Beginning January 1, 2022 Washington employees are subject to a new payroll tax to fund a state-run long-term care (LTC) program.
What is the WA Cares Fund?
The Washington State Legislature established a long-term care insurance benefit for all eligible workers to address the future long-term care crisis. Under this law, individuals will have access to a lifetime benefit amount that, should they need it, they can use on a wide range of long-term services and supports.
What should employers know about the program?
- Employees that have alternative qualifying LTC coverage in place before November 1, 2021, can opt-out of the program
- This is done by requesting an exemption through the Employment Security Department (ESD)
- An employee that has opted out of LTC coverage may not become a qualified individual or eligible beneficiary in the future
- They are permanently ineligible for coverage under the program
- For an employee to be marked exempt from the LTC withholding, in the employee’s profile, the employee must present their exemption approval letter from the ESD
- If an employee fails to present their approval letter, the premiums withheld are non-refundable
- An employee’s exemption takes place the quarter after the exemption was approved by the ESD
- ***Employers must retain a copy of each employee’s ESD exemption letter
What is the premium rate?
- The premium rate for withholding is 0.58% of all wages paid by employers
- Tips are not qualified wages for purposes of calculating and deducting the premium
- The LTC premiums will be paid through the same portal currently used to pay and report Paid Leave
How is the program funded?
- WA Cares is self-funded entirely by worker contributions
- There are no required employer contributions
What is the program timeline?
- Beginning January 2025, each person who is eligible to receive the benefit can access services and supports costing up to $36,500
- To earn benefits, an employee must contribute at least 10 years (without a break of 5 of more years) or have contributed 3 of the past 6 years at time of application for benefits, and have worked at least 500 hours during each of those years
This information can be found @ https://wacaresfund.wa.gov/
RASI is in the process of developing the withholding tables and reports to accommodate the new requirements and make payments on your behalf. This process will be in place well before the beginning of the new year and an alert will be posted to communicate when this is complete. At this time, you will be able to mark employees exempt that have presented an ESD approval letter.
If you have any questions or concerns, please reach out to RASI’s Compliance Department through Support Request or email @ Compliance@rsiaccounting.com