Washington has passed its version of a long-term care insurance bill, sort of, using a payroll tax to fund it.
Unlike the misconceived Class Act that was originally part of the Affordable Care Act, which was designed to rob Peter to pay Paul, Washington State has just passed its own version, The Long-Term Care Trust Act. While the intent is worthy, I don’t think it will accomplish its goals.
As now passed, the Act will be funded by a payroll tax of 58 cents for every $100 of salary. For someone making $20 per hour, that comes to about $240 per year, and they can least afford it. I have seen no mention of an employer match, but I am sure that is coming.
The sponsors claim that family members who leave the workforce lose on average $300,000 in income and benefits over their lifetime. With a lifetime cap of $36,500 under the Act, that hardly puts a dent into it. Payroll deductions start in 2022, and benefits start in 2025, so we really won’t know how well it works for another decade or so. Too late.
It claims that the payroll tax will go into a separate “Trust Fund,” supposedly meaning that it can’t get robbed to pay for other things. That didn’t work so well for the Social Security and Medicare “trust” funds over the years.
Unfortunately, $36,500 is not going to solve the problem, which comes to $100 a day if used consecutively for just one year. My bet is that it will be used in the early stages of frailty, because it is there, and then what? Back to Medicaid as the answer, again? I am sure the sponsors mean well, but this is too little to solve the problem. When they figure that out, that 58 cents will be rising.
