Washington’s New Lengthy-term Care Profit Program: Vital Deadlines Loom! – Employment and HR

How much do employees have to contribute?As part of the program, employers must deduct a payroll tax of 0.58 percent of the employee’s wages per wage period (wage x 0.0058).

For example:

• Employees who earn $ 50,000 contribute $ 290 per year.
• Employees who earn $ 75,000 contribute $ 435 per year.
• Employees who earn $ 100,000 contribute $ 580 per year.
• Workers who earn $ 150,000 contribute $ 870 per year.
• Workers who earn $ 200,000 contribute $ 1,160 per year.

There is no upper contribution limit for highly employed people. The program taxes all wages and compensation, including bonuses, gifts, severance payments, and stock-based compensation. Tips are not included in the wages.

Do employers contribute?Employers are not required to contribute to the program. However, employers can choose to pay their employees the WA Cares Fund rewards.When do the deductions start?From January 1, 2022, employers must collect deductions for participating employees and transfer these premiums to the occupational safety department every quarter.Which workers are included?

All Washington workers are included unless:

• the employee is self-employed (ie sole proprietor, member of a partnership, member of a limited liability company, independent contractor or other self-employed person);
• the employee is subject to an existing collective agreement (GKV) that was in force on October 19, 2017; or
• the employee leaves the program.

Note: As soon as exempted CBA agreements are reopened, renegotiated or expired, employees to whom the CBA applies will become subject to the program.

How are teleworkers treated?Employers must withhold bonuses for employees whose work is “located” in Washington, including those who do all or most of their work in Washington.

If only part of a worker’s work is being done in Washington, then employers may be bothered by a variety of factors (such as the place of work, the location where the services are directed or controlled, and where they are resident).

Can the self-employed take part in the program?Self-employed people do not have to take part in the program, but can register for the program by submitting an application.What are the advantages of the program?Program participants receive $ 36,500 in lifetime benefits that are adjusted for inflation annually.

An authorized participant can use program funds for:

• Memory maintenance;
• Adaptive equipment and technology;
• House modifications, e.g. access ramps;
• Evaluation of security at home;
• Delivery of meals;
• Transport;
• Personal care in a home;
• Facility for assisted living;
• Adult family home or nursing home;
• Training and support for caregivers; and
• Other qualified care needs.

When do the services start?Eligible employees can apply for and receive benefits from January 1, 2025.Who is entitled to benefits?The Washington State Department of Social and Health Services determines eligibility. To be eligible, workers must: (1) participate in the program, and (2) need help with at least three activities of daily living.

• Employees vest if they have worked:
• a total of 10 years without interruption of 5 or more consecutive years; or
• 3 years within the last 6 years from the application date.

Note: A “year” is a year in which the individual worked at least 500 hours.

Who can consider opting out?Several categories of employees may consider opting out of the program, including the following:

1. Workers with rising wages
2. High wage workers
3. Pensionable workers

Employees who retire before the program expires may contribute to the program before they have an opportunity to receive any benefits.

4. Workers with plans to move out of Washington

Benefits are limited to Washington residents. As a result, employees and / or retirees moving out of Washington are not eligible for benefits.

5. Employees with existing long-term care insurance
6. Employees who want to adjust their insurance coverage

How do employees quit?Employees over the age of 18 can take the following steps to opt out of the program:

Step 1. Until November 1st, 2021take out qualified private long-term care insurance.

Step 2. Apply for a program exemption between October 1, 2021 and December 22, 2022 by submitting an application to the Washington Employment Security Department (ESD) confirming that the employee obtained qualifying long-term care insurance before November 1 , 2021.

Approved exceptions will not take effect until the quarter immediately after approval. For example, if the ESD approves an employee time off on January 1, 2022, the employee’s wages will be taxed until March 31, 2022. In other words, the year-end bonuses or commission payments often paid in the first quarter are reduced by the payroll deduction program.

Step 3. Send the ESD approval letter to your employer.

Is the deregistration permanent?Once an employee signs out, there is no option to opt for the state program again. It is not yet clear whether an employee can give up private long-term care insurance after permanently withdrawing from state benefits.What are the employer’s obligations under the program?The employer has five main tasks:

1. Deduct premiums.
2. Keep copies of the ESD exemption letters submitted by workers.
3. Transfer quarterly premium payments to the ESD.
4. Submit quarterly reports to the ESD that are expected to be consistent with reports that employers are already providing under the Washington Paid Family and Medical Leave Program.
5. Immediately inform the ESD of any reopening, renegotiation or expiry of a CBA that was in effect before October 19, 2017.

Current law and draft regulations do not require employers to give their employees advance notice of the program, their option to opt out or be exempted from the program, or that deductions begin January 1, 2022.