Tips for Hiring Workers from Washington in the New Year

If You’re Planning on Hiring in the State in 2022, consider this:

The Washington State Long-Term Care Program, known as the “Washington Cares Fund,” originally established in May 2019 by the Long-Term Services and Supports (LTSS) Trust Act, is on track to begin as of January 1, 2022.

What is it?

This is the nation’s first public state-operated long term care insurance program for which the benefits, up to $100/day, up to a maximum lifetime limit of $36,500 (to be adjusted annually for inflation), will first become available to individuals as of January 1, 2025.  The premium is funded via a .58% payroll tax on all employee wages ($0.58 per $100 earned), for which there is no cap, beginning January 1, 2022. This premium assessment is remitted to the Washington State Employment Security Department (ESD) as part of the employer’s quarterly reporting, but the good news for the employers themselves is that they are not required to contribute to the program.  Employers can face penalties, as of yet undetermined, if they do not comply with the law, however.

Employees will be fully vested in the program by having worked and contributed to the fund for at least ten years without a break in service of 5 or more years, or 3 of the last six years; and, at least 500 hours per year during those years.

Who is eligible?

All employees employed in the state of Washington, age 18 or above, are required to pay the tax into the program so that even out-of-state employers with employees in the state must collect and remit these premiums.  Exceptions to this rule are self-employed individuals, employees of a federally recognized tribe, union employees party to a collective bargaining agreement in existence as of October 19, 2017 (unless or until the existing agreement is reopened, renegotiated, or expires), and employees who qualify for an exemption.

Can Employees Opt-Out of the Program?

Currently, an employee may opt-out of the program and the corresponding associated taxes and benefits only if the employee is at least 18 years of age on the date they apply for exemption, and the employee attests that they already have in place another qualifying, private long-term care insurance prior to November 1, 2021. The employee must apply for and receive the exemption with the Washington State Employment Security Department (ESD) by no later than December 31, 2022, and they should also be aware that the opt-out choice is permanent, even if they should change jobs in the future. If the employee is granted an exemption by the ESD, they will receive proof of the approval which must be provided to their employer so that the payroll tax withholding may be stopped.

Further, employers should be prepared, as of January 1st, to withhold the applicable payroll tax for any employees who do not obtain an exemption as well as implement a process for maintaining exemption approval copies and tracking them.  For any questions or concerns regarding this program, please note the attached link here:  https://wacaresfund.wa.gov/employer-resources/ and as always, feel free to reach out to your Payroll Specialist, who will work with you to ensure compliance with the required quarterly reporting.