Lawsuit seeks to head off WA Cares insurance program

A first-of-its kind long-term care insurance program in Washington state is facing a legal challenge, just ahead of its launch in January.

The forthcoming program, WA Cares, will institute premium payments of as much as 58 cents per $100 on after-tax earnings, setting up a fund that would become available to make long-term care payments by 2025. It would provide long-term care insurance only for those who have paid into the system, making current retirees ineligible.

The program is designed to address a severe shortage in coverage for long-term care, a situation that is predicted to disastrous consequences for some retirees and could financially strain states.

But opponents are claiming that the state program violates a handful of laws. In a proposed class-action case filed Nov. 9 in U.S. District Court in Washington, several small businesses and half a dozen employees allege that WA Cares violates the Employee Retirement Income Security Act, state insurance law, the Older Workers Benefit Protection Act and other laws. The program is also preempted by ERISA, the plaintiffs claim.

They are seeking to make the program unenforceable, so that employers wouldn't be required to collect the 0.58% premium from workers.

“The premium assessment, however, is not sufficient to fund the promised benefits and the trust through which WA Cares benefits will be paid is currently projected to be depleted by 2076,” the complaint stated.

Washington Gov. Jay Inslee’s office did not immediately respond to a request for comment. Inslee is named as a defendant, along with employment security department commissioner Cami Feek, acting secretary of the department of social and health services Donald Clintsman and the WA Cares program itself.

The program has a maximum lifetime benefit of $36,500 per worker, and benefits are available for those who have paid premiums for 10 years without interruptions of five or more consecutive years. Benefits are also available to those who contributed in three of the prior six years from the date of application.

“From a practical standpoint, this means that older employees who plan to retire in the next 10 years will be required to pay premiums to [the state] but may never qualify for the benefits,” the complaint read. “It also means that retirees who move out of Washington will not qualify for the benefits. WA Cares thereby restricts the ability of employees to travel out-of-state.”

However, workers can opt out of the program, if they can show that they have private long-term-care insurance coverage.

Plaintiffs in the proposed class-action lawsuit are represented by law firm Davis Wright Tremaine.