Washington State is ramping up for their new publicly funded Long Term Care program, Washington Cares Fund.
This plan will require all W-2 employees working in the state of Washington, including those that live elsewhere but are working in Washington for a minimum of 500 hours per year, are at least 18 years of age and have not yet retired, to pay a .58% payroll tax. There is currently no cap on the tax and self-employed or independent contracts may opt in if they so choose.
This payroll tax, deducted from employees' pay and paid quarterly by employers, provides a benefit of $100/day for 365 days or $36,500 lifetime maximum for long term care services for Washington residents. There is no elimination period to be satisfied. The care must be provided in the state of Washington and is available only to Washington state residents. The benefit triggers are the inability to perform three of ten Activities of Daily Living (medication management, personal hygiene, eating, toileting, cognitive functioning, transfer assistance, body care, bathing, ambulation/mobility, dressing).
Residents who move out of the state for five or more years forfeit benefits and the tax/premium. One is considered claim eligible after paying the tax for three of the last six years or a total of ten years of payments, five of which must be consecutive.
There is a one-time (forever) opt-out period that begins on October 1st, 2021 and ends on December 31st, 2022. In order to opt out, the Washington employee must have qualifying coverage that was in-force prior to November 1st, 2021 and apply for the opt-out during that time.
If an employee is approved by the Employee Security Division for opt-out they will receive a letter of approval and must present it to their current and any future employer(s). The tax deduction will cease the quarter following approval. The employer must maintain these letters per the ESD.
Employers are gearing up to begin deducting the payroll tax on January 1st, 2022, which they will pay on a quarterly basis thereafter.
The State of CA has pulled together a task force and several other states appear to be poised to follow suit.
Pacific Resources is educating our clients and providing qualified coverage options to allow employees to apply for exemption.