New Washington State Long-Term Care Program and Employee Tax

Washington State has passed a new law mandating long-term care (LTC) benefits for Washington residents. This is the nation’s first public, state-operated, long-term care insurance program. It is funded through an employee payroll tax.

WHAT IS THE TAX?

Beginning January 1, 2022, Washington employees will begin paying a tax of $0.58 per $100 of payroll. This means that for every $1,000 you earn, you will have $5.80 deducted from your paycheck. There is no cap on wages. All wages (including stipends, paid time off, etc.) are subject to the payroll tax.

WHAT IS THE BENEFIT?

Once eligible, you will be able to access the long-term care benefit at $100 per day, up to a maximum lifetime benefit of $36,500. This benefit will help you pay for expenses associated with activities of daily living (e.g. dressing, bathing, etc.) if you need it. The state plan requires you to need assistance with at least three activities of daily living to be eligible to collect this benefit, which first becomes available on January 1, 2025.

Note: this benefit is not payable or portable if you live outside of Washington State when you need the benefit.

WHO IS ELIGIBLE TO RECEIVE THE BENEFIT?

To qualify for benefits, you must have worked and contributed to the fund for:

  1. A total of 10 years without an interruption of five or more consecutive years, or
  2. Three years within the last six years from the date you apply for benefits.

You also must have worked at least 500 hours during each of the 10 years or each of the three years, whichever applies.

MAY I OPT OUT?

Between October 1, 2021, and December 31, 2022, you may file for an exemption waiver with the Employment Security Department attesting that you have other qualified long-term care insurance. This other long-term care insurance must be effective before November 1, 2021. If your exemption request is granted, you will receive an approval letter you will need to provide to the ESD 113 Payroll Office. Keep a copy of this letter for yourself. You will be required to present it to all future Washington State employers to avoid paying the tax.

Note: If you opt out of Washington State’s plan, it is permanent. You may not opt back in at a later date.

Once you provide proof to Payroll of your exemption, the tax will continue to be collected through the end of the quarter in which proof was received. (For example, if you provide proof of your exemption on January 15, 2022, the tax will be collected through March 31, 2022).

RESOURCES

DATES & DEADLINES

  • 10/1/21 — Opt-out application begins
  • 11/1/21 — Qualified alternate long-term care insurance must be effective (if you have chosen to opt out)
  • 12/31/22 — Opt-out application window closes
  • 1/1/25 — Long-term care benefits become available