WA Cares. Do You?
In an effort to provide support for long-term care needs, Washington State has introduced the WA Cares Fund, a program that offers long-term care benefits to both full-time and part-time Washington State workers. Workers who are not exempt are made to contribute 0.58% of their wages to the long-term care insurance fund, and when eligible, they are able to utilize long-term care benefits in an amount up to $36,500. Keep reading to learn more about long-term care insurance, how the WA Cares Fund works, and why it's probably something that will benefit a lot of people.
Photo by Hillary Peralta on Unsplash
What is Long-Term Care Insurance?
Generally, long-term care insurance is a type of coverage designed to help individuals cover the costs associated with long-term care services such as nursing home care, assisted living, and in-home care. It offers financial protection by paying for these services when an individual is unable to perform daily activities independently due to aging, illness, or disability. By providing support for long-term care expenses, this insurance can offer individuals and their families peace of mind and help them maintain their financial stability during periods of extended care needs.
How Does the WA Cares Fund Work?
Contributions
The WA Cares Fund is an automatic contribution from employees. Every worker in Washington State, regardless of salary, contributes at the same rate of 0.58%. The contributions started appearing on employee paystubs on July 1, 2023, and will continue as long as the individual is employed in the state. Contributions to the fund end at retirement, unemployment, or exit from the workforce to care for a loved one. Contributions continue if the benefit is accessed and the worker returns to the workforce.
Full-time, part-time, and temporary workers in Washington State contribute unless exempt. Federal employees working in Washington State are exempt. Employees of tribal businesses are exempt unless their employer has opted in. Self-employed individuals must opt in to obtain the benefit. Non-working and retired Washington State residents are exempt.
The voluntary exemptions available for approval include employees who have permanent addresses outside of Washington State, non-immigrant visa temporary workers, registered domestic partners and spouses of active duty military, or veterans with disabilities that are 70% related to their service or higher.
The WA Cares Fund offers three different paths to meet the contribution requirement for earning benefits:
Lifetime Access: Workers who contribute for at least ten years, with no gap of five or more consecutive years, gain lifetime access to the full benefit of $36,500.
Early Access: Workers who have contributed for at least three of the past six years and have a sudden need for care can qualify for the full benefit.
Nearing Retirement: For workers born before 1968, partial benefits can be earned for each year of contributions.
Noteworthy
The premium is calculated based on gross wages, the same as what the Employment Security Department (ESD) uses to calculate Paid Family and Medical Leave. Unlike Paid Leave, WA Cares premiums are not capped at the taxable maximum for Social Security.
Benefits
To access the WA Cares benefit, an individual must demonstrate a need for care assistance in three or more Activities of Daily Living (ADLs):
Moving from one location to another
Moving to a chair
Entering or exiting a bed
Bathing
Toileting
Eating
Meal Prep
Taking Medications
Retaining and recollecting information
Making decisions regarding everyday tasks
What Can the WA Cares Fund Benefit Be Used For?
Services to evaluate and enhance home safety, such as wheelchair ramps, lifts, grab bars, and more.
Care providers who offer assistance with personal care and household chores within your home.
Delivery of nutritious meals or prescription nutrition right to your doorstep.
Scheduled transportation services to and from appointments or for grocery shopping needs.
Access to wheelchairs, walkers, personal emergency response systems, medication reminders, and other helpful devices.
Provision of essential caregiving supplies like feeding supplies, adult diapers, , nebulizers, wound care items, etc.
Educational resources, training programs, care respite options, care coordination, and additional caregiver services.
Care can be provided in various facilities, including adult family homes, assisted living facilities, and nursing homes.
Noteworthy
Starting in 2026, the benefit will be adjusted annually up to the rate of inflation, even after individuals retire and payroll contributions stop. The .58% premium rate is prohibited by law from increasing. The WA Cares Fund is available to meet care needs up to $36,500; there is no daily limit.
Conclusion
The reality is that covering long-term care-related expenses can be an expensive proposition. As life expectancies increase, the demand for care services likely increases, along with the cost. Private long-term care insurance has been around for many years, but there has been a great deal of consolidation among the providers of long-term care insurance, and the providers that remain have increased premiums to account for increased costs of care and increasing life expectancies. For many individuals, private long-term care insurance is prohibitively expensive.
The WA Cares Fund public benefit offers individuals the opportunity to benefit from many of the features of a long-term care insurance policy, including:
Photo by Centre For Ageing Better on Unsplash
Asset protection: An individual's assets are protected up to the amount of the plan benefit. In the case of the WA Cares Fund, if an individual has a long-term care need and $36,500 in savings, they will not have to spend all of it on long-term care. The WA Cares Fund benefit will protect the individual's savings until the fund benefit is exhausted. To be fair, this benefit may not go very far in covering costs for many. The WA Cares Fund estimates the benefit will be sufficient to cover all the lifetime long-term care needs incurred by about a third of participants. For everyone else, it will provide immediate relief and afford them time to plan for expenses after the benefit is exhausted. For those with private long-term care insurance, the WA Cares Fund benefits can be used to cover benefit waiting period expenses.
Support for Loved Ones: One of the most valuable, but maybe the least talked about, benefits is the care coordination benefit. In a way, long-term care insurance isn't just for the person needing care; it's for the spouse and family of the individual needing care. It can be a very stressful situation when someone needs long-term care. Having a long-term care insurance plan in place with professional care coordination can relieve some of the stress of making sure a loved one is cared for with the right living situation, professional support, and proper equipment.
The WA Cares Fund does not have some of the challenges associated with private long-term care insurance:
Cost: Private long-term care insurance premiums can be expensive, especially if purchased at an older age. The cost of premiums can vary significantly depending on factors such as age, health condition, the amount of coverage, and any optional features. This does not apply with the WA Cares Fund; the premium rate percentage is the same for each participant, varying only by the wages to which it applies.
Premium Increases: Insurance companies may raise premiums over time, which can make long-term care insurance less affordable in the long run. The WA Cares Fund is prohibited by law from increasing the 0.58% premium rate.
Health Qualifications: Private long-term care insurance typically requires medical underwriting, which means individuals must meet certain health qualifications to be eligible for coverage. If individuals have pre-existing conditions or health issues, they may face higher premiums or potentially be denied coverage. This is not the case with the WA Cares Fund.
For those who oppose a mandated expense being withdrawn from their paychecks, I understand. However, I think the WA Cares Fund will serve the greater good by pooling risk and providing a potentially valuable form of insurance for all Washington State workers participating. This plan may serve as a model for other states to implement; only time will tell.
My name is Tim Melia, and I am a CERTIFIED FINANCIAL PLANNER™ Professional. I would be happy to answer any questions you may have or discuss how this topic impacts your life and financial goals. Feel free to email me at tim.melia@emboldenfp.com. If you would like to learn more about working with Embolden Financial Planning LLC, please schedule a free, virtual introductory meeting.
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References
“How the Fund Works | WA Cares Fund.” WA Cares Fund, wacaresfund.wa.gov/how-it-works.
“Benefit Coverage | WA Cares Fund.” WA Cares Fund, wacaresfund.wa.gov/benefits.
