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Insurance Law: Washington’s First-in-the-Nation Long Term Care Program Facing Lawsuit

December 6, 2021 – Matt Albrecht

Insurance Law: Washington’s First-in-the-Nation Long-Term Care

According to a report from Forbes, Washington’s first state-level publicly operated long-term care insurance program is facing a lawsuit. A group of employers and employees allege that the program violates the law, including the ever-important federal insurance law known as the Employee Retirement Income Security Act of 1974 (ERISA). Here, our Spokane insurance lawyers provide an overview of Washington’s long-term care insurance program and discuss the lawsuit.

What to Know About Washington’s Public Long Term Care Program

Long-term care is expensive. It is a problem that many families are concerned about. If an elderly or vulnerable loved one is in need of full or part-time long-term care services, the costs could be significant for your family. Long-term care insurance exists to help provide some much-needed financial protection to families.

In 2019, Washington lawmakers passed reforms creating a mandatory public long-term care insurance program. Called the Washington Cares Act, the law requires most workers to pay a 0.58 percent yearly payroll tax surcharge. In exchange, they will receive up to $36,500 in long-term care insurance benefits. Under the terms of the law, only Washington residents are eligible for coverage and an employer must generally make ten years of contributions before accessing benefits.

Notably, the Washington Cares Act allows many employees to opt out of coverage. Any individual employee who has private long-term care insurance as of November 1st is permitted to opt-out of the tax and participate in the Washington Cares Act fund for long-term care benefits. For reference, Forbes reports that nearly 350,000 state residents applied for the exemption.

Washington Cares Act is Facing a Lawsuit on Several Grounds

The Washington Cares Act long-term care insurance program is now headed to litigation. A Western Washington law firm representing three employers and six employees has filed a lawsuit on the grounds that the state’s first-of-its-kind public long term care insurance fund:

  • Violates the federal insurance law ERISA; and
  • Discriminates on the basis of age and residency.

The ERISA argument is likely to be the key issue upon which this lawsuit is resolved. One of the most important insurance regulations in the country, ERISA is a complex law. It provides some protection to workers, including strong protection against forfeiture of benefits. In effect, ERISA holds that an employee cannot be denied benefits after paying into a program. However, as currently constructed, the Washington Cares Act would deny any benefit to employees who pay into the program for fewer than ten years.

We Wrote the Book on Insurance Law in Washington State

At‌ ‌Albrecht‌ ‌Law‌ ‌PLLC, our Spokane insurance law attorneys have the professional skills and legal expertise that you can count on. With experience handling the full spectrum of insurance law matters, we know how to get results for our clients. Contact us now for a free, no-commitment case review. We handle insurance law matters in Spokane, Spokane County, and beyond.

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