Washington state recently became the first state in the nation to establish a state-run long-term care trust fund, which will help pay for long-term care and support services for eligible individuals over 18 years of age.
What does this mean?
Starting on January 1, 2022, employers must begin collecting a 0.58% payroll tax on W-2 employees’ compensation, with a few exceptions.
That means all wages, bonuses, paid time off, severance pay, and stock options are subject to the tax — and there is no cap on the income level for the payroll tax.
Do I have to participate? Well, for most part, yes.
However, if you are a W-2 earner that is subject to this payroll tax there are a few possible ways to opt out, during a very narrow, one-time, opt-out window.
- You are a W-2 employee who already has a long-term care insurance policy in place through your employer, or
- You are a W-2 earner who currently has or will have an individual long-term care insurance policy (or a LT Care rider on your life insurance policy) approved and in place by November 1, 2021.
In both scenarios:
- The policy will need to provide equal or better benefits than those available through the state program, and
- You will need to apply to the Employment Security Department between Oct. 1, 2021 and Dec. 31, 2022 for an exemption.
It is important to note that exemptions are permanent – no changing your mind later.
I spoke with Brent Anderson, a certified long term care insurance professional about this new law and some of the options available outside of the state-run long-term care insurance system.
Listen in to learn a bit more.
P.S. If you want more information, learn more at WA Cares Fund site