Study shows WA Cares is on solid financial ground
What does solvency mean?
To be considered solvent, WA Cares must have enough expected future revenue (based on the premium rate set in law and investment earnings on those premiums) to pay all expected future program benefits and expenses.
Milliman, the actuarial firm that prepares the program’s financial projections, works to measure program solvency based on information at a specific point in time. To perform these projections, they gather data, make informed assumptions and estimate future program revenue, costs of paying benefits and other expenses over a 75-year projection period.
The Office of the State Actuary (OSA) is responsible for monitoring the program’s ongoing solvency and making recommendations on any changes needed to stay solvent based on the analysis provided by Milliman.
Is the WA Cares Fund solvent?
The latest study, which was completed in 2022, shows the fund is projected to be solvent at the current premium rate of 0.58% of earnings under most evaluated scenarios.
In short, based on this analysis, the program is on solid financial ground as it launches, which is good news for the many Washingtonians who will need long-term care in the future.
Is there a chance the program’s costs could exceed its revenue?
While the current analysis shows the program is on solid financial ground, it is important to note that actual results will vary from these projections.
Fortunately, there are processes in place to identify any risks to the program’s finances promptly, giving the Long-Term Services and Supports Trust Commission and the legislature plenty of time to adjust the program as needed to stay on course.
If at some point in the future, projections were to show a repeated, long-term shortfall, the Commission would use its Risk Management Framework to recommend adjustments to the Legislature that would either reduce program costs or increase program revenue to restore long-term solvency. Such adjustments could be made long before any projected shortfall could occur.
As part of the Commission’s Risk Management Framework, the Office of the State Actuary and the Commission are required to continuously monitor the program’s finances for any potential issues.
How do I learn more?
For a quick overview of the report and what the findings mean, watch this Q&A video with WA Cares Fund Director Ben Veghte and State Actuary Matt Smith.