Staff at AWC have received a lot of questions about the upcoming exemptions process for employees that do not wish to participate in the state WA Cares Fund program and forego the payroll tax. The following summarizes what city employees must do to qualify for an exemption from the long-term care program:

1. Employees seeking an exemption from the WA Cares Fund and payroll tax must be at least 18 years old.
2. Employees must purchase a qualifying private long-term care insurance plan before November 1, 2021. If you want to know more about what alternative plans may qualify, you can visit the Office of the Insurance Commission’s guidance page.
3. After purchasing a qualifying alternative insurance plan by the deadline, an employee must submit an exemption application to ESD between October 1, 2021 and December 31, 2022. Exemption applications will be available Oct. 1.

As a reminder, anyone that is approved for an exemption is permanently exempted from the WA Cares Fund payroll tax and can never apply for benefits under the program. Exempted employees will receive a letter from ESD stating their permanent exemption from the program, which the employee must show to their current and future employers to inform them that the exempted employee should not have the payroll tax applied.

Currently, the law does not require employees to have to re-attest that they are qualified for an exemption from the payroll tax. In other words, an employee only has to qualify and to apply for an exemption once and there is no need to follow up after an exemption is granted. The state agencies managing WA Cares Fund have discussed the possibility of asking the legislature to require exempted employees to have to regularly re-certify their qualifications for exempted status to continue being exempted from the payroll tax. However, this change has not yet been formally proposed and is not currently in place.

At this time, there are no other ways to gain exemption from the WA Cares Fund payroll tax. AWC has heard of a possible misunderstanding about the payroll tax. Some people have apparently been told that older employees can age out of the payroll tax and automatically become exempted from the tax. As far as we know, this is not true. The only way to become exempted from the payroll tax is to purchase alternative long-term care insurance and apply to ESD for an exemption, as outlined above (See RCW 50B.04.085). Otherwise, the payroll tax applies to anyone considered an employee regardless of age (See RCW 50B.04.010 and RCW 50A.05.010).

Another rumor going around is that the WA Cares Fund payroll tax rate changes depend on an employee’s age. As the statute that outlines the payroll tax (RCW 50B.04.080) makes clear, the rate is statutorily set at 0.58% and does not change depending on an employee’s age. It is possible that the rates of the alternative long-term care insurance that employees purchase to become exempt from WA Cares Fund could be based on an employee’s age, but that is not true of the WA Cares Fund itself.

For cities that are members of AWC’s Employee Benefit Trust, the Trust is sponsoring an alternative long-term care coverage plan that can qualify employees for an exemption from the WA Cares Fund. Trust members can sign into their AWC account to learn more about the coverage available to their employees.