Thousands will miss deadline to avoid badly-designed state insurance plan, will be stuck for life

OLYMPIA – Gov. Jay Inslee needs to suspend the new state law that will soon force Washington workers into a long-term care insurance plan so badly designed that many will pay taxes but get nothing in return, says Sen. Jeff Wilson, R-Longview.

Under legislation passed this year, Washington is launching a first-of-its-kind state-managed long-term care insurance program. Payroll taxes start Jan. 1. But the program is so restrictive that many will pay and never be able to use it – and even if they do, benefits are meager.

The law gives workers just one out. They can duck the tax if they obtain private long-term care insurance before Nov. 1. But good luck finding a policy. Overwhelmed insurers have stopped writing long-term care policies in the Washington market, and options are few.

“Thousands of Washington workers are in for a big surprise in January, when this new payroll tax kicks in and they are automatically enrolled in the state’s long-term care insurance program,” Wilson said. “When that happens, it will already be too late. The law doesn’t provide a way to opt out. Once you are in the program, you are stuck for life.”

Wilson is among 23 senators, 21 Republicans and two Democrats, who signed a letter to Inslee last week urging him to suspend the law using COVID emergency powers granted him by the Legislature. Wilson and fellow Republicans argue the governor’s emergency powers should be curbed. But as long as the governor has authority to suspend laws, Wilson says this would be a good time to use it.

“With great power comes great responsibility,” Wilson said. “We just want to remind the governor that he has the power to put this badly designed insurance program on hold. I think it would be helpful if everyone in Washington knows it.”

For those unable to obtain private long-term care insurance, the mandatory state payroll tax kicks in Jan. 1, at a rate of 58 cents for each $100 of income. Unlike traditional insurance, payouts cannot exceed contributions.

Problems with the program include:

• No opt-out provision after Nov. 1.
• Benefits limited to $36,500, enough to pay for only a short nursing home stay.
• No benefits for workers who contribute and later move out of state.
• No benefits for workers residing in other states but who work in Washington and must pay tax.

Program rules and eligibility requirements outlined on the official program website are particularly problematic for workers planning to retire within 10 years. They are required to pay tax, but those over 62 planning to retire at 65 are ineligible for benefits. Those between 55 and 62 planning to retire at 65 are eligible for benefits only if they are able to suffer a debilitating condition by age 68.

“What a mess,” Wilson said. “The Legislature really needs a chance to think it through. The governor can give us that opportunity, and I am sure he will be delighted for everyone in Washington to learn this rests entirely on his shoulders.”