Class Action Argues Washington WA Cares Benefits Fund Preempted by Federal Retirement Law

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A proposed class action aims to challenge Washington’s Long-Term Services and Support Trust Program, whereby workers in the state will begin to pay into a trust fund $0.58, after tax, for every $100 earned. 

The 21-page lawsuit contends that the program, referred to as WA Cares and set to go into effect January 1, 2022, is unenforceable given it violates the federal Employee Retirement Income Security Act and state laws governing employee benefit plans and multiple employer welfare arrangements. 

The suit states that WA Cares, passed in 2019, is the nation’s first public state-operated long-term care insurance program. The aim of the program, through which an eligible participant can receive a lifetime maximum of $36,500 in benefits, is to help Washington residents preserve their savings and prevent family caregivers from losing benefits should they have to leave the workforce. 

According to the lawsuit, the premium assessment of .58 percent on all employee wages is not sufficient to fund the promised benefits, and the WA Cares trust is currently projected to be depleted by 2076, per the suit. 

Those eligible for WA Cares benefits must be Washington residents who have paid premiums into the program for either a total of 10 years without interruption of five or more consecutive years, or three years within the last six years from the date the application for benefits is made, the complaint states. Moreover, to qualify for WA Cares benefits, an individual must have worked at least 500 hours during each of the 10 years or each of the three years, as applicable, the case says. 

A significant contention, the lawsuit relays, is that there is no cap on wages subject to the WA Cares premium. 

“For example, an employee with wages of $65,000 will pay $377 in premiums each year, while an employee with wages of $250,000 will pay $1,450 in premiums each year,” the suit says.

The complaint also points out that older individuals who plan to retire in the next decade will be required to pay premiums toward the WA Cares program but may never qualify for its benefits. Similarly, individuals who move out of Washington will also not qualify for benefits despite paying into the program for a period of time, the suit relays, claiming WA Cares “thereby restricts the ability of employees to travel out-of-state.” 

The lawsuit further contends that the amount of time employees in Washington were given to buy long-term care insurance before November 1, 2021 to be eligible to opt out of the program was too short of a window to do so.

“For many employees, the opt-out process was illusory,” the case claims. “Three months before the November 1 deadline, many insurance companies in Washington froze the application process.” 

According to the suit, the statutory definition of ERISA and the requirement that an insured be unable to perform basic activities are enough to demonstrate that WA Cares provides a benefit subject to the federal law.

“ERISA supersedes any state laws that ‘relate to any employee benefit plan,’” the complaint says. 

The plaintiffs are three Washington businesses and six individuals—five of whom live and work in, yet plan to retire outside of, the state, and one who does not live in Washington but whose wages are subject to payroll withholdings under WA Cares. The plaintiffs contend that the WA Cares program violates the Age Discrimination in Employment Act of 1967 and the Older Workers Benefit Protection Act. 

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