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Study finds Washington's long-term care payroll tax program is likely viable for the next 75 years

Courtesy of Washington Cares Fund

A new analysis of Washington State’s long-term care payroll tax program has found that in most scenarios, the fund is solvent.

Washington State’s long-term care program is the first of its kind in the nation. It collects payroll taxes into a fund state residents can use for any long-term care expenses when they leave the workforce. Its primarily meant as a resource to help people age in place.

The program however has drawn criticism, and was reworked last legislative session by lawmakers over concerns about its viability.

Matt Smith, Washington State Actuary, said the firm the state contracted to evaluate the fund looked at several factors.

“Perhaps people might not access these benefits as soon, or as frequently as they estimated,” he said. “They do that as well as looking at analysis on the other side of things, where perhaps we won't collect as much in premiums, or pay more at benefits, they do some stress testing as well. So, when they say most of the scenarios they evaluated resulted in the program being solvent, that's really what it means. It doesn't mean that every scenario result in solvency, but most did.”

He said there are still a few unknowns about the future of the program, such as how COVID-19 will impact people’s need for long term care. It may have no, or little impact, or people may need more long-term care earlier than they would have normally because of long-covid.

The analysis found the program is likely solvent until 2098. People can apply to opt out of the payroll tax and benefits in January. The state will start collecting premiums next July and people will be able to access benefits starting in 2026.

The lifetime amount a single person can withdraw is $36,500. All state residents pay about 58 cents out of every $100 of their paycheck for the benefit. That’s about $302 a year for people making the state median income of $52,075, according to the program.

Most people can access benefits after paying in for 10 years. Those close to retirement age, born before 1968, can access benefits without paying in for a full 10 years. More information on who qualifies is available on the WA Cares Fund website.