- Delay the start date of mandatory payroll deductions from January 1, 2022 to July 1, 2023;
- Delay the start date of benefits from January 1, 2025 to July 1, 2026;
- Provide the ability for workers who live out of state and work in WA, spouses and registered domestic partners of active military, workers on non-immigrant visas, and certain veterans with disabilities to opt out of the WA Cares Fund; and
- Provide the ability for workers near retirement (born before 1968) to qualify for partial benefits.
Prior to the amendment, employers were required to collect WA Cares premiums through a 0.58% payroll deduction on WA employee wages beginning January 1, 2022. Now that a delay has been passed, employers with WA employees do not need to collect and remit WA Cares Fund premiums until 2023. Employers who began collecting premiums as of January 1, 2022 should immediately stop withholding premiums and reimburse any premiums collected within 120 days of the collection date.
The Long-Term Services and Supports Trust Act (“Act” or “WA Cares Fund”) was designed to provide eligible WA residents with benefits to pay for long-term care services beginning January 1, 2025. The Act requires WA employees to fund these benefits through a “premium assessment” (i.e., tax) on their wages, initially set to begin on January 1, 2022. Though employers are not required to contribute to the WA Cares Fund, employers (including out-of-state employers) are required to collect premiums from WA employees and remit them to the WA State Employment Security Department (ESD).
A couple weeks before the premium assessment was set to begin, WA legislators announced that they planned to pass legislation that would delay the premium collection start date. As such, WA legislators encouraged employers to pause collecting premiums and Governor Inslee ordered ESD not to collect premiums. Several days after this announcement, Governor Inslee issued another statement clarifying that employers would be responsible for premiums as of January 1, 2022 if legislators failed to pass a delay.
Based on these announcements, some employers decided to begin collecting premiums as of January 1, 2022, while other employers decided to wait on collecting premiums to see if a delay would be passed. On January 27, 2022, WA passed a delay to the premium collection and other amendments to the Act.
Payroll Tax Delayed
The amendment delayed the start date for collecting WA Cares premiums from January 1, 2022 to July 1, 2023. Employers who began collecting assessments on January 1, 2022 must reimburse employees for any premiums within 120 days of the collection date. Employers who did not begin collecting assessments on January 1, 2022 have no payroll action at this time.
Sequoia PEO Clients Only: Sequoia One systems will be updated in accordance with these legislative changes. For additional questions please be sure to reach out to your dedicated HR Business Partner.
Additional Exemption Categories
Under the original iteration of the Act, employees could apply for an exemption from the WA Cares premium assessment if they attested to having long-term care insurance before November 1, 2021 and applied for an exemption between October 1, 2021 through December 31, 2022. Though the recently passed amendments do not change requirements under this exemption, they do provide new exemptions for certain employees.
The following categories of employees can apply for a voluntary exemption:
- Employees who are employed in WA but maintain a permanent residence outside of WA as their primary location of residence;
- Veterans of the U.S. military who have been rated by Veterans Affairs as having a service-connected disability of 70% or higher;
- Spouses or registered domestic partners (RDP) of an active duty member of the U.S. armed forces; and
- Employees who have a non-immigrant visa for temporary workers.
Employees who receive an approved exemption will not be required to pay the premium assessment but will be permanently ineligible to receive benefits (except in limited circumstances).
ESD will begin accepting and approving these exemptions on January 1, 2023. Employees who receive an exemption must provide written notification to all current and future employers. If the employee fails to notify the employer of an exemption, they are not entitled to a refund of any premium deductions taken before the notification.
Discontinuation of an Exemption
Employees who receive an exception based on the above categories are permanently ineligible for benefits unless they discontinue the exemption within 90 days of:
- A discharge or separation of an employee’s spouse/RDP from military service;
- The dissolution of marriage/RDP between the employee and the active duty service member;
- The employee no longer holding a temporary non-immigrant visa and becoming a permanent residence or citizen; or
- The employee establishing a permanent address within WA as their primary location of residence.
To discontinue the exemption, the employee must notify ESD and their employer that the exemption must be discontinued due to one of the above events. Employers must then begin taking premium assessments from the employee.
Partial Benefits for Employees Born Before January 1, 1968
An initial criticism of the WA Cares Fund was that employees close to retirement would be required to make contributions to the Fund but would be ineligible to receive benefits because of their inability to satisfy the 3-year or 10-year minimum contribution requirement.
To address this issue, the recent amendments expand eligibility to include workers close to retirement (born before January 1, 1968) who contribute premiums for at least one year but do not otherwise meet the contribution minimum. These individuals are now eligible to receive partial benefits based on the number of years they contribute to the Fund.
- Payroll Deductions:
- Employers who began collecting WA Cares premiums on January 1, 2022 should stop these payroll deductions immediately and reimburse WA employees for any deductions taken within 120 days of the collection date.
- Sequoia PEO Clients Only: Sequoia One systems will be updated in accordance with these legislative changes. For additional questions please be sure to reach out to your dedicated HR Business Partner.
- No payroll action is currently required for employers who did not begin collecting WA Cares premiums on January 1, 2022.
- Collect Exemptions: Employers should continue collecting and maintaining exemption approval letters.
- Employee Communications: Employers may want to communicate the delay in payroll deductions, the changes to eligibility for workers near retirement, and new exemptions to WA employees.
- Sequoia Foreword: Get Ready for Washington State’s New Long Term Care Program
- WA Cares Fund Amendments: House Bill 1732 and House Bill 1733
- Announcement of Implementation Delay (December 17, 2021)
- Governor Inslee Statements on Payroll Deductions (December 23, 2021)
- Official WA Cares Fund Site
- Official Employer Guidance
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2022 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved