Washington's Bet on the Future of Long-Term Care

Are you concerned about the cost of long-term care? Washington state may have an answer. The state has launched the nation's first public long-term care program, financed by a small payroll contribution. This initiative aims to bridge the gap left by a private insurance market that has struggled for years.

The program, known as WA Cares, will begin paying benefits in July 2026. Workers who contribute for 10 years will qualify for a lifetime benefit of $36,500, an amount that will increase with inflation. The program has undergone several amendments, including making benefits portable so they can still be used if a resident moves out of state.

Both the required premiums and the eventual benefits are modest, as WA Cares was never intended to cover all long-term care needs. However, for older adults and people with disabilities, these benefits can help cover a range of services, including home care, transportation, adult day programs, home modifications (such as ramps or grab bars), compensation for family caregivers, and assisted living facilities or nursing homes.

The private alternative is both expensive and complicated. Historically, older policies often disappointed buyers with steep premium increases or restrictive benefits that didn't adequately cover common care settings.

Even with private coverage, buyers often face out-of-pocket costs due to daily or monthly benefit caps, lifetime limits, or waiting (elimination) periods before benefits begin. Some consumers stopped paying premiums entirely when the cost seemed to outweigh the benefit or when premiums jumped before they had received any payouts.

Current options and their limitations

The industry has tried to address its existing shortcomings with newer, more flexible policies that offer a range of benefit levels. Still, financial advisers generally recommend private coverage for households with sufficient assets (beyond their home) that are worth protecting — often cited as a few hundred thousand dollars or more — but not so wealthy that they can comfortably self-insure, a point many advisers place at a net worth in the millions.

For those who fall outside that financial range, or who never purchase a policy, there's a common misconception that the government will step in and Medicare will cover long-term care. This is largely untrue. Medicare primarily covers healthcare. When it does cover long-term care, its income and asset limits are so strict that, according to the Brookings Institution, most middle-class families are excluded or must spend down nearly all their assets to qualify. Additionally, those who do qualify often face monthslong waits for home care.

Similarly, while some state programs offer assisted living or home care through waivers, eligibility and availability vary widely.

Meanwhile, the private market itself has contracted. Most of the largest insurers — Genworth, John Hancock, MetLife — have exited the market entirely. As losses mounted and premiums spiked, consumer purchases declined. Today, an estimated 30% of applicants aged 60 to 64 are denied coverage, with the rejection rate climbing to 47% for applicants aged 70 to 74.

How insurers and states are responding

As sales of stand-alone policies have decreased, insurers have shifted toward bundling long-term care benefits with life insurance or annuities. Even with this trend, only 3% of Americans over 50 carry any long-term care coverage, according to the trade association LIMRA.

These hybrid policies address a common concern: paying premiums for years and never needing the care. However, they cost more than life insurance alone, and the life insurance payout remains modest unless the long-term care benefit is attached to a larger, more expensive permanent policy.

Generally, long-term care benefits activate when an individual can no longer perform a set number of daily activities — such as bathing, dressing, eating, using the toilet or getting in and out of bed and chairs — or when they become cognitively impaired. However, a Brookings Institution report found that under a proposed program subsidizing at-home long-term care through Medicare (with beneficiaries contributing based on ability to pay), 8.2 million Americans would be eligible — far more than currently receive home-based care through Medicaid.

Washington spent a decade developing WA Cares, and other states are now closely observing its progress. Legislation has been introduced in states including Illinois, Hawaii, Pennsylvania and Minnesota, while others have established task forces to study the issue.

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