Report from Olympia |  July 13, 2021

To avoid long-term care tax, Washington residents must opt out now

Washington residents must enroll in private insurance by Nov. 1 to escape new payroll tax

Dear friends and neighbors,

A new payroll tax for a state long-term care insurance program will soon go into effect, the result of legislation approved by the Legislature’s majority party. I strongly opposed this new state mandate, and I want to make sure Washington residents know they can avoid the tax — by obtaining private insurance before the state deadline.

Beginning Jan. 1, 2022, nearly all Washington workers will face this new payroll tax on all wages. For example, if you earn $50,000 per year, you will be forced to pay $290 a year until you stop working or leave the state. This is just the beginning, as legislation is expected in the 2022 session to increase the payroll tax from 58 cents per $100.00 earned to 66 to 68 cents per $100.00 earned.

This new program, known as the WA Cares Fund, has some serious problems. Even if you spend a lifetime paying into this program, if you move out of Washington, you will receive no benefit, and all the money you paid will be lost. You must pay in to the program for a minimum of 10 years to be eligible for the benefits.

To avoid paying this tax, you must act now. If you would like to be exempted from paying this tax, you must purchase a private long-term care plan before November 1 of this year. Then you will need to apply to the state Employment Security Department for an exemption between Oct. 1 and Dec. 31. If your exemption is approved, ESD will provide you a letter you can present to your current employer and to future employers, to stop the payroll deduction.

A list of private companies selling long-term care insurance in Washington state can be found here.

You will find an official description of the new WA Cares Fund program here. I urge you to look past the rhetoric as you review the requirements. Among other things, you must apply for benefits within three years of leaving employment — even though many who enter nursing homes do so long after retirement.

Washington state government already has enough trouble with fundamental duties such as protection of public safety and responsible administration of public funds. You will see stories about some of these issues below. The problems with this new mandate should be apparent from the start, and it appears to be another measure aimed at creating greater government control over our lives.

If you have a question about the process for opting out, or any of the issues in this e-newsletter, please don’t hesitate to contact our office. We are here to help.

Best Regards,

Senator Mike Padden