The program already has a long-term actuarial deficit of $ 15 billion
The seven-member Senate Democratic caucus leadership today called on Governor Jay Inslee to delay the implementation of the WA Cares Fund’s premium valuation by one year. It’s the ‘income tax’ that Democrats passed in the state legislature in 2019, which created a long-term care insurance plan.
Earlier this year, former State Representative Cary Condotta launched a citizens’ initiative to give people choices regarding Washington State’s Long Term Care (LTC) program and the payroll taxes that accompany him. The legislature passed the law in 2019 and it is expected to come into force in January 2022.
The state’s mandatory LTC program offers a maximum benefit of $ 36,500, or $ 100 per day. “It’s not good for workers,” says Elizabeth Hovde of the Washington Policy Center.
Employers will be required to collect a tax of 58 cents per $ 100 of earnings and remit it to the state, unless employees have already obtained their own LTC insurance plan and have submitted proof of it to the state in October. The state would then provide the employee with an exemption form, which could be given to the employer, to avoid withholding tax.
Democrats called for a delay to allow time for the legislature during the 2022 legislative session “to engage the public in a transparent deliberative process to address concerns that have been raised with the WA Cares Fund without being limited by a premium assessment which is already underway. progress. The extra year will also give affected agencies time to fully implement any changes with the appropriate time to communicate with the public about the program. “
It would appear that they have received a significant setback from voters and fear the consequences at the polls in 2022. In addition, a class action lawsuit has been filed against the law that created the mandatory program. Opponents of the law have filed in federal court and are seeking to end the payroll tax in early January.
“You are part of a program the benefits of which you will probably never see,” Condotta told KVI’s John Carlson, when he announced the initiative’s petition.
Condotta listed several examples of faults in the program. If you are less than 10 years from retirement, you cannot obtain acquired rights; but you will still have to contribute. If you leave the state, you cannot use the allowance as a resident of another state. “Everyone pays the tax,” he said.
Additionally, the Idaho Attorney General has filed a cease and desist order regarding tax collection from Idaho residents for the WA Cares Fund. The law is worded in such a way that even Washington workers who live in other states will be required to pay state payroll tax but are not eligible for program benefits.
The order correctly reads: “The program is discriminatory and unconstitutional with respect to Idaho residents who work in Washington.” To avoid legal action, please ensure Washington refrains from implementing or enforcing the program against residents of Idaho…. ”
Members of a committee responsible for managing the program were told last month that the cost of implementing the law could rise. State agencies were looking for money for more actuarial work, more outreach, and more customer service, among other things.
When offering to answer questions committee members might have about the demand for money for more actuarial services, WA Cares Fund director Ben Veghte said the needs of the program have far exceeded the needs of the program. expectations. “In the first four months of the current biennium, the cost of actual services has been approximately $ 210,000. He added that “42% of the total cost that has been allocated to actual services, just in the first four months of this biennium.”
Veghte said he expects high levels of actuarial support to be needed during the next legislative session.
The seven Democratic senators who signed the letter to Inslee say they continue to fully support the goals of the WA Cares Fund. “The high cost of care as people age has potentially devastating financial consequences for every Washingtonian without long-term care insurance. “
Senators raised concerns that many voters were unable to purchase private insurance before the November 1 deadline. They blamed the failure on the private insurance market. “This market has been volatile and unpredictable for many years and poses a risk to many consumers who buy policies that never pay benefits,” their letter said.
Many employees who wanted to retire will nonetheless be taxed 0.58% of their pay on January 1. There should be enough time for the legislature to assess our options before employees take money out of their paychecks.
Lawmakers want “enough time” to assess options, ignoring the fact that citizens only had one month to navigate a new state bureaucracy to secure an exemption.
Senator Lynda Wilson shared the following point of view with Clark County Today.
“On September 22, several Republican senators sent him a letter asking for the same. Yes, at the very least it should be put on hold.
There are far too many problems with this law. He has already forecast a long-term actuarial deficit of $ 15 billion. The payroll rate should be immediately increased to $ 0.66 to make up for this deficit. Thus, the cost is likely to increase even before it is implemented.
It’s not transferable, which means if you’ve contributed to the system for years and leave the state, you lose all benefits. In addition, over 400,000 people have applied for exemptions, which is much higher than the state expected. This could affect the viability of the program where the choice would be either state increase taxes or you reduce benefits. Neither is acceptable.
Then consider the rising costs of health care that have not been factored in. And more importantly, there is no way to back down… ever.
These are just a few of the many reasons why it should be delayed. I would suggest that it be repealed and that it continue to let the private sector meet the needs of the people.
Meanwhile, Condotta continues to collect signatures on I-1436 petitions. The initiative, if enacted into law, would require people to “register”, to actually choose to participate in the program. This is in stark contrast to the current law which only allows people to opt out once.
The program cannot be self-financing according to Condotta. “It’s 58 cents. That will turn it into $ 1.58 and then into $ 2.50, ”he said.
“Explain why my social security is transferable; everywhere I go, my Social Security is with me, ”Carlson said. “My 401k comes with me, my medical insurance comes with me. Why wouldn’t this brand new long-term care program come with me if I paid the taxes on it? “
“Because that’s how they wrote it,” Condotta replied. “There are a lot of issues like that.
The lawmakers closed the letter with the following.
“In order for the legislature to have time to listen to the public, review all the necessary data, and engage in a vigorous debate on what changes should be made, we believe the program should be postponed until January 1, 2023.”