Real-world situations show why a long-term-care mandate and tax should be repealed

By ELIZABETH HOVDE  | 
Aug 11, 2021
BLOG

Lawmakers have mandated that all W2 workers in Washington state save for possible long-term care the way they see fit, creating confusion and frustration in households across the state. 

A new long-term-care law and accompanying payroll tax that starts January 1st was signed into law by Gov. Jay Inslee. The entitlement program it creates will be funded by payroll taxes on W2 workers. 

 The tax rate is 58 cents per $100 of earnings, with no income cap, and the program has numerous limitations that mean many workers will be forced to pay in but will receive no benefits. This unfair dilemma is well-illustrated by an email we received recently from a person in Bellingham. It is presented here, slightly edited for length. (Note: The private opt-out that’s mentioned expires November 1st. See an article I wrote about opting out here or visit WACaresFund.com.) 

“I appreciate the work done by the Washington Policy Center and am wondering if there is anyone there that has been helping organize any sort of opposition to the upcoming payroll tax for long-term care.

“As I understand it, the tax will be levied on payroll. To be eligible for the benefit, you must be employed and contribute at least 10 years, then reside in Washington state to receive the benefit. A brief window will allow people to opt out, provided they have evidence of private long-term-care insurance.

“I plan on retiring in the next few years so will not benefit by virtue of not paying in for 10 years.  I also plan on retiring out of state so would also not benefit for that reason.  I was recently diagnosed with cancer (not too serious, fortunately), however, when looking into LTC policies that would follow me in retirement found out that because of the cancer diagnosis, I am ineligible for LTC insurance.  Therefore, I am unable to opt out.  This means I have no choice but to be taxed by the state for something I do not want and am ineligible to benefit from.

 “It is my hope that my situation will provide some fodder for somebody that is putting together an argument against this tax, or at least for other opt-out options.” 

“I have no choice but to be taxed by the state for something I do not want and am ineligible to benefit from” sums up how unfair and misguided this long-term-care mandate is. 

At a time of distress, uncertainty and rising inflation, some state lawmakers and the governor imposed a program that will cut household incomes and increase costs, while denying many people any benefit at all. In the meantime, government competition is likely destroying Washington state’s remaining private long-term-care market. Some long-term-care insurers won’t offer plans here until after the opt-out window ends.

It’s no surprise that citizens are demanding — and some lawmakers are talking about — repeal of this poorly designed program.

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