Pension Funding Council keeps WA Cares premium at 0.58% after OSA valuation shows modest actuarial margin

The Pension Funding Council reviewed an OSA summary of Milliman's 06/30/2024 actuarial valuation of the WA Cares Long-Term Services and Supports Trust during its Oct. 8 meeting.

Ben Vecti, director of the WA Cares Fund at the Department of Social and Health Services, outlined the program's social-insurance design, benefit pathways (10-year career credit; near-retiree credit for those born before 1968; and a 3-of-6-year look-back misfortune pathway), the $36,500 base benefit indexed to inflation, and implementation timing (pilot IT/business processes, account opening, and July 1 benefits availability next year).

Luke Maselink summarized Milliman's valuation results, explaining that the firm projects 75-year cash flows and computes an "actuarial balance." Under Milliman's base scenario (using an ongoing 0.58% premium and current assumption set), the program showed an actuarial balance of about +3.5%, meaning projected assets would cover expected benefits and leave a ~3.5% buffer relative to expected claims. Milliman's sensitivity runs showed a large range (approximately '-14.5% to +30%) under simultaneous adverse selection and investment scenarios, reflecting substantial uncertainty in a first-of-its-kind social-insurance program.

OSA stressed the program's three-phase risk-management framework: an initial "learning" phase (through at least 2029) focused on data collection, model refinement and experience monitoring; subsequent phases would set and aim for an actuarial margin target once early experience is better understood. OSA recommended no change to the statutory 0.58% premium during the learning phase. Maselink noted that passage of a related ballot measure (Senate Joint Resolution 8201) would permit the State Investment Board to expand investments beyond diversified fixed income, which could improve projected solvency but would not immediately change valuations until policy and implementation decisions were made.

The council voted, on a roll call of 6-0, to adopt the recommendation to maintain the WA Cares premium at 0.58%.

Why it matters: WA Cares is a self-funded, state-administered long-term services program that is intended to be affordable and broadly available; the premium is community rated and statutory. OSA's valuation shows a modest actuarial margin in the base case but large sensitivity to downside scenarios, justifying a cautious approach during the early operating years. Maintaining the current premium during the learning phase preserves stability while the program begins benefit payments and accumulates more data.

Next steps: OSA will continue biannual actuarial audits and present updated valuations to the Pension Funding Council. The commission, SIB and implementing agencies will coordinate on investment, administrative, and reporting decisions as the program moves fully live.