New payroll tax to take effect in 2022, resources to opt-out of tax

The Washington Employment Security Department is promoting a new website with more information about WA Cares, the state’s new long-term care insurance coverage.

As BIAW had previously shared, the Washington State Legislature passed the Long-Term Services and Supports (LTSS) Trust Act in 2019, mandating a payroll tax for ALL Washington-based employees in order to fund long-term care benefits.

Payroll tax collection starts January 2022

Starting in January 2022, employers must collect a 0.58% payroll tax from all employees (with no income limit)—unless the employee applies and is approved for an exemption.

Up to $36,500 in benefits available

The state will start paying the benefits to eligible individuals in January 2025. Each person may receive a lifetime benefit of $36,500 to pay for long-term services and supports.

Employees must purchase private insurance to avoid the tax

To qualify for the exemption, an employee must purchase a private long-term care insurance plan by Nov. 1, 2021 and apply for an exemption between Oct. 1, 2021 and Dec. 31, 2022.

The tax is paid entirely by the employee, although an employer has the option to pay it for employees.

More information

Thank you Biggs Insurance for providing this educational content.

  • Overview: WA Long Term Coverage Trust and Private Long Term Coverage Options ⇒ access
  • LTC Tax Act – Employee Communication Template ⇒ access
  • What Employers Need to Know Presentation & Private Coverage Options for Opting-Out ⇒ access

For quotes, please email Tyson Fuehrer at Biggs Insurance.

The WA Cares team will be hosting webinars in the fall to help employers learn how to use the state’s existing Paid Leave reporting process to report once for both the Paid Leave and the Long-Term Care programs.