Ericksen calls for governor to suspend new payroll tax for long-term care insurance

Ericksen among 23 senators urging governor to hit pause on poorly thought-out program

  • All Washington workers face tax unless they obtain private insurance by Nov. 1
  • Private insurers have pulled out of Washington market
  • Many will pay state tax but receive no benefits
  • No way out once you’re in

OLYMPIA – State Sen. Doug Ericksen, R-Ferndale, is among 23 senators calling on Gov. Jay Inslee to suspend a new payroll tax for a poorly designed long-term care insurance program.

Among other things, the state insurance policy won’t pay if you live out-of-state, and meager benefits will only partially cover nursing home costs. Participation is mandatory unless you obtain private long-term care insurance before Nov. 1, but most insurers have stopped selling in the Washington market. And once you’re in the state program, there’s no way out.

“The state long-term care insurance program is so awful that if a private insurance company were to propose it, I doubt the state insurance commissioner’s office would approve it,” Ericksen said. “Many who pay into the program will never see a dime. The only way out is to buy a private insurance policy right away, but private long-term care insurance is almost impossible to get in the state of Washington. The worst part is that once you’re enrolled in the state program, you are stuck with this turkey for life.

“Gov. Inslee has demonstrated his willingness to use his emergency COVID authority to suspend state laws. If any law deserves suspending, it’s this one. And the sooner he does it, the better.”

The state’s new long-term care insurance program kicks in Jan. 1, launching a new payroll tax of 58 cents per $100. That’s about $437 a year for a worker making $75,000. The maximum payout cannot exceed the amount contributed, and is capped at a lifetime total of $36,500. Money can be used for in-home or nursing home care.

But the maximum payout is enough to cover only a few months of nursing home care, and many who pay into the program won’t be able to collect. The state won’t pay when retirees move to other states. Oregon and Idaho residents who work in Washington will be required to pay, yet they will not receive benefits unless they move to Washington. Those currently over 55 will collect only under limited circumstances. And there is no way to opt-out of the program once it begins.

“Our colleagues were so busy celebrating when they passed this legislation that they forgot to think things through,” Ericksen said. “That’s why we fought last session to give people time to obtain better policies from private insurers. But the insurers have been overwhelmed and most are no longer selling policies to Washington residents. We need to put this program on hold, and give people a choice.”

The letter to Inslee is signed by 21 Senate Republicans and two Democrats, Sen. Tim Sheldon, D-Potlatch and Sen. Mark Mullet, D-Issaquah.