Key Findings

1. House Bill 1011 repeals Washington state’s long-term care law, HB 1087, which created WA Cares, a social program to be funded by a payroll tax of 58 cents for every $100 a worker earns.

2. Washington state voters recommended the repeal of House Bill 1087 in Washington Advisory Vote 20, with a vote of nearly 63 percent.

3. Engrossed Senate Joint Resolution 8212, allowing for investment strategies to provide needed funding for the program, was defeated 54 to 46 percent, impacting program solvency.

4. The state-imposed program will not give workers financial security promised. An inadequate lifetime benefit of $36,500 is not enough for most people’s care, should they require it.

5. Many workers won’t qualify for the benefit, regardless of how much they pay. Telling people this fund brings them “peace of mind” is not only false, it’s dangerous.

6. The regressive tax in the law means some low-income workers will be forced to hand over a portion of their income to benefit others with higher incomes and who may not need assistance.

7. As seen with other state-imposed programs funded by payroll taxes, tax rates increase over time to keep programs viable.

8. A program exemption included in HB 1087 allowed nearly 500,000 people who learned of the exemption in time to apply to opt out of the program. More exemptions are expected.

9. Instead of imposing this program and tax on Washington workers, lawmakers should repeal the law, create awareness, encourage savings, protect Medicaid, cut the tax on insurance products and remove limits on purchasing. House Bill 1011 is an opportunity to start this forward motion.

Introduction

The long-term-care crisis headed states’ ways is a real issue. The United States has a graying population, and many people will require assistance with the activities of daily life at some point. Someone turning age 65 today has almost a 70 percent chance of needing some type of long-term services and support in their remaining years. There are also many people using state-federal Medicaid programs for long-term care needs, and too few people plan and save for the possible life event.

In 2019, the Legislature passed a law to create a new payroll tax and impose a mandatory long-term-care (LTC) entitlement program on Washington state workers. Governor Jay Inslee signed House Bill 1087 on May 13 of that year. The program the bill created was named the WA Cares Fund. The misguided payroll tax for WA Cares was initially planned for collection starting January 1, 2022.

Public opposition and glaringly unfair details of the long-term-care law, however, caused the governor to ask the Legislature to delay the tax collection until after the 2022 election and make some changes to the law.

Lawmakers agreed and implemented an 18-month delay until July 1, 2023, after hundreds of thousands of people sought exemption from WA Cares and the payroll tax created to fund it. The Employment Security Department reports 484,704 people applied for exemption from WA Cares during an exemption window included in the law for people with private long-term-care insurance. More are expected to do so. Lawmakers also created a partial benefit for some near-retirees and some additional exemption categories. These changes were made in House Bills 1732 and 1733. Both pieces of legislation were fast-tracked in the first weeks of the 2022 legislative session, and the governor signed the bills into law on Jan. 27, 2022.

The new payroll tax will shift some of Medicaid’s future long-term-care costs onto the backs of today’s workers. In July, most workers in the state will start paying 58 cents on every $100 they earn with hopes that, if someday they need long-term-care services, they might qualify for money that can be used for those services. Service Employees International Union 775, which represents 45,000 long-term-care workers, lobbied hard for and supports this law, which includes a training requirement for the use of WA Cares funds for caregivers. Union membership for those workers could be required.

The long-term-care law has proved deeply unpopular, and its many shortcomings have been exposed, causing legislators to delay implementation. Responding to the people they represent, some lawmakers have proposed repealing the program. This Legislative Memo reviews House Bill 1011, the latest proposal to repeal HB 1087.

Click here to read the Legislative Memo in full.