Washington’s New Long-term Care Benefit Program: Important Deadlines Loom!

For example:

• Workers earning $50,000 contribute $290/year.
• Workers earning $75,000 contribute $435/year.
• Workers earning $100,000 contribute $580/year.
• Workers earning $150,000 contribute $870/year.
• Workers earning $200,000 contribute $1,160/year.

For high-wage workers, contributions are not capped. The program taxes all wages and compensation, including bonuses, gifts, severance payments, and stock-based compensation. Tips are not included in wages.

• the worker is self-employed (i.e., sole proprietor, member of a partnership, member of a limited liability company, independent contractor, or other self-employed status);
• the worker is subject to an existing collective bargaining agreement (CBA) that was in effect on October 19, 2017; or
• the worker opts out of the program.

Note: Once exempted CBA agreements are reopened, renegotiated, or expire, workers to which the CBA applies will be subject to the program.

If only some of an employee’s work is performed in Washington, employers may still be required to implement the payroll tax for the worker based on several factors (such as the base of operations, the location where the services are directed or controlled, and the employee’s residence).

An eligible participant may use program funds for:

• Memory care;
• Adaptive equipment and technology;
• Home modifications, e.g., access ramps;
• Home safety evaluation;
• Meal delivery;
• Transportation;
• Personal care in a home;
• Assisted living facility;
• Adult family home or nursing home;
• Training and support for family caregivers; and
• Other qualified long-term care needs.

• Workers are vested if they have worked:
• a total of 10 years without interruption of 5 or more consecutive years; or
• 3 years within the last 6 years of the date of application.

Note: A “year” is one in which the individual worked at least 500 hours.

1. Workers with upward wage trajectory
2. High-wage workers
3. Retirement-ready workers

Workers who expect to retire before they vest in the program may contribute to the program before they have an opportunity to receive benefits.

4. Workers with plans to move out of Washington

Benefits are limited to Washington residents. Therefore, workers and/or retirees who move out of Washington will not qualify for benefits.

5. Workers with existing long-term care coverage
6. Workers who want to customize their coverage

Step 1. By November 1, 2021, purchase qualifying private long-term care insurance.

Step 2. Between October 1, 2021, and December 31, 2022, apply for a program exemption by submitting an application to the Washington Employment Security Department (ESD) which attests that the worker obtained a qualifying long-term care policy prior to November 1, 2021.

Approved exemptions are not effective until the quarter immediately following approval. For example, if the ESD approves a worker exemption on January 1, 2022, the worker’s wages will be taxed through March 31, 2022. In other words, end-of-year bonuses or commission payments often paid in the first quarter will be reduced by the program payroll deduction.

Step 3. Submit the ESD approval letter to their employer.

1. Deduct premiums.
2. Maintain copies of the ESD exemption letters submitted by workers.
3. Remit quarterly premium payments to the ESD.
4. Submit quarterly reports to the ESD, which are expected to be consistent with reports employers already provide under the Washington Paid Family and Medical Leave Program.
5. Inform the ESD immediately upon reopening, renegotiation, or expiration of a CBA that was in effect prior to October 19, 2017.

The current law and draft regulations do not require employers to provide advance notice to employees about the program, their ability to opt out or become exempt from the program, or that deductions will begin on January 1, 2022.