As the revised start date (July 1st) of the Democrats’ bungled and expensive Long-Term Care payroll tax and plan (WA Cares) is quickly approaching, Shift’s Newsmaker Interview is with one of the leading experts on such insurance policies, Mike Anderson, an executive with AIM. Anderson is the company’s Senior Internal
Wholesaler and has been in the insurance business for nearly 30 years. He was very involved with his company’s efforts to assist Washington State consumers in 2021 when individuals attempted to purchase private long-term care policies, which most were seeking so they could be exempt from the state’s plan. He is currently leading his company’s efforts as liberal lawmakers in other states are considering imposing a similar tax on their residents.
Readers will recall that the tax was supposed to commence on January 1, 2022. Yet even Democrats understood the plan was woefully unprepared to provide coverage to Washington residents and would likely be shut down by the courts due to breaking taxation laws. The legislature responded by delaying implementation for 18 months.
We ask Anderson about the many problems with WA Cares and whether or not state bureaucrats were able to fix them (hint: they weren’t). Anderson points out the many serious flaws that remain with WA Cares and encourages the state to have another ‘Exemption Period” where consumers can again purchase private Long-Term Care coverage.
First, please tell Shift readers about yourself and your history with Washington State’s Long-Term Care plan and payroll tax (WA Cares).
I’m the Senior Internal Wholesaler (been here since 2006) at AIM, one of the largest wholesalers of Long-Term Care (LTC) in the country. In addition to our usual LTC business, we are the Managing FMO for one of the worksite carriers and as such enrolled more than 100 cases and set up an additional 75 that couldn’t be enrolled due to technology and capacity constraints.
This payroll tax was supposed to commence at the start of 2022, but even Democrat legislators realized it would have been a disaster and pushed back the start date to July 1, 2023. They said this would enable bureaucrats to fix the many problems with the plan. In your opinion, were the problems fixed? If not, what more should have be done?
Some of the problems were addressed (Idaho residents, Oregon residents, military and special visa) but four key pieces were left untended:
- Modifying the exemption paperwork to make it more detailed (carrier info) and require ongoing verification to stop residents from gaming the system
- There is no mechanism for residents aging in (turning 18) to purchase coverage and establish an exemption
- There is no mechanism for someone moving to WA to purchase coverage and establish an exemption
- There is no mechanism for college students who are graduating to purchase coverage and establish an exemption
Prior to the original start-up date of the tax/plan, nearly a half million residents bought private plans and were approved to opt-out of paying the tax. Will all of these people automatically be able to opt-out of the tax when it commences in July?
That is the way the plan is supposed to work.
Thousands of other Washington State workers attempted to opt out in 2021, only to find no private plans available or became very frustrated and did not obtain a plan. Will there be any opportunity for these people to opt-out before the tax starts?
The temporary shut-down of the private market was an unintended (and sad) consequence of the way the legislature chose to manage the early phases of the plan in terms of communication. There has been nothing announced about opt-out opportunities other than the timeline originally set forth.
Previously there were many people who were forced to pay into the plan, yet they will not be eligible to receive benefits (those near retirement and those who retire out of state). Have these problems been fixed?
Those problems have not been resolved as of yet.
There has been much concern about the solvency of the plan. In your opinion, will the plan be funded well enough to meet expenses or will lawmakers need to raise the amount that workers are taxed?
The plan is not appropriately funded; it seems highly likely that the tax rates will get raised very soon.
There are many people who believe that since the plan’s benefits can be used up in a matter of weeks, that the Democrats will soon rapidly increase the tax to pay for longer coverage. In your opinion, how much higher will the tax need to be to pay for complete long-term care coverage for everyone?
Any move the Dems make will be simply to ensure solvency.
The unintended benefit to the WA Cares campaign in 2021 was the previously mentioned nearly 500,000 residents who now have private insurance. Those people all have at least a two-year calendar period where they have private coverage before they can access Medicaid benefits – an outcome no one expected.
With that in mind, in my opinion, the best thing that could happen would be for the legislature to set forth a second “Exemption Period” in 2025 where residents can purchase private LTC and qualify for an exemption (beginning in January 2026) but surrender any tax they have paid to that point in time.
It won’t be a popular move politically but the budget wonks will understand what another 500,000 exempt residents means to the Medicaid bottom line.
Getting an honest answer about the true mission of WA Cares may never happen. The disingenuous answers and misleading TV advertising out there now are doing nothing to lessen the questions. When all is said and done what it will likely end up doing is provide some minimal funding to offset future Medicaid expenses. And for some working residents with significant medical conditions, that is better than nothing.
The problem is that the cost of care in Western Washington now is significantly more than the $100 a day the plan allows and there is nothing in place to allow the Fund to invest collected monies to provide growth as is usually found in private LTC policies.
If you would like to contact Mike Anderson, you can reach him at: [email protected]