November 3, 2021
Employment Alert: 
Be ReadyWashington's Long Term Care
Insurance Program Goes Into Effect January 1, 2022
Washington’s new long-term care payroll tax goes into effect on January 1, 2022. Known as the WA Cares Fund, it is a first of its kind program in the nation that aims to provide eligible workers with up to $36,500 in long-term care benefits beginning in 2025. It is paid for by a tax on employees’ wages.
 
The program, which the Washington Legislature passed in 2019, imposes a payroll premium of $0.58 per $100 in earnings beginning in January. The tax is mandatory, and employees—not the employer—must pay the tax. Employers are not required to contribute.
 
Exemption Period
 
Earlier this year, the Washington Legislature approved a one-time opt out for those who obtained private long-term care insurance by November 1, 2021. More specifically, any employee who attests that they have comparable long-term care insurance purchased before November 1, 2021, may apply to the Employment Security Department (ESD) for an exemption. The employee must then provide proof of their exemption to their employer before the employer can waive collecting the premium assessment from the employee’s wages. The employee must apply for the opt-out exemption to ESD between October 1, 2021, and December 31, 2022. Employers should remind employees of this tight deadline. Employees who apply for the opt-out exemption will receive a letter from ESD and will need to provide a copy to their employer.
 
Employees Subject to the Tax; No Cap on Amount of Wages Taxed
 
Notably, there is no cap on the amount of wages that are taxed, and the program applies to all employees employed in Washington with the exception of individuals who are self-employed, federal employees, employees of a federally-recognized tribe, certain employees subject to a collective bargaining agreement, and those who qualify for an exemption. An employee is treated as employed in Washington if the employee’s service is “localized” in Washington, or, if the employee’s service is not localized in any state, if the employee performs some services in Washington and the services are directed or controlled from Washington. Therefore, an employer must make this determination and comply if necessary. ESD states that generally, employers will need to collect premiums for WA Cares from the same employees for which the employers pay premiums for Paid Family and Medical Leave.
 
In effect, this likely means that out-of-state employers will need to collect and remit premiums for their employees who work primarily in Washington including remote employees. For out-of-state based employers with Washington-based employees (or employees working remotely in Washington), contact the FWW employment law attorneys for support in determining whether the WA Cares Fund tax applies.
 
Eligibility for Benefits
 
In order to be eligible for WA Cares Fund benefits, an employee must have worked and contributed to the fund for:
  • A total of 10 years without an interruption of five or more consecutive years; or
  • Three of the last six years at the time the employee applies for the WA Cares Fund benefit; and
  • Worked at least 500 hours per year.
 
Additionally, to be eligible for benefits an employee must be at least 18 years old and a current resident of Washington.
 
The benefit is not transferrable if the employee moves out of state. Additionally, many employees who are older may never be able to collect on this benefit prior to retirement.
 
Setting up Payroll Deductions
 
Beginning January 1, 2022, employers will need to collect premiums from their employees in the same manner in which they do now for Paid Family and Medical Leave (PFML), and ESD is in the process of updating the PFML reporting system so that employers can report for both programs at the same time. More information on calculating and collecting premiums, as well as a variety of other resources, can be found on the WA Cares website.
Conclusion

The WA Cares Fund is a brand new program and the first of its kind in the nation, and it is likely that ESD will provide clarifying guidance in the future. If you have questions, please do not hesitate to contact our Employment attorneys at any of the email addresses below or 503.228.6044.
Kelly Tilden  focuses her practice in the areas of employment law, business, and litigation. She advises clients regarding the hiring, discipline and termination of employees, compliance with state and federal civil rights, wage and hour laws, and leave laws. Kelly offers practical guidance and experienced-based insight to help employers confidently apply state and federal regulations. She has been selected by her peers for inclusion in the Best Lawyers in America® 2018-2022 for Employment Law - Management.

Contact Kelly at 503.228.6044 or ktilden@fwwlaw.com
Kim McGair's practice emphasizes a wide range of litigation matters including employment, commercial litigation, commercial collections, personal injury defense, and real estate litigation. She is an advocate for her clients and provides them with sensible advice and strong representation to protect their interests and help them achieve their objectives as efficiently as possible. Kim was selected by her peers for inclusion in the Best Lawyers in America® 2018-2022 for Commercial Litigation and to the Oregon Super Lawyers list 2019-2021 for Commercial Litigation.

Contact Kim at 503.228.6044 or kmcgair@fwwlaw.com
Trish Walsh focuses her practice in the areas of litigation and employment law, protecting clients' interests inside and outside the courtroom. In her employment practice, Trish drafts, audits and updates policy handbooks and provides advice on employment issues under Oregon, Washington and federal laws.

Contact Trish at 503.228.6044 or twalsh@fwwlaw.com

Jon Himes practices in several areas including litigation, employment, and financial services, enabling him to assist clients with a full-range of legal and business challenges. His employment practice focuses on employment litigation and wage and hour laws. 
 
Contact Jon at 503.228.6044 or jhimes@fwwlaw.com
Copyright © 2021 Farleigh Wada Witt. All Rights Reserved.
 
The contents of this publication are intended for general information only and should not be construed as legal advice or opinion on specific facts and circumstances.