![WA Cares revenue update: One quarter goes to administrative costs, funded by a payroll tax of 58 cents per $100 earned.](https://www.clarkcountytoday.com/wp-content/uploads/2024/08/Large_Clark-County-Today-WA_Cares_Administrative_Costs.jpg)
The program is funded by a payroll tax of 58 cents for every $100 dollars earned
Carleen Johnson
The Center Square Washington
Members of the Long-Term Services and Supports Trust Commission got an update this week on revenue collections from WA Cares, the state’s mandatory long-term care insurance program.
The program is funded by a payroll tax of 58 cents for every $100 dollars earned. After a certain number of years paying in, it offers a maximum lifetime benefit of $36,500 to offset costs associated with long-term care.
Luke Masselink, senior actuary with the Office of the State Actuary, told lawmakers premium revenue is coming in higher than projected.
“But just because this revenue is coming in higher, that doesn’t automatically meant that the financial projections when they get updated later this year are going to improve in a similar fashion,” he said.
Variability remains a factor.
“It’s hard to say, based on one year of experience, if this is a sustained deviation or if it’s just something more short term,” Masselink said. “There also remains a lot of uncertainty around projected costs for this program.”
Projections for the first 12 months of WA Cares collections were $950 million.
WA Cares Director Ben Veghte told members, “Once four quarters are collected [through the end of 2024] it should be about $1.3 billion.”
That would be about $350 million more than expected.
Sen. Karen Keiser, D-Des Moines, asked Ibrahim Dembele of the Employment Security Department about administrative costs in running the program.
“So far, we are retaining about 25 percent,” Dembele replied, which raised eyebrows among commission members.
“How much, 25 percent?” asked Keiser.
“The Employment Security Department is keeping 25 percent, yes,” he responded.
Keiser pressed again.
“But wait, administrative expenses? You can’t be getting 25%,” said the senator. “That seems excessive, to say the least.”
Dembele then said he would provide members with a complete financial accounting at the next meeting.
“If you want to break down all the calculations, I can immediately send after this meeting, how we are calculating that,” Dembele said.
Keiser said she would appreciate that.
“ESD is a passthrough agent and not actually administering anything,” she said. “DSHS actually administers the program.”
Veghte then chimed in.
“And ESD has a team doing a lot of administrative things as well: collecting premiums, administering exemptions, and so forth,” he explained.
He went on to say ESD keeps up to 25% as a cushion in case of unexpected expenses, but said actual administrative costs are much lower.
Other members continued to press, urging ESD officials to provide that breakdown of expenses and any additional revenue being set aside, suggesting that keeping 25% is unnecessary.
Veghte attempted to allay their concerns.
“I could just say that that, you know, we collected $1.3 billion this year and the administrative expenses were, you know, a tiny fraction of that, probably around 6 or 7 percent – 5, 6, 7, 8%,” he said. “I don’t have the exact number, but it’s not 25%.”
As previously reported by The Center Square, there are concerns the entire program could become insolvent if voters this November approve Initiative 2124, to make WA Care optional.
During a May Senate Labor & Commerce Committee discussion, experts told the committee that if the program was made optional for Washington state workers, many would flee, leaving the program unable to pay its way in its current form.
This report was first published by The Center Square Washington.
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