A bill that moves up the deadline for employees to opt out of the state’s upcoming long-term services and supports program (and its associated payroll taxes) is on its way to the Governor. AWC partnered with other organizations and employers to successfully push back the opt-out date to November 1, 2021 to allow employees more time to consider their long-term care options. We appreciate the support from Senator Mark Mullet (D–Sammamish) and Senator Ron Muzzall (R–Whidbey Island) who pushed for the change.

Earlier this month, we updated you on a late-breaking amendment to HB 1323 that would have required employees wishing to opt-out of the upcoming state Long-term Services and Supports Trust Program (LTSS) to find alternative long-term care coverage by late-July of this year in order to qualify for an exemption from LTSS payroll taxes. Proponents were concerned that if too many employees were allowed to opt-out of the payroll taxes the program would no longer be actuarially sound. AWC, business and employer groups, and unions all advocated for a later “purchase by” date to give employers a more realistic chance to look into alternative long term care offerings for employees and to give employees a fair chance to explore their options before being locked into the LTSS program’s payroll taxes.

This advocacy led to an amendment adopted by the Senate that pushed the deadline for employees to purchase alternative coverage to November 1, 2021. The House concurred in the amendment on April 14 and the bill is now on its way to the Governor. Assuming the Governor signs the bill, the key takeaway is that for an employee to qualify for an exemption from the LTSS payroll taxes, an employee must have purchased alternative long-term care coverage by November 1. Employees that get alternative coverage by the deadline can apply to the Employment Securities Department for a permanent payroll tax exemption after they have completed their LTSS exemptions process rulemaking. ESD will accept exemption applications between October 1, 2021 to December 31, 2022. Exempted employees will be permanently barred from receiving benefits from the LTSS program.

As a reminder, the LTSS trust program is a long-term care insurance program that allows qualified beneficiaries up to a lifetime benefit cap of $36,500 to help pay for long term care expenses like in-home personal care, adult day services, family caregiver respite, etc. The program is funded by a 0.58% payroll tax paid by all employees (collected and remitted to the state by employers). Unlike Paid Family & Medical Leave, there is no salary cap or employer share for the payroll tax. Employees begin paying the tax January 1, 2022. Qualified individuals can apply for LTSS benefits beginning January 2025.

If signed by the Governor, HB 1323 will go into effect July 25.