In Seattle Business Builders

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.

  1. You are a W-2 employee who already has a long-term care insurance policy in place through your employer, or
  2. 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

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