Washington pushes pause on state-run long-term care insurance fund

The enactment of Washington state's new long-term care fund has been delayed, Gov. Jay Inslee announced.

The state planned to collect up to 58 cents for every $100 in wages that workers in the state make starting in January 2022. The funds would be earmarked for the WA Cares Fund, a public long-term care fund through which eligible individuals could receive benefits and access up to $36,500 in services and support starting in 2025.

But that plan is now on hold thanks to an order from Inslee. Washington Senate Majority Leader Andy Billig and House Speaker Laurie Jinkins also encouraged employers to not collect premiums from employees in Washington so lawmakers can take action.

"We need to give legislators the opportunity to make refinements to the bill," Inslee said in a release, noting that employers will not be subject to penalties and interest for not withholding fees from employees' wages during the transition.

Improvements made during the pause are aimed at better serving disabled veterans, military spouses, nonresidents and individuals who are near retirement. There were no additional details as to exactly how the program will change.

Washington Insurance Commissioner Mike Kreidler said in an email to S&P Global Market Intelligence that his office's consumer advocacy staff heard from a large number of consumers who were worried about the program.

"Long-term care insurance is an important and complex issue, and the governor and legislative leadership had to make a difficult decision," Kreidler said. "The pause will allow both policymakers and citizens to better understand the program and its implications."

Gauging "consumer anger" at paying additional taxes may be the real reason the program is being delayed, according to Jesse Slome, director of the American Association for Long-Term Care Insurance.

"I've seen this play before," Slome said in a release.

Slome said workers in Washington who earn $100,000 per year could pay an additional $48 in taxes per month to pay for the program. That might seem like a hefty price tag for younger workers who would not expect to benefit from the program anytime soon.

Slome recommended that agents who sell private long-term care policies to individuals in Washington maintain communication with their clients; canceling a policy could result in voiding an individual's exemption from the tax.

Insurers had largely ceased writing new long-term care policies in Washington several months ago because of the overwhelming demand for coverage that companies were not staffed to handle. The program is expected to also cause a one-time bump in overall long-term care sales in 2021.