Dear Friends and Neighbors,
Get ready. Your paycheck is about to get a bit smaller. Starting on July 1, the WA Cares Fund, a new state-run, long-term care insurance program, begins payroll deductions. For those eligible, WA Cares provides up to $36,500 for nursing care and other services.
Background: In 2019, the Long-Term Care Act, House Bill 1087, was approved by the majority party and signed into law by the governor. Republicans voted “no” on this measure for several reasons, including its deep unpopularity with voters.
- Nearly 63% of Washington voters said the long-term care payroll tax should be repealed with Advisory Vote No. 20 in 2019.
Originally set to take effect in January 2022, because of several issues with the program, the Legislature voted to delay the payroll tax by 18 months.
- Click here to learn more about the WA Cares program.
The cost: Most workers in Washington, including part-time and temporary workers, will pay up to 58 cents on every $100 of their earnings for this new program. That means, for example, someone making $50,000 per year will pay $24.17 monthly or $290 yearly.
- Use this calculator to determine how much will be deducted from your paycheck.
Are there any exemptions? If you purchased a qualifying long-term care insurance plan by November 1, 2021, and applied for a permanent exemption from the WA Cares Fund, you are not subject to the new payroll tax.
- Two deadlines in 2021 and 2022, set in law, were originally offered to those looking to opt out of the program. The final deadline for applying for those exemptions was December 31, 2022.
- The Long-Term Services and Supports Trust Commission makes recommendations regarding criteria for determining who is a qualified individual, minimum provider qualifications, service payment maximums, actions needed to maintain Trust solvency and monitoring of agency expenses. Click here to learn more or to attend meetings.
What if you missed those deadlines? Although some people were able to take advantage of the exemptions listed above, many others couldn't find a private plan in time, and countless others simply didn't know about the new payroll tax. In fact, thousands of Washingtonians were denied the opportunity to apply for long-term care insurance prior to the deadlines listed above. Why? Because nearly all long-term care insurance companies halted sales in Washington state due to the overwhelming number of new applicants.
Beyond the private insurance exemption listed above, there are a few — very limited — exemptions that exist in state law:
- Live outside of Washington state.
- Are the spouse or registered domestic partner of an active-duty service member of the U.S. armed forces.
- Have a non-immigrant work visa.
- You are a veteran with a 70% service-connected disability rating or higher.
- Learn more about exemptions here.
More on the Long-Term Care Act
When the bill was originally debated, several amendments were offered to further open exemptions for those unable to meet the deadlines listed above. Those changes were rejected by the majority party.
While I understand the good intentions behind this program, I have serious reservations about it. First, it's wrong to lock residents into a state-run program with no way to opt-out. Because Washingtonians are being denied broader exemption opportunities, those who want nothing to do with the program will still be forced to pay the tax. That's wrong.
Here are a few more of my concerns:
- With current high inflation rates, the new payroll tax is financially burdensome for the poorest among us, who often live paycheck to paycheck.
- You could pay into the system for years and receive none of the benefits. For example, if a taxpayer moves out of state when they retire, they'll lose their benefits.
- The limited benefit of $36,500 is wholly inadequate and may give a false sense of security about future long-term needs.
- The WA Cares program's solvency is already in question. It's possible, if not likely, the payroll tax will need to be dramatically increased in the future.
Other news on the upcoming long-term payroll tax:
- WA paychecks will take a hit this summer. Long-term care tax is about to get real (Tri-City Herald)
- 'Ready to go': State prepares to collect, invest funds for WA Cares program (The Center Square)
- Washington Cares Fund goes into effect on July 1. Here's what to know (The Olympian)
I hope you found this information helpful
In the next legislative session, there will be several additional efforts to modify this program and make it better. As always, if you need further information on the long-term care payroll tax or other state government-related topics, contact my office. I'm happy to help.