The Washington Long-Term Services and Supports Trust Act (LTSS) (RCW 50B.04) created the WA Cares Fund which provides Washington State employees with state-funded, long-term care (LTC) benefits. An employee payroll tax will provide funding for the WA Cares Fund. Washington employees may opt out of the payroll tax if they meet certain criteria by the exemption deadlines. However, exemption from the WA Cares payroll tax disqualifies a worker from ever receiving future WA Cares benefits.

The newly created WA Cares Fund provides eligible Washington workers with state payroll tax-funded LTC insurance benefits beginning January 1, 2025.

Employee premiums completely fund the WA Cares benefits. Employers are not required to contribute to any portion of the WA Cares premium – a 0.58% ($0.58 for every $100 of earnings) state employee payroll tax funds WA Cares. Employers are only responsible for collecting, remitting and reporting these premiums. To qualify for benefits from the WA Cares Fund, a worker must have worked and contributed to the fund for:

  • At least 10 years at any point in their lifetime without a break of five or greater years within those ten years; or
  • Three of the last six years at the time they apply for the benefit and worked at least 500 hours per year during those years.
Qualified workers can receive LTC benefits totaling a maximum of up to $36,500 per year beginning January 2025.

Washington’s Employment Security Department (ESD) indexes the annual maximum benefit amount each year. To receive the benefits, an employee must be at least 18 years of age and meet the working and contribution requirements when they apply for the LTC benefits. Qualifying for benefits requires a Washington employee to get in-state care for assistance with at least three activities of daily living which are listed on the WA Cares application site.

Washington workers may opt out of the WA Cares Fund and its taxes and benefits.

Employees are eligible for an exemption from the state payroll tax if the worker:

  • Is at least 18 years old on the date they apply for the exemption; and
  • Attests that they had other qualifying private LTC insurance before November 1, 2021.

To opt out, the employee must provide identification to verify their age and apply for an exemption with ESD between October 1, 2021, and December 31, 2022. Exemption applications were available online starting October 1, 2021. Employees must provide the exemption application to ESD and to their employer to avoid incurring payroll taxes. If approved, an employee’s exemption from the payroll deductions becomes effective the quarter immediately following ESD approval. The payroll taxes begin January 1, 2022. Once an employee opts out, the employee cannot opt back into WA Cares – the exemption and opt-out are permanent. According to the WA Cares Fund exemption page, if an employee’s exemption application is approved, they are permanently disqualified from getting WA Cares benefits.

The deadline to get private LTC insurance coverage to opt out of the WA Cares Fund is October 31, 2021.

Employers are not required to offer alternative LTC coverage to employees who wish to seek exemption for WA Cares Fund. Employees must purchase private LTC insurance before November 1, 2021. LTSS gives Washington workers until December 31, 2022, to apply for the payroll exemption. Once a Washington employee opts out of the WA Cares Fund, they are responsible for maintaining private LTC coverage going forward and cannot re-enroll in the WA Cares Fund at a later date.

 


EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.

 

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Kevin Mathis

Compliance Manager – Atlanta, GA