State Long-Term Care Programs: WA Cares Fund and What's Coming to Your State

Washington became the first state to run a mandatory LTC payroll program. As of July 2026, it's paying benefits. More states are watching closely. Here's what these programs actually provide — and whether they change what you need to plan privately.

Why states are creating LTC programs

The math behind state-run LTC programs is simple: Medicaid is the largest payer of long-term care in the United States, consuming a growing share of every state budget. As baby boomers age into their 80s, states face a choice between raising Medicaid taxes, cutting benefits, or finding a new mechanism to shift some cost to individuals before they spend down to Medicaid eligibility.

The policy model they landed on: mandatory payroll deductions — like Social Security — that build a modest personal benefit to bridge the gap before Medicaid kicks in. Washington state was first. At least 12 others are studying similar proposals.

The WA Cares Fund: what it actually does

Washington's Long-Term Services and Supports Trust Act created the WA Cares Fund, with mandatory premium collection beginning July 2023 and benefits becoming available statewide July 1, 2026.¹

The tax: 0.58% of gross wages

Washington employees pay 0.58% of gross wages as a payroll deduction — the employer cannot absorb this cost by law. The rate is capped at 0.58% by statute, though the program can lower it in surplus years.²

On a $100,000 salary, that's $580/year. On a $300,000 salary, $1,740/year — with no wage cap (unlike Social Security's $176,100 ceiling for 2026). Higher earners pay proportionally more for the same lifetime benefit.

The benefit: $36,500 lifetime, starting July 2026

Each qualifying Washington worker who meets the vesting requirements can access up to $36,500 in lifetime LTC benefits beginning July 2026. The benefit amount is indexed for inflation after that initial figure.¹

Benefits can be used for a broad range of services: home care, adult day services, assisted living, memory care, nursing home care, caregiver training for family members, and home modifications.¹ The $36,500 is a total balance — not a monthly or annual allowance — and is exhausted over time as services are used.

Vesting requirements: 10 work credits

To collect benefits, you must have earned at least 10 work credits — one credit for each year you worked at least 500 hours in Washington while contributing to the fund. There's also an accelerated pathway: 3 years of contribution within the 6 years preceding an LTC need.

Residents who move to Washington later in life may not accumulate enough credits before they need care. And those who move out of Washington after contributing may not be able to claim benefits depending on residency at the time of need.

Reality check: $36,500 against actual LTC costs

The WA Cares benefit sounds meaningful until you put it against real care costs.

Cost data from Genworth 2025 Cost of Care Survey, adjusted for 2026 inflation.

Average LTC stays last 3+ years for women and 2+ years for men. The worst scenarios — dementia, Parkinson's, severe stroke — routinely run 7–10 years. $36,500 covers under a year of care in virtually every scenario. It's a useful supplement to a plan, but not a substitute for one.

There's also the wage-cap asymmetry worth noting. A $300,000-per-year earner who contributes $1,740/year for 20 years pays $34,800 into the fund — nearly the full benefit — before ever collecting. For high earners, WA Cares is a poor deal compared to private insurance or self-funding strategies at the same dollar amount.

Opt-out: the window is closed for most people

Washington allowed a one-time private insurance opt-out window. The rules:

• Original opt-out: Washington employees who purchased qualifying private LTC insurance before November 1, 2021 and applied for an exemption by December 31, 2022 could permanently exempt themselves from the payroll tax.
• That window is permanently closed — no new private insurance opt-outs are available. You cannot buy a policy today and opt out.

If you're a Washington worker who did not opt out in 2021–2022, you will pay the WA Cares payroll tax regardless of any private LTC coverage you purchase today.

What changed in 2025: if you already opted out

Washington's 2025 SB 5395 clarified an important point: if you opted out in 2021 using private LTC insurance, you are no longer required to maintain that policy to keep your exemption.³ Many Washington residents bought LTC policies solely to avoid the payroll tax. You can now cancel that policy without losing your exemption — if you already have it. The policy may still make sense on its own merits; that's a separate question.

Re-enrollment window: January 2026 – June 2028

Workers who hold a private insurance exemption and decide they want to join the WA Cares Fund can voluntarily cancel their exemption and re-enroll before July 1, 2028.⁴ After that date, the opt-out exemptions become permanent and re-entry is no longer available.

Current exemption categories that still apply

• Non-Washington residents: If you live outside Washington state (even if you work there), you may be exempt from premium contributions.
• Military spouses and registered domestic partners of active-duty service members.
• Veterans with 70%+ service-connected disability: Permanently exempt.
• Tribal members under some circumstances.

These exemptions apply to the payroll tax going forward; they don't accumulate credits for future benefits.

Should Washington residents still buy private LTC insurance?

Yes, for most households in the $500K–$10M+ range — and the WA Cares benefit doesn't meaningfully change the math.

The $36,500 lifetime benefit covers early months of a care stay. A realistic LTC exposure — three years of home care plus two years of memory care — could reach $350,000 to $500,000 in today's dollars. WA Cares covers roughly 7–10% of that. The other 90%+ is your problem.

For Washington households who already opted out in 2021 and now are reconsidering their private policy (since the requirement to maintain it is gone): the question is whether the private policy makes sense on its own merits, independent of the tax savings. If you're in the 55–65 age window and still healthy, the policy likely makes sense for reasons that have nothing to do with WA Cares. If your health has changed significantly or the policy has had premium hikes, that decision framework is different.

What other states are doing

Washington is the only state currently collecting premiums and paying benefits. But several others are actively studying similar programs:⁵

The pattern to watch: states that pass LTC tax programs typically include a private insurance opt-out window — usually open for 12–18 months before premium collection begins. If you live in California, New York, or another state considering this legislation, buying qualifying LTC insurance before the opt-out window closes will likely be your only chance to avoid the payroll tax if the law passes.

Unlike Washington's original 2021 window — which many people missed — future windows may be better publicized. But the window exists only once. By the time a law appears in the news, the purchase lead time may be short.

What "qualifying" LTC insurance means for opt-outs

Washington's original opt-out required an individual policy that met specific minimum benefit standards — not just any policy with "LTC" in the name. Key requirements at the time of Washington's window included:

• Daily benefit of at least $100/day (most real policies far exceeded this)
• A minimum benefit period
• A licensed, qualified tax-qualified LTC contract under IRC §7702B
• Hybrid life+LTC policies were not accepted — only standalone LTC insurance

Other states are likely to establish similar standards, but definitions may vary. If a state opt-out becomes available in your state, a fee-only advisor can help you confirm whether a policy you're considering actually qualifies.