On January 27, 2022, Washington Governor Jay Inslee signed two bills that make significant changes to the Washington (WA) Cares Program. The WA Cares Program is the nation’s first publicly funded program to provide basic long-term care benefits.
House Bill 1732 delays the implementation of the WA Cares Program by 18 months. This includes delaying the premium tax start date from January 1, 2022, to July 1, 2023. Under the program, employers are required to collect payroll taxes from all income of a Washington-based employee at a rate of 0.58% ($290 per year for someone making $50,000 per year). Many employers started collecting the tax on January 1, 2022, not knowing for sure if the tax would be delayed.
Any taxes that have been collected need to be returned to employees within 120 days.
The 18-month delay means that the benefits will first be available starting July 1, 2026, instead of January 1, 2025. The lifetime maximum benefit is still scheduled to be $36,500.
The bill also allows for people born before January 1, 1968, to become eligible for benefits if they pay into the program for at least one year. This will make it easier for individuals who are close to retirement to qualify for benefits, though the benefits they receive would be reduced. An individual who only pays the premium tax for one year would receive 10 percent of maximum benefits. The longer they pay into the program, the greater the percentage of the maximum benefit.
House Bill 1733 addressed some of the problems that have been identified with the WA Cares Plan. This bill expands the voluntary exemptions from the Program for certain groups including:
- Veterans with a service-connected disability of 70% or higher;
- Spouses or domestic partners of active duty service members;
- Persons who reside outside of WA but work in WA; and
- Persons in the U.S. under a temporary, nonimmigrant work visa.
Individuals who apply for and are granted an exemption are permanently ineligible for the program.
However, the exemption can be discontinued if military service ends, the marriage or domestic partnership ends, the employee moves to the State of Washington or the employee’s visa status changes from nonimmigrant visa to permanent status.
An employee must notify the Washington Employment Security Department and their employer of the change in status within 90 days. Failure to do so will make the employee liable for unpaid premiums plus interest.
The WA Cares Program is expected to see significant review and change during the Washington Legislative session that begins in January 2023.
Approximately 450,000 people applied for an exemption to the WA Cares Program based on purchasing long-term care insurance before November 1, 2021. While the WA Cares Board has proposed a requirement that individuals who were granted an exemption to recertify annually, they have not proposed another period to purchase long-term care insurance to qualify for the exemption.
Individuals who purchased long-term care insurance so that they could qualify for an exemption may want to keep those policies in force, or they may be required to pay the tax in the future with no additional way to opt out.
The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as ﬁnancial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.
This article was last reviewed and up to date as of 01/28/22.