08/05/2021
๐๐๐ฌ๐ก๐ข๐ง๐ ๐ญ๐จ๐ง ๐๐ญ๐๐ญ๐ ๐๐จ๐ง๐ -๐๐๐ซ๐ฆ ๐๐๐ซ๐, ๐๐ก๐๐ญ ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐ซ๐ฌ ๐๐ง๐ ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐๐ฌ ๐๐๐๐ ๐ญ๐จ ๐๐ง๐จ๐ฐ
Jesse Consulting Co., Inc.
Alexandra Jesse, May 25, 2021
The state of Washington is the first in the nation to implement a long-term care plan for Washingtonians (HB 1087 amended by SHB 1323). The goal is to provide affordable long-term care benefits to residents of Washington.
This is not intended as a definite guide or legal advice. We recommend employers consult with their payroll team and legal counsel to determine how the rules apply to them.
๐๐ก๐ ๐๐๐ฌ๐ข๐๐ฌ
The WA Cares Fund (originally the WA LTC Trust Act) is for people working in Washington State:
โข Payroll deductions begin January 1, 2022, for all W-2 employees, age 18 or older, working 500 hours or more a year.
โข Benefits are available for people who are vested, live in Washington State and access services in Washington.
โข The Fund will accumulate a reserve from January 1, 2022, to December 31, 2024.
โข Lifetime maximum long-term care benefit is $36,500.
๐๐ฉ๐ฉ๐ฅ๐ฒ๐ข๐ง๐ ๐๐จ๐ซ ๐๐๐ง๐๐๐ข๐ญ๐ฌ ๐๐ง๐ ๐๐๐ฌ๐ญ๐ข๐ง๐
Eligible employees can apply for benefits beginning January 1, 2025. If they had paid the tax for 3 of the last 6 years before they applied for benefits (temporary vesting). Employees are permanently vested when they have paid the tax for 10 years without a break of 5 or more years. If an employee plans on retiring in 9 years or less, they will not be vested, and no benefits will be paid.
๐๐๐ฒ๐ซ๐จ๐ฅ๐ฅ ๐๐๐ฑ ๐๐๐๐ฎ๐๐ญ๐ข๐จ๐ง .๐๐%
The WA Cares Fund will be funded with W-2 employee payroll deductions beginning January 1, 2022.
โข Applies to employees, age 18 and older, working 500 or more hours per year.
โข Tax is $0.58 of employee wages, โafter tax.โ Basically, $.58 on every $100 earned.
Employers are not required to contribute to the Fund.
๐๐จ๐ญ๐: The .58% tax may increase per legislation based on the State CPI, currently 2.5%, to cover the cost of claims.
๐-๐ ๐๐๐ซ๐ง๐ข๐ง๐ ๐ฌ ๐๐ง๐ ๐๐ฌ๐ญ๐ข๐ฆ๐๐ญ๐๐ ๐๐๐ฑ ๐จ๐ง ๐๐๐ซ๐ง๐ข๐ง๐ ๐ฌ
The tax is based on W-2 earnings. There is no maximum with uncapped earnings. It includes all wages, tips and remuneration, stock-based compensation, bonuses, paid time off and severance pay.
๐๐ฉ๐ญ๐ข๐ง๐ ๐๐ฎ๐ญ ๐๐ ๐๐ก๐ ๐๐๐ฒ๐ซ๐จ๐ฅ๐ฅ ๐๐๐ฑ
Employees can opt-out from the tax if they have a long-term care plan, effective before November 1, 2021, and an approval letter from the Employment Security Department (ESD).
Employees must submit their request for exemption to the ESD between October 1, 2021 through December 31, 2022.
Opting in or out is permanent even when the employee changes jobs. Employees are responsible to submit their ESD approval letter to their current employer and all future employers.
๐๐ฑ๐๐ฆ๐ฉ๐ญ ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐๐ฌ
Once an employee has their approval letter from the ESD the employee should:
โข Provide their employer a copy of the approval letter and Declaration page from their LTC policy.
โข Understand their employer must deduct the tax until they receive the approval letter and Declaration page.
โข Recognize their employer cannot refund tax deducted before receiving the approval letter and Declaration page.
๐๐จ๐ญ๐: An employer who deducts the payroll tax after receiving the employeeโs approval letter must refund the employee the amounts deducted. ESD will not refund employers for these amounts.
๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐ซ๐ฌ ๐ฐ๐ข๐ญ๐ก ๐ ๐๐ฎ๐ซ๐ซ๐๐ง๐ญ ๐๐จ๐ง๐ -๐๐๐ซ๐ฆ ๐๐๐ซ๐ ๐๐ฅ๐๐ง
โIf you already offer long-term care insurance to your employees, you can continue to do so. Itโs your employeesโ responsibility to decide whether to apply for an exemption. You canโt apply for exemptions on behalf of your employees.โ http://www.wacaresfund.wa.gov/
๐๐ก๐ฒ ๐๐ฉ๐ญ-๐๐ฎ๐ญ?
The long-term care benefit can only be used by Washington State residents, who are vested, and for services in Washington.
โข Employees with higher income can purchase a personal LTC policy with better benefits and options.
โข Employees retiring before their benefits are available.
โข Employees planning to move or retire outside the State.
โข Employees who move around from state to state and are not continuously working in Washington.
๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐ซ ๐๐๐ฑ๐ญ ๐๐ญ๐๐ฉ๐ฌ
โข Identify employees, regardless of residence, who work in Washington State.
โข Communicate with employees about the payroll tax.
โข Determine employees subject to the payroll tax and exempt employees.
โข Interact with your payroll team about implementing the payroll tax.
โข Create a process to collect and maintain the employee exemptions and coordinate with your payroll team.
โข Prepare quarterly payroll tax remittance to ESD, the first remittance is due April 30, 2022.
๐๐จ๐ญ๐: When an employee provides their approval letter, request a copy of the long-term care policy Declaration page.
๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐๐ฌ ๐ฐ๐จ๐ซ๐ค๐ข๐ง๐ ๐ข๐ง ๐๐๐ฌ๐ก๐ข๐ง๐ ๐ญ๐จ๐ง ๐๐ญ๐๐ญ๐
Employees working in Washington State are subject to the tax. The employer may be located outside Washington State with all or some of their employees working in Washington State. Those employees working in Washington State regardless of their residence are taxed.
An example is an employee working in Washington State. Their employer is in Oregon and the employee resides in Idaho. This employee would have a payroll tax deduction.
๐๐๐ฅ๐-๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐, ๐๐ง๐๐๐ฉ๐๐ง๐๐๐ง๐ญ ๐๐จ๐ง๐ญ๐ซ๐๐๐ญ๐จ๐ซ๐ฌ, ๐๐จ๐ฅ๐ ๐๐ซ๐จ๐ฉ๐ซ๐ข๐๐ญ๐จ๐ซ๐ฌ, ๐๐๐ซ๐ญ๐ง๐๐ซ๐ฌ, ๐๐จ๐ข๐ง๐ญ ๐๐๐ง๐ญ๐ฎ๐ซ๐๐ซ๐ฌ
People who are self-employed can โopt-inโ effective date of January 1, 2022. Refer to http://www.wacaresfund.wa.gov/
Federally recognized tribes, Employees and Employees subject to a Collective Bargaining Agreement
These entities have specific requirements that apply to them. More information: http://www.wacaresfund.wa.gov/
Source: jesseconsulting.com
๐๐๐ฌ๐ก๐ข๐ง๐ ๐ญ๐จ๐ง ๐๐ญ๐๐ญ๐ ๐๐จ๐ง๐ -๐๐๐ซ๐ฆ ๐๐๐ซ๐, ๐๐ก๐๐ญ ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐ซ๐ฌ ๐๐ง๐ ๐๐ฆ๐ฉ๐ฅ๐จ๐ฒ๐๐๐ฌ ๐๐๐๐ ๐ญ๐จ ๐๐ง๐จ๐ฐ
https://www.jesseconsulting.com/home/washington-state-long-term-care-first-in-the-nation
