Mandatory tax pays for long-term care insurance many will never collect – and there is no way out
Note: The following e-newsletter was sent to Sen. Chris Gildon’s subscribers July 17, 2023. To subscribe to Sen. Gildon’s e-newsletters, click here.
This week I joined Senate Republican leaders in calling for a reprieve from the new WA Cares program and payroll tax. With me are Senate Republican Leader John Braun and Sens. Lynda Wilson and Curtis King. Our proposal would allow Washington residents to opt out of the program. To see this news conference, click here or on the video above.
Dear Friends and Neighbors,
Did your last paycheck look smaller? A new payroll tax took effect July 1 for a never-before-tried state program of long-term care insurance. Unfortunately, this program is riddled with problems. The biggest one is that there is no way out.
The idea is worthy. Many of us will need in-home care or a nursing home stay when we get older. The costs are enormous and insurance is a good idea. But the new WA Cares trust-fund program is so inadequate that it is hard to imagine anyone signing up if they had a choice.
Payouts are limited to the amount you put in. The lifetime maximum benefit is just $36,500 at present, about enough for a three-month nursing home stay. Anything more, you pay. If you move to another state, you can’t collect. In fact, the program’s solvency depends on rules that will prevent many contributors from getting their money back.
The new payroll tax costs 58 cents for every $100 in income, or a $290 tax on anyone making $50,000 a year.
A half-million Washington residents dodged this bullet two years ago, and opted out by obtaining better insurance policies on the private market. That opportunity has ended. Exemptions are available for military families and other select groups, but most people won’t qualify. The way the law works, if you saw the deduction on your last paycheck, you can assume you are stuck as long as you live and work in Washington.
The tax is new but we’re already hearing complaints from workers who looked at their latest paystubs. This will be a major issue in the 2024 legislative session. I had the honor last week of joining Senate leaders in announcing the first proposal in this new reform debate. We would allow workers to permanently opt out of participation in WA Cares, upon request. There would be no need of proof of other long-term care coverage. Tax refunds would be provided. We’ll have more details when the bill is drafted for introduction in the 2024 session.
We didn’t vote for the program, but repeal is unlikely under current legislative leadership. Solutions should put the people first. It’s your money, and you should be able to decide how to spend it.
Great news! Ecology can cut gas prices
Will state agency relent on rules that have given Washington the most expensive gasoline in the nation?
For the last few weeks, we’ve been hearing the governor talk about conspiracies by oil companies to drive up the price of gasoline. It’s the “anyone but me” game we often see in politics. Washington now has the highest gasoline prices in the country, according to the American Automobile Association – an average $4.96 a gallon — and the cause is clear. Gas prices shot up in January when the state’s new cap and trade program took effect. Cost of the program now is about 45 cents a gallon. Our higher costs are reflected rather precisely in the increased prices we see at the pump. This is exactly what the experts predicted when our colleagues passed the cap and trade bill in 2021 — not the pennies on the gallon the governor promised when he pushed the legislation.
This argument diverts attention from fact that the state Department of Ecology can take action, right now, to cut gas prices – without waiting for the Legislature to come back in session next year and pass a bill. Forty-two lawmakers signed on to a letter I authored telling Ecology how to do it. Now it’s up to the agency to respond.
The issue has to do with the complex credit marketplace Ecology set up as it was implementing the bill. We looked at all the dials that might be turned and levers that might be pulled. We found many rules the agency can adjust to relieve pressure on Washington gas prices. You can read more about our suggestions here.
The Department of Ecology has the authority to make these changes on its own. This is a question of political will. Let’s end silly arguments about “price gouging” and make course corrections before prices get any worse. The average gas price nationwide, by the way, is just $3.52.
On the air
Thanks for reading — it is an honor serving you!
Sen. Chris Gildon, 25th Legislative District
Deputy Leader, Senate Republican Caucus
PHONE: (253) 281-1746
MAILING ADDRESS: P.O. Box 40425/ Olympia, WA 98504
LEAVE A MESSAGE ON THE LEGISLATIVE HOTLINE: 1-800-562-6000
NOTE: Written communications are subject to disclosure under the Washington Public Records Act.