December 8, 2021

Washington cares fund: Long-term services and supports

Update:

On Thursday, January 27, 2022, Governor Jay Inslee signed two bills into law delaying premium collection for the Washington Cares Fund from January 1, 2022, to July 1, 2023, while also expanding the categories of workers which may be eligible for exemption from the fund’s mandatory contribution requirements. The Washington Long-term Services And Support Trust Act as originally enacted required that employers withhold 0.58 percent from each employee’s gross wages per pay period. Premium collection was effective January 1, 2022, but has since been postponed by legislative amendment to July 1, 2023. Any premiums which were collected from the start of the year through the date of amendment shall be returned to employees within 120 days. The legislature also expanded the categories of employees which may be eligible to seek an exemption from premium assessment to include the following:

  • Veterans with a service-connected disability of 70% or more;
  • Spouses or registered domestic partners of active-duty service members whether or not the service member is deployed or stationed within or outside Washington;
  • Employees with nonimmigrant visas for temporary workers as recognized by federal law, and employed by an employer in Washington; and
  • Employees who are employed by a Washington employer, but who maintain a permanent address outside of Washington as the employee’s primary location of residence.

Commencing January 1, 2023, the employment security department will begin accepting and approving applications for voluntary exemptions from the premium assessment for any employee who meets the exemption criteria based upon the expanded employee statuses above. Notably, the legislature did not extend the time period for employees to seek an exemption based upon their acquisition of private long term care insurance. The deadline to acquire private long-term care insurance occurred on November 1, 2021, with employees having until December 31, 2022, to apply for an exemption on that basis.

Please find a link to the Washington Cares Fund website with initial instructions for employers.

Additional information will be released via newsletter in February per the Washington Cares Fund website.

Washington state governor Jay Inslee signed into law the Long-Term Services and Supports (LTSS) Trust Act establishing the Washington Cares Fund. This fund provides a long-term care insurance benefit for eligible Washington employees, funded by mandatory worker contributions into a state trust fund. This is the first public long-term care insurance program in the nation; with a handful of other states also considering taking the leap and implementing a long-term care tax in the near future.

Key provisions for employers include the following:

  • Effective January 1, 2022, employers will be required to withhold 0.58 percent from each employee’s gross wages per pay period.
  • All public and private employers with some exceptions (including federal, governmental and some federal tribal employers) are required to report their employees’ wages and hours and pay premiums every quarter.
  • All Washington employees are required to participate with the exception of the following:Self-employed individuals (though they may apply to opt-in to the program)Workers subject to an existing collective bargaining agreement* orWorkers who apply for and receive an exemption from the Employment Security Department (ESD).
  • Self-employed individuals (though they may apply to opt-in to the program)
  • Workers subject to an existing collective bargaining agreement* or
  • Workers who apply for and receive an exemption from the Employment Security Department (ESD).
  • Employers will collect and report these premiums in the same way that they do for Washington Paid and Family Leave. First quarter LTSS premiums are due on April 30, 2022.
  • In contrast to the Washington Paid Family and Medical Leave program which requires contributions on wages up to the annual Social Security maximum wage base, there is no cap on eligible wages for purposes of the LTSS premium. All wages with the exception of tips are includable for premium contribution purposes including bonuses, gifts, and severance, etc.
  • Employers do not have a contribution obligation under the program, but may elect to pay premiums on behalf of their employees.
  • Employees must be Washington residents in order to receive benefits.

*However, once those exempted workers who are subject to a collective bargaining agreement have such agreements renegotiated or such agreements expire or are reopened, then those employees will be subject to premium contributions.

Benefits

Benefits will become available on January 1, 2025, for qualified eligible individuals. To earn benefits, an employee must contribute premiums for at least 10 years (without a break of 5 or more years) or have contributed 3 of the past 6 years at the time of the employee’s application for benefits, and the employee must have worked a minimum of 500 hours during the year under either time frame. Participants may receive up to $100.00 per day up to $36,500.00 in lifetime benefits (adjusted for inflation) if they meet the vesting and residency requirements, and require assistance with at least three daily living activities such as medication management, personal hygiene, eating, cognitive functioning, etc. Eligibility is determined by the Washington State Department of Social and Health Services.

Participation

Generally, all employees in the State of Washington are required to participate unless they submit an application for and receive approval for an exemption from the ESD. Employees may be eligible for an exemption from contribution to the fund if they are age eighteen or older and can establish that they obtained long-term care insurance prior to November 1, 2021. Employees must apply for and receive an exemption by December 31, 2022.

Employees who receive an approved exemption must submit their ESD approval letter to their current and any future employers. The ESD letter is the only acceptable proof of exemption which permits an employer to cease withholdings on behalf of that employee.

Exemptions are permanent once issued and the employee may not later participate in the program even if the private long-term care insurance they once held expires or is no longer available. Approved exemptions are effective the quarter immediately following approval. Once an employee has submitted its exemption approval letter to its employer, then the employer must cease deducting premiums from that employee beginning on the first day of the quarter immediately following the exemption approval date.

Implementation

Rules implementing the requirements of the new program and providing guidance have been under development in phases, with rules regarding Exemptions (Phase 1) and Premiums, Self-employed Elective Coverage, CBAs, and Appeals (Phase 2) being adopted June 7, 2021 and September 18, 2021, respectively.

Phase 3 rulemaking addressing Audit functions and “other rules as necessary” is under development and is anticipated to become effective April 2022.

For more information, please visit the Washington Cares Fund website.

Disclaimer:The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.

By Megan Butz
General Counsel, HR Compliance, Checkwriters
Megan joined Checkwriters in 2020 and is responsible for reviewing, revising, and implementing internal policies of the company, advising on human resource, employment, and labor matters, and monitoring and publishing state and federal legal updates to the Checkwriters News and Compliance Center for distribution to thousands of clients around the country. Before joining Checkwriters, Megan served as a judicial law clerk for the justices of the Massachusetts Probate and Family Court performing legal research and writing, followed by private practice in Cape Cod.

Go back