New long-term care fund offers choices when you need it

Washingtonians are quite fortunate to have one of the best long-term care systems in the nation. Our state's system is ranked so high because it's based on consumer choice and provides various options for people to receive the care that best meets their individual needs and the settings they prefer.  

However, consumer choice is only half the equation.  Our long-term care system needs continual improvement to keep up with the increasing demand of a growing older population, and affordability remains a significant issue. Seventy percent of Washingtonians 65 and older will require some assistance to live independently as they age. Yet, only 9% of people in Washington can afford private insurance, and that market has been shrinking even as the age wave is ramping up.

In 2014, facing a projected doubling of Medicaid Long Term Services and Supports (LTSS) costs by 2040 due to the Age Wave, the Joint Legislative Executive Committee on Aging and Disability, together with a broad group of interested stakeholders, began a search for a Long Term Care (LTC) public policy innovation that would:

• Preserve and protect the Medicaid program budget by reducing reliance on Medicaid LTSS for those who could reasonably afford alternatives to relying on Medicaid;
• Offer affordable LTSS benefits to delay or prevent individuals spending down to poverty to qualify for Medicaid;
• Provide financial relief to middle-class families and their caregivers; and
• Be financially viable and sustainable for the long term.

Washington State, like the rest of the nation, faced a confounding situation with a broken LTC private market that had been in steady decline for over two decades due to a range of factors. As a result, less than 3% of the population under 65 had a LTC policy. Additionally, due to underlying medical conditions, upwards of 30 percent of the public age 50 and over would not meet private LTC insurers’ underwriting criteria.

To verify this, in 2015 the legislature directed DSHS to contract with an actuarial firm to explore  - through modeling and interviews with a broad range of stakeholders including the private LTC insurance industry - whether a public-private reinsurance model could lead to an expanded private LTC insurance market to address the long term care crisis. The actuarial report’s conclusion was definitive: it could not.

In 2019, AARP, along with a coalition of 30 organizations called Washingtonians for a Responsible Future, helped pass the Long-Term Care Trust Act (LTCTA) now called WA Cares Fund. The WA Cares Fund creates a public long-term care program, providing Washingtonians with flexible and meaningful benefits ensuring families can choose the care setting and services that best meet their needs.  Based on a modest payroll premium of .58% per $100 earned, vested and eligible contributors would receive a benefit of $36,500, indexed to inflation, and would contribute money only during their working years.

With the Washington State legislature action, the WA Cares Fund is projected to save Washington taxpayers $19 million in the first year of operation (2025), $368 million in 2050 and have a net savings of over $3.9 billion by 2052 by helping people pay for care before they impoverish themselves to receive Medicaid.

Unlike private plans, the WA Cares Fund provides increased flexibility to access to a wider array of care settings and choices. Washingtonians can choose between in-home care aides, adult family homes, assisted living, skilled nursing facilities, and others.  The benefit can also be used to pay for medical equipment like emergency alert devices, and services including but not limited to home modification, transportation, or meal preparation.

More importantly, the benefit can be used to pay family caregivers. Families are the backbone of Washington’s care system, and at some point in our lives each of us will likely take care of somebody we are close to who needs help with everyday activities.  Family caregivers take on big responsibilities to care for their loved ones. On average they spend about 25% of their income on out-of-pocket costs related to caregiving. The benefit will help ensure their financial well-being.

Historically, AARP Washington has worked with the legislature and stakeholders to develop solutions to help people pay for the care they need to live independently and remain in their own homes and communities as they age. 

Crafting a viable and robust program like the WA Cares Fund to help Washingtonians better prepare for their long-term care needs is critically important for our families and for our state. Learn more about the fund at www.wacaresfund.wa.gov/.