Last year, the Legislature delayed Washington’s long-term care (LTC) program by 18 months. Unless action is taken in the upcoming legislative session, premiums will be assessed beginning July 1, 2023, and benefits will be available beginning July 1, 2026.

Under statute, benefits are only payable to Washington residents—even if a nonresident had previously worked in Washington and vested in the program. In our 2021 report on the program, we noted that this exclusion of vested-but-nonresident individuals is contrary to typical social insurance programs. We identified this as one of the reasons Washington should reconsider the LTC program entirely.

The 2022 supplemental operating budget required the Long-Term Services and Supports (LTSS) Trust Commission to “develop options for allowing persons who become qualified individuals and subsequently move outside of Washington to access benefits in another state if they meet the minimum assistance requirements to become an eligible beneficiary.”

The LTSS Trust Commission met yesterday and discussed recommendations on this topic from its portability workgroup. The two options from the workgroup would not fix the problem. The recommendations document notes,

Making benefits portable would add cost to the program. Much of the cost of portability would likely come from younger workers who tend to be more mobile during their careers. Adding them into the cohort of people who can receive benefits after ten years of paying in would drive up the cost for all Washingtonians up to .36 basis points.

Take two people who work in Washington for 10 years, thereby vesting in the LTC program:

• The first continues to work in Washington for another 20 years and stays in Washington. The LTC program collects premiums from him for 30 years. He is eligible for $36,500 (adjusted for inflation) in benefits.
• The second leaves Washington and works in another state for 20 years. He never lives in Washington again. The state collects premiums from him for only 10 years, and he is not eligible for any benefits.

If the state makes benefits portable, the second person would be eligible for the same amount of benefits as the first person even after paying premiums for a much shorter period—hence the expense of portability.

(There is a third potential outcome: Say a person pays in for 10 years and vests, then leaves Washington and works in another state for 20 years. Then he returns to Washington. Under current law, he would be eligible for the same $36,500 in benefits even though the state would have collected premiums from him for only 10 years.)

The workgroup’s first option on portability is: “Allow anyone with at least one year of qualifying coverage who leaves the state to elect portable benefits coverage by choosing to continue contributing premiums to WA Cares until the Normal Retirement Age under Social Security.” (The current normal retirement age is 67.)

The second option is: “Provide significantly reduced benefits to anyone who has paid in 10 years and then leaves the state.”

One of the selling points of the LTC program was that people would only have to pay premiums while they are working. (The premium is assessed on an individual’s wages.) By contrast, private LTC insurance plans require payments until the benefit is drawn, even if the person isn’t working.

But option 1 would potentially require a vested person who retires out of state to keep paying even though he isn’t working. For example:

• If you work in Washington for 20 years (meeting the 10-year vesting requirement) and then retire at 62 and stay in Washington, you stop paying premiums at 62 and are fully eligible for LTC benefits should you need them.
• If you retire at 62 and move out of state, under option 1 you would have to keep paying premiums until age 67 in order to qualify for LTC benefits.

(Meanwhile, under this option—as under current law—if you retire at 62, leave Washington, do not pay additional premiums, then return to WA at age 72 and subsequently need LTC, you would get the benefits.)

Additionally, with option 1, if a person opts to elect portable benefits coverage, what would be the basis for the premium if that person isn’t earning a wage? Would he have to keep paying the same premium he paid when he was working?

Neither of these options fully addresses the fundamental fairness issue at play: If you vest in a social insurance program, you should be entitled to the benefit. While I appreciate the concern about the high cost of extending benefits to these people, the response to the fiscal problem should be to rethink whether the state should be in this business, not to provide a lesser benefit to vested nonresidents or require nonresidents to pay more even after vesting.