After Washington State's Long-Term Care Tax, Other States Are Watching—and Moving

Washington State made history in 2019 when it enacted the WA Cares Fund, a mandatory public long-term care insurance program funded by a payroll tax. After a turbulent implementation—delays, exemption controversies, and political battles—the tax went live for most Washington workers in July 2023. Two years later, the program is operational, imperfect, and closely watched by legislators in a growing number of states.

The question they are asking: Can government-managed social insurance solve the long-term care financing crisis that private markets have struggled to address?

What Washington Built

The WA Cares Fund offers eligible residents a lifetime benefit of up to $36,500, adjusted for inflation over time, to cover long-term care costs. The benefit can be applied toward nursing home care, assisted living, home care, caregiver training, or equipment that supports independence at home.

It is funded by a 0.58 percent payroll tax on Washington workers—for a worker earning $60,000 per year, that amounts to roughly $348 per year. Employers contribute nothing; the employee bears the full cost.

The benefit is modest by design. At current nursing home rates in Washington—well above the national median—$36,500 covers a few months of care, not a multi-year stay. But the program's architects argue that the goal was never to cover all costs. It was to provide a meaningful first layer of funding that reduces the number of people who must spend down to Medicaid, supports those who prefer home-based care, and creates infrastructure for a broader solution.

The Exemption Controversy

Washington's rollout was complicated by a significant opt-out problem. When the payroll tax was first announced, workers with existing private long-term care insurance were granted a one-time window to apply for an exemption from the tax and the benefit. The response was enormous—hundreds of thousands of workers rushed to purchase private policies to qualify for the exemption, overwhelming insurers and raising concerns about the program's long-term solvency.

The exemption window closed, and the state has since refined its eligibility rules. But the experience illustrated how sensitive the design of a mandatory program can be, particularly when it creates incentives for higher-income workers to opt out.

States That Are Moving

New York has emerged as the state most seriously advancing its own long-term care social insurance program. Proposals circulating in the New York legislature contemplate a mandatory payroll tax similar to Washington's, with a larger benefit amount reflecting the state's higher cost of care. As of 2025, legislative committees have held hearings on multiple versions of the bill, and advocates believe passage is more a matter of when than if.

California, Minnesota, and several other states have also convened task forces, commissioned feasibility studies, or introduced early-stage legislation. The common thread is recognition that private long-term care insurance—which once covered millions of Americans and was expected to become the dominant financing mechanism—has contracted dramatically. Insurers exited the market, premiums on existing policies have increased sharply, and the product has become inaccessible to many middle-income households.

What Makes the Problem Hard

Long-term care is an actuarial nightmare. Unlike life insurance, where the event is certain and only the timing is unknown, care need is genuinely uncertain—some people need no formal care at all, while others need several years of intensive support. Private insurers have found it nearly impossible to price policies that remain affordable to consumers while remaining viable for the company.

Social insurance programs spread risk across a far larger pool—the entire working population—and rely on the fact that most people will pay the tax for decades before any benefit is needed, or will never need long-term care at all. That pooling is what makes modest premiums mathematically feasible.

Whether the states watching Washington will move quickly enough to address the coming wave of baby boomer care needs remains an open question. What is clear is that Washington's experiment has made the conversation real in statehouses that were previously content to leave the problem to individuals and families.