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Making WA’s long-term care program optional will create costs for state

Full length side view of female nurse pushing senior man on wheelchair at hospital corridor.
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If voters pass Initiative 2124 to make Washington’s long-term care benefit voluntary, it could cost the state millions of dollars to deal with a large-scale exodus of people from the program.

How many millions depends on how many workers abandon WA Cares and how quickly they go, according to a fiscal impact statement that will appear in the voter’s guide for the Nov. 5 election.

Estimates range from $12,623,250 to $31,215,960 in the course of the first three state fiscal years following passage, according to the analysis prepared by the Office of Financial Management. Those costs, mostly for adding staff at two state agencies to handle increased workload, would be covered from the program’s coffers

Most workers in Washington are now required to participate in the program, supporting it with a tax on their wages. The statement draws no conclusions on the financial viability of WA Cares, or whether it will survive if a large share of residents drop out.

WA Cares applies a 0.58% tax on Washington workers’ paychecks. Beginning in July 2026, those who qualify can access a $36,500 lifetime benefit, adjusted over time for inflation, to use on expenses like caretaking, equipment or meals.

The tax went into effect last year. Premiums collected are deposited in a state account to cover benefit payments and administrative costs. Workers who opt out will stop paying the tax and will not receive benefits. They do not get back the money they’ve paid in.

Opponents say too many people are required to pay the tax who may never use the full benefit or even qualify for it.

Last year, Let’s Go Washington, a conservative political committee, led the signature-gathering drive to get Initiative 2124, along with measures to scrap the state cap-and-trade program and to repeal the state’s capital gains tax, on the ballot.

OFM will prepare a statement of fiscal impacts for each measure, and this is the first of those to be released.

Gearing up

The Employment Security Department faces a stiff challenge if the measure passes.

There’s a short timeline. The election is Nov. 5 and the provisions would take effect Dec. 5. Initiative backers think there are throngs of people who will immediately ditch WA Cares.

There are 4.1 million workers in the state with 3.9 million paying into the program, according to the analysis. Because it is not known what will occur, the analysis identified a range of costs for each fiscal year based on 25%, 50% and 75% of workers opting out.

The Employment Security Department will incur the largest hit, with costs that include technology upgrades and hiring communications staff to develop informational materials to let employers and employees know about the changes. There also will be a need for more staff to field phone calls from workers.

The report estimates in the first fiscal year, which runs through June 30, 2025, the range of expenses for the department is $1.9 million to $6.7 million. That only covers about seven months. The potential sums are higher in each of the next two fiscal years.

The Department of Social and Health Services, which fields questions and complaints about WA Cares, will need more staff too. OFM estimates that if 10% of workers who opt out call the agency and are on the phone for at least five minutes, the costs will range from $577,000 to $1,409,000 in the first fiscal year.

At its May 1 meeting, members of the Long-Term Services and Supports Trust Commissionpeppered Employment Security Department Commissioner Cami Feek with questions on what workers can expect if the measure passed.

She had few specific answers at that time but stressed that they were prepping to assure a “positive customer experience” for those wanting to exit.

“We have to be prepared … for a wave of exemptions in a very narrow window,” she said.

Can WA Cares survive?

Supporters of WA Cares fear the program cannot survive if it is completely voluntary. A study released earlier this year concluded that those with anticipated long-term care needs will be more likely to participate, but other workers, especially those earning higher wages, will likely opt out.

In this scenario, the program would become more expensive for everyone left in it – a smaller pool of participants with the greatest needs. Raising the premium to cover promised benefits would likely only drive away more people, worsening the decline, according to the analysis.

“If the cycle repeats without intervention, the program could become financially unstable and unsustainable with an inability to collect premiums that are high enough per person to cover benefits,” State Actuary Matthew Smith told the Long-Term Services and Supports Trust Commission in May.

In its report, OFM assumed a decrease in state revenues as workers opt out and their paycheck deductions into the program stop.

It says revenue is now projected to reach $952 million this fiscal year. When added with previous collections, it would be enough to cover benefit payments beginning July 1, 2026.

That could change if the initiative passes and there is a wave of departures, per the report.

If 25% less in premiums were collected, revenue would be $714 million in this fiscal year, according to the report. If there’s a 75% decline, revenue would be $238 million.

“Any impacts this initiative may have on future benefit payouts or associated administrative expenses are indeterminate at this time since the demographic makeup of those who would choose to remain in the program is unknown,” reads the report.

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This story wasoriginally published by Washington State Standard.