WA Cares Fund's First Claims Put Actuarial Assumptions to the Test

WA Cares Fund began paying long-term care benefits on July 1, 2026, giving the actuarial profession its first real-world experience data for a mandatory public LTC insurance program (WA Cares Fund, July 2026). Milliman's 2024 solvency study projected 25,000 to 35,000 qualifying beneficiaries in year one and found the fund solvent through 2099 at the current 0.58% premium rate (Milliman, 2024), a set of assumptions now facing actual claimants for the first time.

Tracking state-level public LTC design since California's Healthy California for All Task Force abandoned its own modeling effort in 2021 rather than advance a workable financing structure, WA Cares is the only such program in the country to reach the benefits-payment stage. That makes its next twelve months of claims experience the sole real-world dataset the profession has for testing whether social-insurance LTC assumptions, priced years before a single claim was filed, survive contact with the people the program was built to cover.

What the Solvency Case Actually Assumed

Milliman's 2024 actuarial valuation, prepared for the Washington Office of the State Actuary, modeled a lifetime benefit of $36,500 in 2026 dollars, adjusted annually for inflation, drawn against the full working-age premium base at 0.58% of covered wages with no cap on the taxable wage floor above Social Security's maximum (Office of the State Actuary, 2024). The study found the fund's actuarial balance at 3.5% of the present value of projected claims, equivalent to a $4.4 billion surplus as of June 30, 2024, and it found the fund would stay solvent through the full 75-year projection window under most tested scenarios (Milliman/OSA, June 2024 valuation). A separate calculation embedded in that valuation put the premium rate actually required for 75-year solvency at 0.57%, just one basis point below the legislated 0.58%, a margin the study explicitly treats as thin rather than comfortable (Center for Retirement Research, Boston College, 2024).

Utilization assumptions in the model were built from national long-term care survey data rather than Washington-specific claims experience, because no such experience existed before this month. That is the structural weakness inherent in pricing any new social insurance program: the model had to extrapolate from a national population that does not necessarily face the same eligibility mechanics, benefit cap, or opt-out dynamics that Washington's specific statute created. Every one of those state-specific design choices is now capable of pushing realized utilization away from the national baseline the model started from.

The Opt-Out Pool and What It Did to the Premium Base

Washington's 2021 law let workers who held qualifying private LTC insurance before November 1, 2021 apply for a permanent exemption from the payroll premium during a window that ran from October 2021 through December 2022. The Employment Security Department approved roughly 475,000 of these private-insurance exemptions, about 12% of the state's covered workforce, and a further group of narrower exemptions, covering active-duty military, certain visa holders, and disabled veterans, brought total approved exemptions above 480,000 by 2023 (Washington ESD, 2023). For scale, the state's Long-Term Services and Supports Trust Commission has noted that only around 35,000 Washingtonians typically purchase new private LTC coverage in a given year, which means the 475,000-person exempted pool was drawn overwhelmingly from workers who already held a private LTC policy well before the state program existed, not from a wave of new private purchases triggered by the opt-out option.

The actuarial question that matters now is how that pool differs from the population still paying into WA Cares. Workers who qualified for a private LTC exemption needed, at minimum, the income and underwriting profile to buy an individual LTC policy in the first place, which skews the exempted group toward higher earners with historically lower LTC utilization rates than the broader insured population. Removing them from the premium base does not change the total number of Washingtonians who will eventually need long-term care, but it does shift the mix of who is left paying into the fund toward a population that, on average, may carry somewhat higher expected morbidity than the workforce as a whole. Milliman's 2022 study, which set the 0.57% required rate, explicitly built adverse-selection effects from the exemption structure into its projections (Center for Retirement Research, Boston College, 2024), so this is not an unmodeled risk. It is a modeled risk whose actual magnitude is only now observable, as the first cohort of claimants begins drawing against a premium base the 2022 and 2024 valuations both had to estimate rather than measure.

The Three-ADL Threshold and Boundary-Seeking Utilization

To qualify for a WA Cares claim, an applicant must demonstrate a need for hands-on or standby assistance with at least three activities of daily living, spanning categories such as bathing, dressing, eating, toileting, transferring, and cognitive supervision, verified through the state's assessment process (WA Cares Fund, 2026 toolkit FAQ). A discrete threshold like "three of six or seven ADLs" is a common design choice in both private LTC underwriting and public programs because it is administratively clean, but any bright-line eligibility rule creates an incentive structure at the boundary. Claimants and their families, working with care coordinators who understand the assessment criteria, have every reason to ensure a marginal case is documented as meeting three ADL deficits rather than two, particularly once premiums have already been paid for years with no benefit received.

This is not a hypothetical concern specific to Washington. Boundary-clustering around categorical eligibility thresholds is a well-documented phenomenon in disability and workers compensation claims administration, and it typically pushes first-year utilization above what a model built from continuous, unconstrained survey data would predict, because national LTC prevalence surveys measure self-reported functional limitation on a continuum, not against a specific state program's assessment rubric. Whether WA Cares' assessment process, run through the state's Area Agencies on Aging network rather than through an insurer's own claims adjusters, produces the same threshold-seeking pattern seen in privately underwritten LTC claims is one of the clearest testable hypotheses this first year of data can resolve.

A $36,500 Cap Against Six-Figure Care Costs

The lifetime benefit ceiling, $36,500 in 2026 and rising with inflation toward a projected $59,810 by 2046 at a 2.5% assumed annual increase (Washington ESD Fact Sheet; WA Cares toolkit, 2026), covers a fraction of what long-term care actually costs in the state. A semi-private nursing home room in Washington runs an estimated $152,570 a year in 2026, and a private room runs closer to $166,075, both well above the national medians of roughly $111,325 and $127,750 respectively (CareScout/Genworth Cost of Care Survey, 2025 data modeled to 2026). Set against those figures, the WA Cares benefit functions as a partial subsidy toward institutional care rather than a full payer, closer to 3.5 months of a private nursing home stay at the 2026 benefit level, or, if applied entirely to home-based care at the program's roughly $45-per-hour reimbursement ceiling, around 811 hours of paid in-home assistance (WA Cares Fund benefit schedule, 2026).

That gap between benefit and cost was a deliberate design choice, not an oversight. WA Cares was built to supplement informal, family-provided caregiving and delay or reduce Medicaid spend-down, not to replace comprehensive private LTC insurance, and Milliman's solvency case credits the program with generating Medicaid savings equal to roughly 10% of program costs specifically because it keeps some claimants out of institutional Medicaid coverage for longer (Center for Retirement Research, Boston College, 2024). The actuarial risk sits in how claimants respond to a partial benefit: a program that pays a capped amount may see claimants defer filing until their needs are more severe, front-loading claim durations and per-claim severity into the early months of the benefit period in a pattern that differs meaningfully from how a private LTC policy with tiered benefit levels manages the same tradeoff.

The Supplemental Market That Isn't There Yet

Washington's legislature tried to close part of that benefit gap through Engrossed Substitute Senate Bill 5291, signed in May 2025, which created a new supplemental LTC insurance product that private carriers can sell to cover costs after a WA Cares claimant exhausts the public benefit. The state Office of the Insurance Commissioner finalized its implementing rules, requiring supplemental policies to provide at least 12 months of coverage once WA Cares benefits run out, allow continuity of care providers across the transition, and offer flexible premium structures, effective March 7, 2026 (Washington OIC, 2026). As of this writing, no insurer has filed a single supplemental LTC policy for approval with the OIC (Washington OIC, 2026), which means the wraparound private market the legislature designed to sit alongside WA Cares does not yet exist in practice, and claimants exhausting their $36,500 benefit this year have no state-approved supplemental product to fall back on regardless of what they can afford to pay for one.

Metrics That Will Tell the Actuarial Story

Four measures from the first twelve months of paid claims will do more to validate or challenge the Milliman projections than any further modeling refinement could. The claims-to-premium ratio in year one will show whether the exemption-adjusted premium base is generating revenue in line with the 2024 valuation's near-term cash flow assumptions, which the study itself flags as rising sharply in the early years before vesting requirements are met broadly across the workforce (Center for Retirement Research, Boston College, 2024). The average benefit period per claimant, measured against the model's implicit duration assumptions, will indicate whether claimants are drawing down the $36,500 cap faster or slower than projected. The distribution of ADL scores recorded at claim initiation will show directly whether the three-ADL threshold is producing the boundary-clustering pattern described above. And the lapse or non-claim rate among vested workers who have paid premiums for the required period but have not yet filed will help distinguish a program with a genuinely young, healthy claimant base from one where early filings are concentrated among the highest-severity cases first, a pattern that would understate near-term claims-to-premium ratios while masking a heavier utilization wave still to come.

Metric to watch	What the 2024 Milliman baseline assumed	What would signal a deviation
Year-one qualifying beneficiaries	25,000 to 35,000 (Milliman, 2024)	Materially above range, consistent with boundary-seeking ADL claims
Required vs. legislated premium margin	0.57% required vs. 0.58% legislated (Center for Retirement Research, 2024)	A widening realized gap as exempted-pool morbidity effects surface
Actuarial balance	3.5% of present value of claims, $4.4B (OSA/Milliman, June 2024)	Faster-than-projected erosion in the next valuation cycle
Medicaid offset credit	~10% of program cost (Center for Retirement Research, 2024)	Lower realized offset if claimants defer filing past the point of Medicaid relevance

Why This Matters for Actuarial Practice

"Washington is the first state to institute this program, or anything like it," Norma Coe, a senior fellow at the University of Pennsylvania's Leonard Davis Institute of Health Economics, said of WA Cares, framing the launch as a genuine policy experiment rather than an incremental extension of existing social insurance (Penn LDI, 2026). For actuaries, that experimental framing is the point: nearly every input into the Milliman and Office of the State Actuary valuations, from utilization to lapse behavior to the interaction between a capped public benefit and a still-nonexistent supplemental market, was necessarily estimated from proxy data before July 2026, because no comparable American program had ever paid a claim. Reserving and pricing actuaries who work adjacent to LTC, whether on the legacy individual-policy blocks still absorbing rate increases or on the group stop-loss side where catastrophic claims interact with public benefit design, now have a live dataset for testing assumptions about ADL-based eligibility and adverse selection from voluntary exemption structures that previously existed only in theory.

Oregon is the next test case to watch. Its legislature directed the Department of Human Services, under a bill introduced in January 2025, to complete a feasibility study and actuarial analysis of long-term services and supports financing options, with findings due to the legislature's health committees by September 15, 2026 (Oregon SB 34, 2025), squarely inside the window when WA Cares' first-year claims data will be available for comparison. Whether Oregon, or any other state studying a similar structure, moves forward will depend heavily on whether Washington's realized claims-to-premium ratio, opt-out morbidity drag, and ADL utilization pattern track the Milliman baseline or diverge from it, and by how much.