How one state is heading off the costs of an aging population

Perhaps the most influential age group in U.S. history, the baby boomers have shaped the workforce, the housing market and much of the nation’s culture. Now in 2023, those boomers  are entering their golden years and stirring concern among policymakers who are realizing the financial implications of serving an aging generation that makes up about 20% of the country’s population. 

By 2030, boomers could cost Medicare nearly $260 billion a year, according to the University of Southern California Sol Price School of Public Policy. With a slowing U.S. birth rate, there will increasingly be more older, retired adults than younger workers. As a result, governments are scrambling to figure out how they will generate enough tax revenue to match the demands for  services seniors need. But Washington state has hit on a novel plan that it hopes will head off those costs: An employee-funded long-term care insurance fund.

“Families will be overwhelmed because they'll have to choose between having a job and having their own economic security and retirement security, or caring for older family members. And that's a choice that people really shouldn't have to make,” said Ben Veghte, director of the WA Cares Fund, the state’s newly launched insurance program. 

Overseen by Washington’s Department of Social and Health Services, or DSHS, the WA Cares Fund aims to enable at-home or nursing home care for senior citizens at lower costs than private insurance programs. For instance, a 2022 study from the American Association for Long-Term Care Insurance estimated that a single 55-year-old man could pay a $2,200 annual insurance premium under a plan where benefits grow 3% every year, and a single woman of the same age could pay $3,700. 

Those high insurance premium costs can quickly deplete a person’s 401(k) savings, Veghte said, and even force someone to drop their coverage. “Then you’ve paid for [insurance] for 30 or 40 years for nothing,” he added. Under WA Cares, workers earning a little over $50,000 per year will contribute just $24 per month, according to the program’s website.

Starting last month, Washington-based employees were automatically enrolled in the program, which collects 0.58% from each paycheck for a long-term care fund that enrollees can claim benefits from starting in July 2026. A person can earn up to $36,500 in lifetime benefits, which will be adjusted for inflation annually starting in 2027, a DSHS spokesperson told Route Fifty in an email. By 2060, for instance, benefits could be valued at $90,000. 

The fund, the first of its kind in the nation, will cover a range of services such as the installation of home modifications like wheelchair ramps, meal delivery for individuals with restricted travel abilities, or medical supplies like adult diapers and nebulizer kits. Benefits can also go toward paying at-home care aides or qualifying family members for the care services they provide. 

Enrollees do not receive payments directly. Instead, the fund will pay health care companies for the products and services they provide. Qualifying care requirements—such as trouble bathing or using the restroom independently, difficulty with everyday tasks due to cognitive or mobility decline or struggles with meal and medication preparation—must be approved by a state employee such as a social worker. 

The program will keep older adults in their own homes and communities, which can improve health outcomes and lower care-related costs for individuals, said Aaron Guest, an assistant professor of aging at the Center for Innovation in Healthy and Resilient Aging at Arizona State University. For example, the fund could help individuals avoid going into nursing homes or other long-term care facilities, which are costly and can increase stress in patients. This program will be especially beneficial in rural communities where the nearest long-term care facility could be hours away. 

Employees may apply to be exempt from the program, and federal employees do not contribute to the fund. Self-employed individuals must opt-in. Residents can manage their account and benefits through their online WA Cares Fund account. 

This program is a solid starting point that other state and local governments may want to keep an eye on, Guest said. As people continue to age and live longer, the pressure on public and private health systems to serve their customers will only increase. 

The success of the WA Cares Fund is yet to be demonstrated, Guest said. A major marker will be how well payments can be doled out to providers in 2026. Any delay in getting benefits to the residents who depend on them could cause concerns among stakeholders and beneficiaries. 

State and local governments should continue to explore programs similar to WA Cares that can supplement the benefits of Social Security, Medicare and Medicaid, Guest said. In fact, WA Cares Fund was modeled after the Part A of the Medicare hospital insurance program, Veghte said, which also deducts money from a beneficiary’s paycheck to help cover health care costs from hospitals, nursing facilities, hospice services and others. 

“I think we’re going to see a growth of these kinds of [programs] because … you can’t just have a quarter of your population not receiving care,” Guest said. But, he wondered, “have we waited too long?”