Dear Friends and Neighbors,
Many of you have reached out to me regarding the new payroll tax in relation to the Long-Term Services and Supports Trust Program. I wanted to provide you with some information.
Background: Washington Cares Fund
In 2019, House Bill 1087 was enacted. This bill is known as the Long-Term Services and Supports Trust Program (LTSS), or the Washington Cares Fund, providing long-term services and supports benefits to people who have paid into the program for a specific amount of time. The bill also established the LTSS Trust Commission.
As a provision of this bill, beginning January 1, 2022, employees in Washington state will pay 0.58 percent per $100 of their earnings to fund the Long-Term Care Trust Act.
House Republicans voted against this payroll tax because:
- This new tax will reduce workers' paychecks for a benefit they may not be eligible for due to retiring before they are eligible/moving out of Washington state.
- The maximum benefit an individual will qualify for is only $36,000 lifetime, which is significantly lower than most private long-term care insurance policies and is not realistic for today's market.
Why is this important?
During the 2021 session, the Legislature passed House Bill 1323 which enacts several recommendations from the LTSS Trust Commission involving timelines for employees to opt-out, setting timelines for a self-employed individual to opt-in, and allowing tribes and individuals who were disabled before the age of 18 to qualify for this program.
Here are some answers to some frequently asked questions I have received:
Is there an option to opt-out?
- An individual may opt-out if they are at least 18 years old, have purchased a qualifying long-term care insurance policy before November 1, 2021, and have applied to the Employment Security Department (ESD) during the designated opt-out window between October 1, 2021and December 31, 2022.
What if you are self-employed?
- Anyone who is self-employed can choose to opt-into the program between January 2022 and December 31, 2024, or within the first three years of becoming self-employed for the first time.
- Self-employed opt-ins are irrevocable, and the payroll tax will apply as long as you remain self-employed (and if you are later employed by a qualifying employer).
Are there impacts to current retirees?
- Current retirees who have no income from an employer will not be subject to this tax or its benefits.
- If a current retiree earns any income from an employer, you will pay the payroll tax on your earnings and could potentially qualify for benefits in future years if you meet the eligibility requirements.
For more information on the new payroll tax in relation to the Long-Term Services and Supports Trust Program, please visit the House Republican Caucus website. This site contains a frequently asked questions page specifically for this issue, which you can find by clicking here.
You can also contact ESD directly by clicking here.
Disclaimer: The content of this email update should not be considered or construed as legal, financial or health care services advice from the House Republican Caucus, including its members and staff. This content is meant to be informative, including the explanation of the legislation that created and changed the Long-Term Services and Supports Trust Program and how it impacts workers, retirees, and employers in Washington state.
We need to address the cost of long-term care and assist Washingtonians in planning for their long-term care needs; however, raising taxes to create another taxpayer funded and government run program is not the solution.
If you have further questions or thoughts, please continue to reach out to my office.
It's an honor to serve you.
In your service,