents with millions in benefits over the years. According to recent data from AHIP, since traditional Long-Term Care Insurance began, more than $3.5 billion has been paid out in claims within the state of Washington alone.
However, unlike Washington Cares, Long-Term Care Insurance requires medical underwriting, so not everyone can obtain coverage. Premiums for LTC Insurance are based on the age at which you acquire coverage, your health, and other factors.
Elizabeth New (Hovde) argues that taxpayers should support safety nets for those in need, and fortunately, they already contribute to a long-term care safety net through Medicaid for individuals facing financial challenges.
LTC Insurance provides an essential supplement for individuals with income and assets to protect, helping to bridge the gap left by what critics refer to as the "meager benefits" from Washington Cares. Without this additional coverage, individuals may face disappointment when they or a loved one needs assistance with daily living activities or supervision due to dementia.
LTC News provides a tremendous amount of tools and resources to help you learn about long-term care planning - Long-Term Care Insurance Resources and Education.
Most people purchase LTC Insurance between the ages of 47 and 67. Experts suggest planning before retirement when premiums are lower, and health is usually better.