How to Calculate Your WA Cares Fund ROI

Why ROI Is the Right Frame

Most public discussion of the WA Cares Fund focuses on the tax rate — 0.58% of gross wages. That number tells you what you're paying, but it doesn't tell you whether you're getting a good deal. For that, you need to compare what you put in over your working years against what you stand to get back.

Annualized ROI (also called CAGR — Compound Annual Growth Rate) is the standard financial metric for this. It answers the question: if your contributions were an investment, what annual return rate would produce the benefit you'd receive? That number can then be compared directly to other financial instruments: savings accounts, bond funds, index funds, or the private LTC insurance market.

Step 1: Calculate Your Total Contributions

The WA Cares Fund tax is 0.58% of gross wages, with no income cap and no employer match. Your total lifetime contribution is the sum of 0.58% of each year's salary over your working career.

If your salary grows over time, this is a geometric series. The formula used by our calculator is:

If your salary doesn't grow (g = 0), the formula simplifies to: Cost = S × τ × n.

Example

A 30-year-old earning $90,000 per year with 2% annual salary growth, planning to retire at 65, would contribute for 35 years. Plugging those numbers in:

Over a 35-year career with modest wage growth, this person contributes approximately $26,100 to the fund.

Step 2: Project the Future Benefit Value

The current base benefit is $36,500. The WA Cares Fund applies annual inflation indexing to this number, so by the time you're likely to claim it (say, at age 80), the benefit will be larger in nominal terms.

Example continued

Our 30-year-old plans to claim the benefit at age 80 — 50 years from now. At 1.5% annual inflation:

Step 3: Compute the Annualized Return

Now you have two numbers: what you put in ($26,100) and what you stand to receive ($76,800), with 50 years between the first contribution and the benefit claim. The annualized ROI formula is:

Example concluded

For this worker, the WA Cares Fund is mathematically equivalent to an investment returning about 2.16% per year — roughly in line with inflation and the current yield on Treasury Inflation-Protected Securities (TIPS), but below the historical average return of a broad stock market index fund.

What the ROI Number Actually Tells You

The annualized return figure is a useful comparison tool, but it requires context:

• It assumes you actually need long-term care. If you never need care, your effective return is -100% regardless. Conversely, if you need care earlier than projected, your return improves. The calculator lets you model different "care age" scenarios for exactly this reason.
• It doesn't account for the insurance value. ROI as calculated here treats this as a pure investment. But it's also insurance — the value of having a guaranteed payout if you need care is real even if you never claim it, similar to how home insurance has value even if your house never burns down.
• High earners see lower returns. Because the benefit is capped at $36,500 base while contributions are unlimited, workers earning $200,000+ per year contribute far more than lower earners for the same maximum benefit. The ROI calculator makes this gap explicit.
• Vesting is binary. If you don't reach 10 qualifying years (or another vesting pathway), your return is exactly zero regardless of how much you contributed. The calculator flags this with a vesting warning.

Comparing to Alternative Investments

For context, here's how the WA Cares ROI typically compares to other options for the same after-tax dollars:

This comparison doesn't make WA Cares "bad" — it's not an apples-to-apples comparison because financial investments don't provide long-term care coverage. The point is to give you an informed frame of reference.