Washington’s new long-term care program, the WA Cares Fund, marches towards the effective date of the payroll tax. As state agencies continue to work on the implementation rules, there is high interest in the program and the payroll tax exemption process.

Starting January 1, 2022, all employees in Washington, unless qualified and approved for an exemption from the payroll tax by the Employment Securities Department (ESD), will begin to have the long-term care program payroll tax withheld from their paychecks. As a reminder, starting in 2025, eligible beneficiaries (Washington residents that have paid into the system for at least three of the last six years) will be able to apply for benefits to pay for certain long-term care expenses. The current payroll tax rate is set at 0.58% of an employee’s salary, and there is a lifetime benefits cap of $36,500. Washington is the first state to create a state-run long-term care insurance program.

Rulemaking activity

ESD has been working on several phases of implementation rules for the long-term care program ahead of the January 1 payroll tax start date. You can follow the rulemaking process on ESD’s rulemaking website here. The rules that are in progress include:

• Phase One rules: Exemptions (completed and adopted) – includes rules on exemptions processing of exemption requests, determinations on exemption requests, employees informing employers of their exemption, and other rules as necessary.
• Phase Two rules: Premium collection, CBA exemption, election of coverage, refunds, reporting and payments, appeals (nearing completion) – includes premium collection, collective bargaining agreement exemptions, election of coverage by self-employed individuals, refunds, cadence of reporting and payments, appeals, and other rules as necessary.
• Phase Three rules: Determinations of “qualified individual” status, audit functions, designated representatives (under development, stakeholder meetings TBD) – includes determinations of “qualified individual” status, audit functions, designated representatives, and other rules as necessary.
• Implementation of HB 1323 (under development, stakeholder meetings TBD) – this 2021 bill provides a pathway for federally recognized Washington tribes to elect coverage into the LTSS program. A tribe that opts in may opt out at any time for any reason it deems necessary. The bill requires the department to adopt rules to implement these provisions.

If you are interested in reading the full long-term care program’s statute, it can be found at RCW 50B.04.

LTSS Trust Commission gets update on WA Cares Fund

The Long-Term Service & Supports Trust Commission (a statutory advisory group to the WA Cares Fund) has also been holding regular meetings and getting updates about the efforts to stand up the new program.

At the most recent meeting on July 23, Commission members got updates from state agencies about public communications efforts for the new program, updates to the new WA Cares Fund website, rulemaking efforts, an update from a supplemental long-term care insurance workgroup and benefits eligibility workgroup, and an actuarial report on the fund’s solvency. According to the state actuary, they expect the WA Cares Fund to be fully funded based on their initial projections of program use. However, those projections could change depending on actual participation in the program after employees apply for exemptions from the program.

The Trust Commission’s meetings are open to the public, and the next meeting is on September 23 from 1 – 4 pm, though no meeting information is available yet. You can look at materials for previous and upcoming meetings on the Commission’s website here.