[UPDATED ON 12/17/2021] Beginning January 1, 2022, employers were to collect premiums on wages of Washington employees under the Long-Term Services and Support Trust Act (see details below); however, on December 17, 2021, Governor Inslee made an announcement of delaying the premium assessment under the act. Legislators identified some areas that need to be adjusted for the program, and the premium assessment is expected to be delayed through the 2023 legislative session to allow the Legislature time to pass the policy reforms.
References: Governor Inslee announcement dated December 17, 2021
Starting January 1, 2022, the Washington Employment Security Department will collect and assess a payroll tax on wages of all Washington employees pursuant to the Long-Term Services and Supports Trust Act (the “Act”). The purpose of the Act is to provide a long-term care insurance benefit for all eligible employees in Washington by contributing toward the cost of long-term care and support services.
[Contributions]
Employers need to collect from employees the premiums through payroll deductions and remit the amounts to the ESD on a quarterly basis. The premium rate is $0.58 per $100 of earnings (0.58%). The premium rate will be reassessed by the pension funding council every other year starting January 1, 2024, at the maximum rate of 0.58%. There is no employer contribution. There is no cap on the wages subject to this tax (i.e., no limit on employee premium collected) under the current legislation.
[Qualifications]
To qualify for benefits under the Act, a person must have worked and paid the long-term care insurance premiums for:
- At least ten (10) years without interruption of five (5) or more years; or
- Three (3) years within the last six (6) years at the time the person applies for the benefit;
and
- At least 500 hours per year during those years.
[Benefits]
Beginning January 1, 2025, each eligible person may receive services and supports for care up to $100 per day, with a maximum lifetime benefit of $36,500. The amount of benefit will be adjusted annually based on the Washington state consumer price index.
[Eligibility]
To be eligible to receive benefits, the person must be:
- a Washington resident;
- at least 18 years old; and
- in need of assistance with at least three (3) activities of daily living, such as medication management, personal hygiene, eating, toileting, cognitive functioning, transfer assistance, body care, bathing, ambulation/mobility, and dressing.
[Exemptions]
An employee, who is at least 18 years old and has long-term care insurance before November 1, 2021, may apply for an exemption from the premium assessment. The ESD accepts applications for exemptions only from October 1, 2021 to December 31, 2022. Once approved, the exemption will be effective on the first day of the quarter immediately following the approval of the exemption. An exempt employee is permanently ineligible for coverage under the current legislation.
An exempt employee must provide a copy of written notification of an approved exemption from the ESD to current and future employers. Employers must retain the copy received from employees.
Exempt employees are not entitled to a refund of any premium deducted before the effective date of an approved exemption. Also, if an exempt employee fails to notify an employer of an exemption, the employee is not entitled to a refund of any premium deducted before notification is provided to an employer.
[Self-employed Persons]
Beginning January 1, 2022, any self-employed person, including a sole proprietor, independent contractor, partner, or joint venturer, may elect coverage under the Act. Coverage must be elected before January 1, 2025, or within three (3) years of becoming self-employed for the first time. The self-employed person must file a notice of election in writing with the ESD. A self-employed person who has elected coverage may not withdraw from coverage.
A self-employed person who elects coverage must continue to pay premiums until such time that the individual retires from the workforce or is no longer self-employed. To cease premium assessment and collection, the self-employed person must file a notice with the ESD if the individual retires from the workforce or is no longer self-employed.
The ESD may cancel elective coverage if the self-employed person fails to make required payments or file reports. The ESD may collect due and unpaid premiums and may levy an additional premium for the remainder of the period of coverage. The cancellation must be effective no later than 30 days from the date of the notice in writing advising the self-employed person of the cancellation.
[Unionized Employees]
Employers and employees subject to a collective bargaining agreement in existence on October 19, 2017 are not required to reopen negotiations of the agreement or apply any of the responsibilities under the Act unless and until the agreement is reopened, renegotiated, or expired.
[References]
WA Care Fund: https://wacaresfund.wa.gov
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