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Washington State LTC Program Requires Employers to Collect Premiums

Other states also may create long-term-care funds

An elderly couple hugging in a wheelchair.

On April 21, Washington State Gov. Jay Inslee signed into law the Long-Term Services and Supports (LTSS) Trust Act, creating the WA Cares Fund and making Washington the first state in the country to adopt a mandatory, public, state-run long-term-care (LTC) insurance program for workers. Below are a few key highlights of the new law, with more details following:

  • The law imposes a new employee-paid premium of $0.58 per $100 of earnings.
  • There is no employer-paid portion of the premium.
  • Employers are responsible for collecting, remitting, and reporting these premiums, and employers will face penalties if they do not.
  • The benefits offered under the WA Cares Fund are limited.
  • The WA Cares Fund premiums are uncapped, but there is a $36,500 lifetime cap, indexed for inflation, on the benefits an employee can receive, so highly compensated employees will help subsidize the program.
  • WA Cares benefits are available only if the employee receives care in Washington.
  • Employees can opt out of the WA Cares Fund only if they secure their own private long-term care insurance by Nov. 1, 2021, and they apply for and receive an exemption by Dec. 31, 2022.

How does this law effect employers with operations in Washington?

The WA Cares Fund will be funded by employee premiums via a mandatory payroll deduction. Beginning Jan. 1, 2022, employers are responsible for collecting and remitting these employee premiums, as well as submitting a quarterly report of these premiums, to the Washington State Employment Security Department (ESD).

How will the WA Cares Fund be funded?

Starting Jan. 1, 2022, ESD will assess each individual employed in Washington a premium based on the employee's wages equal to $0.58 per $100 of earnings (i.e., if employees earn $750/biweekly pay period, they would be assessed a $4.35 biweekly premium). The premium rate will be reassessed every other year beginning Jan. 1, 2024, but is capped at .58 percent. The employee's employer will withhold this amount and pay it to the WA Cares Fund. All Washington employees must contribute to the LTSS Trust, unless they are approved for an exemption (see below).

Is there a cap on either the employee premium or the benefits an employee can receive?

Notably, there is no cap on the employee premium collected. Thus, highly compensated employees will contribute more to the Fund based on their earnings, yet they will only be eligible to receive the same lifetime benefit of $36,500, indexed for inflation, as all other employees. Employers may want to flag this feature of the law to their employees, especially given the fast-approaching deadline to opt out of the WA Cares Fund (Nov. 1, 2021).

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Do employers also contribute to the employee's premium?

Employers do not contribute to an employee's premium or to the Fund on behalf of employees. Employers that willfully fail to withhold and remit the full amount of premiums when due, however, may be liable for the full premium and interest, and may

How can employees opt out of the WA Cares Fund?

Employees over the age of 18 can apply for an exemption from the premium assessment (or "opt out") if they attest that they have purchased private long-term care insurance before Nov. 1, 2021.

What if a Washingtonian is self-employed?

Individuals who are self-employed, including sole proprietors, independent contractors, or joint venturers, may choose to opt-in to the WA Cares Fund t, but they are not required to participate.

What if an employer has unionized employees?

Employers and employees that are party to a collective bargaining agreement in existence on Oct. 19, 2017, are not required to reopen the agreement or to comply with the WA Cares Fund law unless and until the existing agreement is reopened, renegotiated, or expires.

What does the WA Cares Fund provide?

The WA Cares Fund provides eligible Washington workers who pay into the program, and who receive care in Washington, with long-term care benefits up to a maximum of $36,500 per person (to be adjusted annually for inflation). Starting Jan. 1, 2025, workers who: (1) have vested in the Fund, and (2) need long-term care, can access their earned WA Cares Fund benefits.

How do workers vest in the WA Cares Fund?

To vest in the Fund, employees must have worked and contributed to the fund for:

  • At least 10 years without a break of five or more years; or
  • Three of the last six years and at least 500 hours per year during those years.

How does someone become eligible for benefits?

To be eligible for benefits, individuals must: (1) be a Washington resident; (2) need assistance with at least three activities of daily living, such as: medication management, personal hygiene, eating, toileting, cognitive impairment, transfer assistance, body care, bathing, ambulation/mobility, and dressing, and (3) be receiving care in Washington.

Will other states follow?

Other states, such as California, Illinois, Michigan, and Minnesota, are considering creating some type of long-term care fund and/or financing for their residents.

What's next?

Various state agencies, including ESD, are currently engaged in rulemaking to implement the law. Littler will keep clients apprised of significant regulatory and related developments affecting employers as they occur. Employers are advised to consult with counsel with specific questions or concerns.

Emily Cardenas and Kellie Tabor are attorneys in the Seattle office of law firm Littler. An extended version of this article was published on the firm's website. © 2021 Littler Mendelson P.C. All rights reserved. Reposted with permission.


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