Long-term care insurance has been a significant issue in the healthcare industry for some time, with significant expenses being incurred at the end of someone’s life. Recently, Washington State created the nation’s first long-term care insurance program. Now, it is heading to court, as a group of workers and employers has filed a lawsuit against the state in an effort to overturn the law.
The lawsuit alleges that the long-term care insurance program violates the United States Constitution, State insurance regulations, and the Employee Income Security Act, also known as ERISA. While the governor was already considering revisions to the plan, this lawsuit is likely to accelerate them.
The main argument of a lawsuit is that the new public long-term care insurance program violates ERISA’s guarantees and protections against non-forfeiture. What this means is that workers cannot be denied benefits after they have paid into a specific benefit program. Under the long-term care insurance program, employees must pay a 0.58 percent payroll tax in return for long-term care insurance; however, the law also requires workers to contribute for 10 years before they can be eligible for benefits from the program. Furthermore, the benefits only apply to individuals who live in Washington State. The lawsuit alleges that because some individuals might pay into the program without receiving benefits, it violates ERISA.
Furthermore, the program alleges that age discrimination is taking place. The program charges higher-income workers higher premiums even though the state shouldn’t have any interest in the rate differences. Older workers tend to make more than younger workers, so the lawsuit claims that the new program violates multiple laws put into place to protect older workers against age discrimination. This falls under the Equal Protection clause, which is the 14th Amendment of the United States Constitution.
As the lawsuit heads to court, a number of important questions will be answered. Is the program subject to regulation by ERISA? Are employers acting as agents of the state if they collect and remit a tax premium related to the program? Does the payment into the program qualify as a premium or a tax? These questions will be answered as the lawsuit plays out in court.