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Dear Friends and Neighbors,
Ready for another payroll tax deduction? Starting in July, Washington will become the first state to deduct taxes from workers' paychecks to finance a new long-term care benefit for residents. The WA Cares Fund begins payroll deductions on July 1. For those eligible, WA Cares provides up to $36,500 for nursing care and other services.
Long-Term Care Act
Approved by the majority party in 2019, the Long-Term Care Act, House Bill 1087, was signed into law by the governor despite its deep unpopularity with voters. In fact, with Advisory Vote No. 20 in 2019, nearly 63% of Washington voters said the long-term care payroll tax should be repealed.
Along with several of my legislative colleagues, I voted “no” on the Long-Term Care Act. Why? Because the numbers don't add up. The WA Cares program's solvency is already in question. The limited benefit of $36,500 is wholly inadequate. Along with giving a false sense of security about future long-term needs, it's likely the payroll tax will need to be dramatically increased in the future to keep up with demand.
The cost
As the fund goes live, all full-time, part-time, and temporary workers in Washington state will see a decrease in their paychecks. 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.
- Click here to learn more about the WA Cares program.
Are there any exemptions?
One of the most frequent questions my office receives on the program is how to apply for an exemption. 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.
- Unfortunately, thousands of Washingtonians looking to apply for an exemption could not do so. That's because, due to an overwhelming number of applicants, private insurance companies halted sales in Washington state — making it impossible to find private long-term care coverage and apply for an exemption.
- Two deadlines in 2021 and 2022, set in law, were initially offered to those looking to opt out of the program. The final deadline for applying for those exemptions was December 31, 2022.
- When the bill was originally debated, several amendments were offered to further open exemptions for those unable to meet the deadlines listed above. The majority party largely rejected those changes.
- 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.
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
While I understand the good intentions behind this program, 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.
I'm also concerned, with current high inflation rates, the new payroll tax will place yet another financial burden on those living paycheck to paycheck. Worse yet, 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.
I hope you found this information helpful
During the 2024 session, there will be several additional pushes to modify this program and make it better. Let's hope we've got the votes to get those changes across the finish line for the sake of all Washingtonians. 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.
It's an honor to serve you!
Sincerely,
Alex Ybarra
