What you need to know about Washington's new long-term care benefit, and the tax that comes with it

Starting Oct. 1, Washington workers can begin seeking exemptions to the state’s new long-term care tax.   

The tax finances the so-called “WA Cares Fund,” a program the state Legislature established in 2019. The program acts as a state-provided insurance plan for long-term care. It is meant to help eligible adults pay for services such as home-delivered meals and dementia support.  

The state will begin taxing employees on January 1, 2022. The tax is 0.58% of a worker’s total wages, with no salary cap. That means an employee earning $100,000 will pay $580 into the fund.

But there are exemptions. Adults who purchase private long-term care insurance before Nov. 1 will not be subject to the tax. Employers are also exempt.

Keep reading for answers to frequently asked questions about the WA Cares Fund, how to file an exemption, and more.

What does the program do?

Benefits will be distributed starting January 1, 2025. Eligible adults will receive up to $100 per day for a maximum of 365 days, meaning they’ll have access to $36,500 for long-term care costs for the rest of their life. The benefits can be spread out over longer than a year if a person spends less than the maximum daily amount.

Who is eligible?

To qualify for benefits, an adult first needs to verify that they need help with at least three aspects of daily living. Those include activities such as medication management, personal hygiene, eating, bathing or dressing.

From there, adults can qualify for benefits by one of two ways.

They will need to have been working and paying into the program for three of the six years from the date in which they applied for benefits. They will have to have worked at least 500 hours per year — roughly 12 hours per week — during those three years.

Alternatively, a person would qualify if they worked and paid into the program for 10 years, as long as they worked at least five years consecutively during those 10 years. They will have to have worked at least 500 hours during those 10 years.

Employees who move out of Washington will not receive benefits, even if they paid into the program. Additionally, employees who opt out of the tax by way of exemption will be permanently barred from receiving benefits.

Who is subject to the tax?

All employees in Washington are subject to the tax.

Workers are considered “employed in Washington” if their services are performed in the state. That includes workers who also perform services outside the state while basing their operations or directing services from a location in Washington. If a worker doesn’t base their operations or direct services from any specific location, but resides in Washington, they’re also subject to the tax.

Who qualifies for an exemption?

Those who purchase private long-term care insurance before Nov. 1 qualify for an exemption. Self-employed workers can opt into the program if they wish, but they’re not required to.

Employers are also exempt, but they are expected to collect the tax from their employees and remit them to the state Employment Security Department.  

How would someone apply for an exemption?

Applications will be available on the WA Cares Fund website on Oct. 1. If you already purchased a private long-term care insurance plan or expect to before Nov. 1, check the state Office of the Insurance Commissioner to make sure that plan qualifies under the program’s exemption criteria. The office offers guidance on its website.  

Employees have from Oct. 1, 2021 to December 31, 2022 to apply for an exemption.

Why was this program established?

The authors of the bill argued that many older adults pay too much for long-term care. The AARP of Washington estimates nearly 70% of Washington residents will need some form of long-term care; proponents of the program said that most have no plan to pay for that care.

Relatively speaking, $36,500 is a drop in the bucket compared to what some long-term care services can cost. But the thought was that folks who need to pay for pricey services — such as care in a nursing home or assisted living facility — can use that money in conjunction with Medicaid or personal funds to help offset those expenses. Meanwhile, those who don’t require such care can use their WA Care Funds on less expensive services instead of paying out-of-pocket.