A New Option for Long-Term Care Costs

Washington State has launched WA Cares, the nation’s first state-operated long-term care insurance program funded through a mandatory payroll tax surcharge. This initiative addresses a critical gap in the senior care sector, as private insurance options become increasingly unaffordable and Medicare continues to exclude most long-term daily assistance. The program’s rollout is being closely watched by policymakers across the country as a potential solution to the looming financial crisis facing aging Americans and their families.

Washington Cares (WA Cares) is supported by a 0.58% payroll tax on roughly 3.7 million workers, offering a lifetime benefit that currently starts at $36,500 and increases with inflation. For a mid-career worker earning $50,000 annually, a decade of contributions could result in a projected $98,000 benefit by age 75. These funds are designed to be flexible, covering essential services such as home care, adult day programs, transportation, and home modifications like grab bars, while also providing the option to compensate family caregivers or pay for assisted living and nursing home facilities.

The program arrives as the private long-term care insurance market has severely contracted, with major firms like Genworth and MetLife exiting the sector due to low interest rates and unexpected claim patterns. Consequently, only 3% of Americans over age 50 hold long-term care policies, and many are rejected during underwriting for health reasons. Richard Frank of the Brookings Institution highlights that without such programs, middle-class seniors often face the "unprotected health risk" of having to spend down nearly all their assets to qualify for Medicaid-funded care.

While Washington has spent a decade implementing this program, federal lawmakers are beginning to propose similar interventions, including a "home care guarantee" for Medicare beneficiaries led by Senator Ron Wyden. Other legislative efforts, such as a bipartisan bill from Representatives Tom Suozzi and John Moolenaar, suggest a catastrophic-insurance model to protect older adults from ruinous costs. As approximately 70% of Americans are expected to need long-term care, the success of the WA Cares model serves as a pivotal case study for the future of senior care financing in the United States.