Agencies preparing for flood of WA Cares opt outs if I-2124 passes

The Washington State Employment Security Department is making plans for a flood of opt-outs from WA Cares should voters decide this November to pass Initiative 2124, making the state’s long-term care insurance program voluntary.

That was one of the main takeaways from last week’s Long-Term Services and Supports Trust Commission meeting.  

WA Cares is paid for by 58 cents out of every $100 earned deducted from workers' paychecks.

WA Cares provided a one-time opportunity for people to opt out, if they could show they had private long-term care insurance in place before Nov. 1, 2021. This opt-out provision is no longer available to new applicants.

Commission members – including staff members of ESD, the Health Care Authority, lawmakers and others – heard from the State Actuary Matt Smith, who predicted the public's reaction if the initiative passes.

Smith said those with greater long-term care needs and lower incomes could end up disproportionally participating in the program if it becomes voluntary.

That’s because higher wage earners are more likely to opt out, he explained.

“A voluntary program can lead to people leaving, and you have a decrease in premiums coming in,” Smith said.

He went on to say, “The program could become unstable, unsustainable, and what I mean by that is the inability to collect premiums that are high enough per person, to cover benefit payments.”

The commission, Smith said, is discussing the potential formation of a contingency planning workgroup “to address the solvency risks that may occur under a voluntary program.”

One of the commission members asked about the sustainability of WA Cares: “In your professional assessment, is it valuable to pursue some alternatives here because it just seems like this is going to be a huge mountain to climb in terms of sustaining the program?”

Smith then pointed back to one of his slides from the presentation and a line reading,

“risk management cannot guarantee fund solvency.”

A follow-up question cut to the heart of the matter: “For those who opt, do they get their money back?”

ESD Commissioner Cami Feek responded.

“People don’t get their money back when they opt out,” she said. “They opt out future-facing from that point forward.”

Feek noted that as the law is constructed, money is taken from workers’ paychecks every quarter, meaning those who opt out if the initiative passes, will have money deducted from their paychecks through the end of 2024.

With the first deductions from paychecks taken out on July 1, 2023, those who opt out immediately – if the initiative passes – will have paid into WA Cares for 18 months. That translates into someone who makes $75,000 a year having paid more than $650 into the program by the end of 2024.

Feek said ESD is working with the Office of Financial Management “to assess how it is, should the initiative pass, that ESD is prepared and can have a smooth, somewhat smooth positive customer experience for the implementation of an expanded opportunity for an exemption to opt out of the program.”

She said there are both administrative and resource impacts that ESD is sorting through right now.

“It’s a very short runway should the initiative pass,” Feek said, “from its passing and when ESD has to have everything in place, so we’re navigating all that now.”

Sen. Karen Keiser, D-SeaTac, queried Feek about dealing with the potentially large volume of individuals opting out.

“How do you handle that?” she asked.

Feek responded by saying, “These are all great questions that we are grappling with.”