Long-term-care law might be changing again, and solvency is sought
Is WA Cares, the state’s mandatory long-term-care program, complete with a burdensome payroll tax that’s supposed to pay its way, solvent? Maybe. Will the law be changed to make the program benefit portable? Kinda — and only maybe. Are eligibility qualifications changing? They could be. Will recertification be required of the 476,000-plus people who were exempted from the program so far? Almost certainly.
Buckle up: Thursday’s Long-Term Services and Supports (LTSS) Trust Commission meeting was issue-packed. Commissioners went over a new actuarial report, solvency predictions and a slew of commission recommendations for the Legislature. The group continues to try and fix a poorly written law. Fixing it, however, is not possible. The misguided law that created WA Cares is unpopular and does not relieve Washingtonians of a coming long-term-care crisis. It needs to be repealed.
The program will take money from workers of all incomes so the state can try and lower its Medicaid budget and pay family caregivers with taxpayer dollars.
Some Washingtonians and caregivers could financially benefit from all the cost-shifting at the end of the day, while many others will lose out. All workers who will have 58 cents (or more) of every $100 they earn taken from them for WA Cares could have used the money for their own savings accounts or made their own investments to help with possible long-term-care needs someday. Or they could have saved for other life needs they’ll surely have. In some cases, the money people will be out for this program will create a safety net not only for people in need, but for people not in need.
Here is the gist of the first hour of the meeting: The state commissioned another actuarial study of WA Cares, which was considered insolvent in past looks. The study was completed by hired consultant Milliman. And the bottom line is that under some scenarios, the WA Cares Fund might remain solvent at the current tax rate of .58% until June of 2098. Under other scenarios, it won’t. Investment assumptions helped the fund, as did the program's delay, while a high number of opt-outs hurt the fund.
The commission was clearly told that the fund balance is highly sensitive to the underlying modeling assumptions and could vary, even if none of the changes that the commission was recommending to the Legislature were made. And Milliman showed the commission a graph with a plethora of gray lines that represented the many different ways in which assumptions might change and alter the tax rate needed to keep WA Cares solvent. That graph represented to me how the issue of WA Cares' solvency is a big gray area, not black and white as headlines declared this past week. I don’t have any more peace of mind that the tax rate won’t rise than I do that the WA Cares lifetime benefit of $36,500 is going to be enough for workers' possible long-term-care needs. One only needs to look at payroll taxes for other state programs to see into the future.
Portability? Recertification? Criteria changes?
The second hour of the meeting included a handful of questionable and interesting recommendations that will be made to the Legislature. Some will work in the fund’s favor and some against it.
Portability of the program benefit, should you need long-term care one day, is something Washingtonians who will be forced to pay this tax want and something WA Cares is criticized for not having. If the Legislature agrees with the recommendation, a worker who has paid in for at least a year and who is younger than 67 could obtain the lifetime benefit, but only if he or she chooses to continue to pay into the fund for the required vestment period voluntarily, even though no longer working in the state being taxed. People over retirement age would not have to keep paying.
The commission was told this would be costly to the program and that administration costs would be substantial.
The workgroup suggesting this said that the recommendation was contingent on finding ways to offset the cost of making benefits portable. That says to me that portability might be recommended and explored, but it won’t be adopted. The increase to the fund is too great.
One way to possibly bring savings to the fund — and to future Medicaid costs — was proposed. The Legislature will be urged to require recertification of people who have opted out of the fund because they had a private plan. Lawmakers and insurance sellers both have an interest in making sure people have kept their long-term-care insurance. If they don't, they’ll be thrown back into the tax-paying pool. At least one senator wondered how it was legal to go back on the plan that the Legislature laid out for Washingtonians. There was no answer given.
A recommendation will also be made to allow people who opted out of WA Cares originally to have their opt-out rescinded. Why might people do that? Because portability and other details might change and recertification might be required. Another reason? Maybe they rushed into a private plan because they received little or no warning about the coming payroll tax or because they chose a private plan before the Legislature passed a way for near-retirees to earn partial benefits last year.
Health criteria was also discussed. It might become harder to qualify for the WA Cares benefit with changed definitions of outlined activities of daily life. This would make it easier for the fund to pay its bills. WA Cares already makes it hard for people to qualify for the benefit they get taxed for during their working lives. Add changing definitions to the list.
The state really botched this one. It has already amended its long-term-care law in the past few legislative sessions and delayed the WA Cares program and its payroll tax collection. Now it might amend the law some more, in ways that make some of the decisions Washingtonians made about having private long-term-care plans null and void.
As always, stay tuned. The commission will adopt a final recommendations report at its Dec. 9 meeting, and it looks like the Legislature will be busy considering the recommendations this coming session. Then some Washingtonians, again, will have a financial decision to make that might not ultimately be in their best interest, but that makes the best of what the state is dictating.