Beginning January 2022, all Washington workers will pay $0.58 per $100 of their earnings to fund the Long-Term Care Trust Act (LTCTA). This means you will pay $290 per $50,000 of income or $580 per $100,000. There is no limit to how much a worker can contribute to the LTCTA; however, there is a limit to the benefits.
For your contribution, you will receive up to $100 per day for a maximum lifetime benefit of $36,500 (adjusted annually). This benefit is available only for care provided in the State of Washington for Washington residents and is not transferrable. If you plan to retire in sunny AZ or FL, you will lose your entire contribution into the system.
If you plan to retire within the next 10 years, you will not receive a benefit for your contribution because you must work 500 hour per year for 10 years to best vested. Therefore, if you retire in 9 1/2 years you will lose your entire contribution into the system.
Self-employed persons can choose to opt into the program between January 2022 and January 2025, or within three (3) years of first becoming self-employed for the first time. Self-employed opt-ins are irrevocable.
This is a very flawed program that provides little benefit with lots of restrictions. I recently joined my colleagues in the 19th and 20th Legislative Districts and expressed concerns to the State Insurance Commissioner Mike Kreidler. We have to do better than this! The lack of portability, limited maximum benefit, disregard for workers within 10 years of retirement, and lack of a hardship exception are just some of the reasons this new tax is bad policy. This is another one-size fits all scheme that places more burdens on families and businesses.
Peter Abbarno, State Representative in the 20th Legislative District
When can a vested individual use the benefits?
To utilize the benefits, vested individuals (persons working 500 hours per year for 10 years) must reside in Washington and need assistance with a minimum of three of ten Activities of Daily Living (ADLs): medication management, personal hygiene, eating, toileting, transferring, body care, bathing, ambulation/mobility, dressing, and cognitive impairment. Individuals who meet these requirements may begin applying for benefits in January 2025.
How can the fund be used?
The funds can only pay for providers who are on a Department of Social and Health Services approved list for
services. Funds can be spent on nursing facilities, residential settings like assisted living and adult family homes,
professional caregiving like home health care, wheelchair ramps, emergency alert devices, medication reminders, Meals
on Wheels, rides to doctor appointments, dementia education, caregiver support, and care coordination. Family
members may qualify to receive funds upon receiving 21 to 35 hours of formal training to care for beneficiaries.
Can you Opt-out of the fund?
Washington employees aged 18 years or older have a small window of time to permanently opt-out of the
LTCTP and its career-spanning payroll tax. To opt out, employees must have purchased comparable long-term care insurance before November 1st, 2021.
Once a plan is purchased, employees must apply for an exemption from the program to the Employment Security Department (ESD) between October 1, 2021, and December 31, 2022. If ESD accepts the application, the individual is permanently exempt from the payroll tax and ineligible for future coverage from the Long-Term Care Trust Program. Once approved, employees must provide all current and future employers with notice of the exemption to maintain exemption from payroll tax.
Workers can secure Long-Term Care Insurance or add a rider to their Life Insurance policy through private companies that provide benefits equal or better than the state payroll tax funded program.
I am speaking to small business owners and working families confused and concerned about this new payroll tax. People are scrambling to make sense of it and the opt-out deadline is approaching quickly. I am encouraging employers and employees to start planning and researching this issue to compare with private polices. Unfortunately, the decision will be made for you after the deadline.
Peter Abbarno, State Representative in the 20th Legislative District
Is it Constitutional?
Washington State’s constitution does not currently allow for graduated income taxes to be assessed by the state. According to Article VII, Section of Washington’s Constitution “all taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected for public purposes only.” Some legislators call this a “premium assessment” and not a tax to circumvent the prohibition and only the income of W-2 employees is taxed, not the income of self-employed individuals.
How did we get here?
In 2019, the Legislature enacted HB 1087, the Long-Term Care Trust Act. This act was pushed by the Governor’s majority party as a response to the weak private long-term care insurance market at the time and the state’s high expenditures on long-term care through Medicaid.
In the 2021 session, the Legislature passed HB 1323 relating to the LTSS Trust Program, which I voted against. This legislation enacted a package of recommendations forwarded to the Legislature by the Trust Commission and moved up timelines for employees to opt out, set timelines for a self-employed individual to opt in, and allowed tribes and individuals who were disabled before the age of 18 to qualify for the program.
Additional information
• ESD webpage – http://wacaresfund.wa.gov/
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