A bill that would make it harder for employees to opt out of the upcoming long-term services and supports program (and its associated payroll taxes) is making its way through the Legislature. AWC is working with other local government employers to ensure that employees have more time to consider their options when choosing a long-term care insurance program that’s right for them.

The Long-Term Services & Supports trust program (LTSS) was passed in 2019 to create a first-in-the-nation public long-term care benefit for Washington workers. Benefits are intended to be used to help cover costs of daily living activities for people needing long-term care, like adult day services, in-home personal care, and family caregiver respite, among others. The benefit is funded by a 0.58% payroll tax from employees. Employers are not taxed, though they are responsible for collecting and remitting the premiums to the state. There is no salary cap on the LTSS payroll tax. By way of comparison, the Paid Family & Medical Leave payroll tax is 0.4%, shared by employees (0.264%) and employers (0.136%) and is limited to wages under the Social Security cap (for 2021, $142,800). To qualify for LTSS benefits, employees must pay premiums for at least three of the most recent six years, or at least 10 years total. There is also a $36,500 lifetime benefit cap.

Implementation of LTSS occurs in stages. Employees are required to start paying the payroll tax in January 2022 and cannot apply for benefits until January 2025. Employees that have alternative long-term care insurance can apply for a permanent exemption from the tax. However, employees must apply for the exemption between October 1, 2021 and December 31 of 2022. Employees that opt out of the payroll tax are permanently ineligible for LTSS benefits.

This year’s bill, HB 1323, sponsored by Rep. Steve Tharinger (D–Port Townsend), originally dealt only with self-employed people and federally recognized tribes that wished to opt into the LTSS program. However, it was amended, and the current version would effectively require employees that wish to opt out of the program to have already purchased alternative long-term care coverage by a mid-July deadline. That would give employees that do not already have alternative coverage very little time to find coverage if they wished to apply for a payroll tax exemption. Many city employees would likely not even know about the deadline and its ramifications. The July deadline also gives employers, like cities, very little time to explore possible long-term care benefits alternatives and make them available to employees.

To address the problem, AWC is collaborating with other organizations to ask that the deadline to purchase alternative coverage be removed or pushed back to December 31 of this year, to give employees more time to consider alternative long-term care coverage. AWC will continue to engage legislators and try to ensure that the deadlines they establish give city employees a fair chance to consider their options.

HB 1323 is currently on second reading in the Senate, awaiting scheduling for a floor vote. The bill has been amended by the Senate in committee and must return to the House for concurrence before going before the Governor.