The folks running Washington state’s WA Cares Fund, which taxes low- and high-income workers 58 cents for every $100 they make, hosted a webinar recently talking about how people can plan for long-term care (LTC). What? We’re being told WA Cares is already doing that for us.
During the webinar, state agencies took opportunities to prop up the state’s solution to the possible need — WA Cares — while expressing caution about private long-term-care insurance (LTCI) and the limits of Medicaid. The webinar didn’t mention things like planning ahead with real estate or other investments and savings, which seemed odd for a webinar titled, “Long-term care planning.” Self-sufficiency is an afterthought for our government, it seems, not the goal.
The American Association of Retired Persons was invited to present during the webinar. It boosted WA Cares and said AARP was a strong proponent of mandating the program and payroll tax. A representative also painted the picture of family caregivers as victims, suggesting that caring for aging loved ones was a problem for the government to fix.
Family caregivers do give a lot. We need to — like the webinar title indicated — plan for long-term care for ourselves and our family members. That shouldn’t mean tapping other taxpayers for the LTC needs of a parent and allowing children to keep a parent’s assets for themselves, however. That’s what sometimes happens. Medicaid abuse was not discussed.
AARP made an interesting sales pitch for WA Cares, but an even more interesting part of the webinar/marketing session for me was a presentation from Senior Compliance Analyst Sharon Daniel with Washington state’s Office of the Insurance Commissioner.
In talking about purchasing private LTCI, Daniel said this: “When you’re shopping for a policy, you want to make sure that you ask yourself if you need long-term care insurance,” adding it “would depend on your age, your health, some overall retirement goals, your income and assets.” She went on to advise that you want to make sure you understand what the policy covers and doesn’t, that you buy enough coverage (three years minimum), and that you check the insurer’s financial stability. Private policies, she cautions, are only going to pay out for a certain amount of time or money. “So you want to make sure that you have enough funds to cover yourself after you’ve reached the maximum benefit limit,” Daniel explained.
That’s all good advice. But for anyone who has looked into WA Cares or has heard or seen the many advertisements for this mandatory program, you can see how amusing the advice is. I’m not even sure why it was given, seeing how Washingtonians are still being told by the state’s marketing that WA Cares has them covered.
Need WA Cares? That wasn’t a consideration
When lawmakers imposed WA Cares on workers, along party lines, lawmakers did not let workers ask if they “need” long-term-care insurance. Some will use it, some won’t. Workers’ ages, health, retirement goals, income or assets also didn’t matter. All workers were forced into WA Cares, even people with no money to spare.
Further, we’re still not entirely sure what WA Cares will cover and what it won’t. What is known, is that the state will approve of some costs and caregivers and not others. Finding this stuff out is something we’re being urged to find out about a private policy but not WA Cares, apparently.
We do know that WA Cares’ lifetime benefit is $36,500 and that Washingtonians are told to have “peace of mind” about LTC because of WA Cares. Really? The Office of the Insurance Commissioner made it clear on Tuesday that most people will need LTC a lot longer than WA Cares’ $36,500 will provide. Telling Washingtonians to have “peace of mind” is quite different from telling workers to “have enough funds to cover yourself after you’ve reached the maximum benefit limit.”
Finally, we know that financial stability has been a concern with WA Cares. Even the most recent actuarial analysis says that in some scenarios the current tax rate of .58% will be enough and in some scenarios it won’t be. The tax rate could rise — something Daniel stressed could happen with premiums for private LTCI, by the way.
In sum, Daniel said, a private plan is “not the best fit for everyone.” I totally agree. Some plans can be very expensive, she says. They can be. Some plans’ premiums are also comparable to WA Cares. Private plans have a maximum benefit that is typically higher than the WA Cares’ benefit and can be used if you live in a state other than Washington, unlike WA Cares. Private LTCI also typically requires recipients to need help with just two activities of daily life instead of three, as WA Cares requires. This was not mentioned. “Maybe talk to a financial advisor,” Daniel advised. Indeed! Private plans won’t make sense for many people, just as WA Cares is not the best fit for everyone, especially low-income workers. (See my analysis of WA Cares here.)
Many financial advisors told clients to get out of WA Cares if they could. After all, the program has a benefit many people will never need or qualify for, and, in many cases, WA Cares will even send the wages of lower-income workers to people with higher incomes. WA Cares is definitely not a sound investment for low-income workers who are likely to qualify for Medicaid’s LTC help if they need it someday.
Kristen Maki, a WA Cares representative with DSHS, said to think of WA Cares like insurance, not a savings account. If we do that and take the OIC’s advice, WA Cares is not an insurance plan workers should buy. Many people would find various investments and savings for LTC better than private LTCI or the social program.
A solution? Repeal
The state should make WA Cares optional, as some lawmakers have proposed and as an initiative to the Legislature is hoping to do. It’s gathering signatures now. Better yet, the LTC law should be repealed and workers’ wages and financial choices about LTC restored. Workers are now more aware of LTC because of the misguided law. They should plan accordingly. As they do, lawmakers can protect Medicaid for people in need and help make insurance products more affordable. Repealing WA Cares would get us out of a long-term mess in the making.
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Elizabeth Hovde is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center.
