In an effort to plan for the projected long-term care needs of its residents, State of Washington passed the Long-Term Services and Supports Trust Act (SHB 1323) requiring each worker in Washington to contribute $0.58 per $100 (0.58%) of wages to a trust set aside to pay long-term care benefits for its residents. The law was enacted in 2019 and becomes effective in 2022. Benefits under the Act are first payable in 2025. Washingtonians may opt out, but must have qualifying long-term care coverage in place by November 1, 2021.
- Starting January 1, 2022, employers must remit on a quarterly basis a payroll tax of 0.58% (adjusted based on Washington's CPI) of Washington employees' wages to the trust. There is no cap on wages for this purpose.
- There is a one-time opt-out window from October 1, 2021 to December 31, 2022 for individuals who have qualifying long-term care coverage from any source (e.g., their employer, spouse's employer, an individual policy) by November 1, 2021. There are special effective dates for union employees.
- To be considered qualifying long-term coverage, the coverage must meet the requirements listed here: RCW 48.83.020: Definitions. (wa.gov).
- The right to opt-out belongs to the individual (not the employer). To opt out, the individual will apply to the State. If approved, the State will send an opt-out approval letter to the individual. The individual will then provide a copy of the letter to current and future employers. Other specifics on the opt-out procedure are still in the works.
- Long-term care benefits are only available to Washington residents who have paid premiums for either: (i) a total of 10 years with no more than a five-year interruption; or (ii) three of the six years before the date of application for benefits. Additionally, the resident must have worked at least 500 hours during each of the 10 or three year measurement period, as applicable.
- The maximum benefit payable is $100/day up to a maximum lifetime benefit of $36,500.
Options for Employers:
- Do not offer long-term care insurance to Washington-based employees and simply collect and remit the payroll tax (other than for those employees with an opt-out approval letter),
- Review long-term care coverage already in effect to determine if it is considered qualifying coverage under the Act, or
- Quickly procure new long-term care coverage that meets the Act's definition of qualifying coverage.
Regardless of the option selected, employers may wish to inform their Washington employees of the upcoming payroll tax and their ability to opt out.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.