Washington State Long Term Care Act

In 2019 WA Legislators passed the initial version of what is now known as the WA CARES Act.  After an update this spring to the policy changing the opt-out periods the WA CARES Act is upon us.  Here is what you need to know:

• The WA CARES Act is a state-run Long-Term Care coverage program.  This means if you require Long-Term Care assistance, say for example in an assisted living facility, this program can help to cover the costs.
• The lifetime maximum that an employee can receive through this program is $36,500, and must have met the hours worked requirements.  These include
  • At least ten years at any point in your life without a break of five or more years within those ten years, or
  • Three of the last six years at the time you apply for the benefit, and
  • At least 500 hours per year during those years.
• All W-2 Employees are automatically enrolled unless qualifying documenting is provided no later than Oct. 31st (We will go into qualifying opt-out programs further down).
• A deduction of $0.58 per $100 earned will be deducted from each qualifying employee's payroll.  The employer must deduct and report this to the state, but is not currently required to pay an employer's share.  The employer may of course choose to pay this for their employee.
• Employers will report this deduction using the same system as Washington's Paid Family Medical Leave.
• All employees who record working hours in WA must pay into this program, no matter in what state they reside.  However, only WA residents qualify for coverage under this program, meaning any employee who pays into this program by having worked at least part-time in WA, but not living in WA, does not qualify.
• This program is not portable.  Even if you met the work qualifications for this program, the moment you move outside WA and require Long-Term Care assistance
• Deductions begin January 1, 2022.

How can you opt out of this program?  

For a limited period of time (up to Oct 31st of this year) an employee has the opportunity to get approved for a private Long Term Care policy that provides the same or better coverage than what the state program has set up.  If an employee is not approved by a private insurer by Oct. 31st they are required to participate in the state program.

There are two types of policies that you can currently buy that qualify you to be exempt: 

• A private stand-alone Long-Term Care Policy can be issued to individuals 40 years and older by select insurance providers.
• A Hybrid policy, that is an insurance policy such as a Whole Life or Universal Life policy, with a Long-Term Care rider is available as an option to all qualifying individuals. Many of you might find this the better option, as these Life policies will have the option for a payout in case of death, whereas stand-alone policies are use-it-or-lose-it.

You can see the entire list of insurance providers that offer one or more of these options by clicking here.  

If you have not already heard from your company's Benefits Agent we encourage you to do so.  Many of them will have access to a Hybrid policy that you can offer to all of your employees, right away.  Also your personal financial advisor or insurance agent will likely have one or more policy options for you to choose from.  We do encourage you to reach out as soon as possible.  Some national companies are actively increasing policy minimums, or simply halting the sale of additional Hybrid policies at this time.

Some insurance policies will require further medical screenings as well.  Do not expect you will be able to apply and simply be approved for these programs as October comes to a close.  You will want to act now if you are planning on getting a policy to opt out of the state's program.  

The WA CARES Fund website has many tools to better understand this new program, including documents for employers to provide to employees to help them more easily understand their options.  You can visit the WA CARES Fund website by clicking here.

Final Notes  

• The state's own website acknowledges that $36,500 is the bare minimum amount a person could expect to pay in today's market for long-term care assistance.  Currently, the Act also does not have any adjustments built in for inflation.  Nor does it stop the legislature from updating/changing the requirements and costs in the future.
• The AGC remained neutral towards the 2019 version of the bill, as it did not require employers to pay into the program, and had an opt-out clause at any point after January 1, 2022 so long as a private policy was acquired.
• The AGC opposed the updates in the 2021 version of the bill that did away with the opt-out provisions after Oct 31st, 2021.
• The Legislature could modify this program further at any time to require, among other things, employers contribute to this fund.  The AGC will oppose all efforts to make these sorts of changes in future legislative sessions.