Dear Friends and Neighbors,
I recently heard from many of you regarding the payroll tax that will be implemented next year to fund long-term care. I know many of you have questions and concerns regarding this new tax and I wanted to provide you with background information on this topic and what’s coming next.
In 2019, the legislature passed HB 1087 which created the WA Cares Fund. Under this bill, most Washingtonians, both public and private W-2 earners, would receive a onetime $36,500 benefit for long term care. This will be funded by a mandatory payroll tax of 58 cents for every $100 of income starting in 2022. This is on top of all the other state and federal taxes workers already pay.
I, and most of my Republican colleagues, did not support this bill for several reasons. I acknowledge that many individuals and families are not prepared for the financial cost of long-term care. At its best, this is seen by many as a modest, government-administered, worker tax-funded program that potentially offers short-term relief. If you have a friend or loved one receiving long-term care in a nursing home facility or at home, you know very well that $36.5k doesn’t go very far. At its worst, many employees will pay into this program and never receive any of its benefits and there is only one opportunity to opt out of this mandatory payroll tax.
Before the bill even passed, lawmakers knew the amount of the payroll deduction will need to increase in future years as the current contribution rate will likely fall short of funding this program — meaning we can all expect that 58-cent tax to go up over time with a simple majority vote of the legislature! If individuals wish to opt out of the state mandated program, they must purchase private insurance by October 31 and submit a withdrawal application to the Washington State Employment Security Department before the end of the year.
I also want you to be aware of the fact that if you are retire between now and 2025, you will pay into this program but will not be eligible to receive any benefit from it; unfortunately, you do not own this policy, the state does. This is also the case for individuals who move out of state at any point after they are enrolled, they will no longer be eligible to receive this benefit. For workers moving into Washington state in and after 2022, they will be automatically enrolled in this program without the choice to opt out. The same is true for 16 and 17-year-olds joining the workforce.
If you would like more information on private long-term care insurance companies approved to sell in Washington state, check out the Office of Insurance Commissioner’s website. I have also provided the following Q&A below to help answer your questions and will be sending out more information as we get closer to the reporting dates. Please do not hesitate to contact my office if you have any questions or concerns.