The GSBA Blog

WA Cares Payroll Tax Delayed

by Matt Landers, Director of Public Policy & Government Relations
| Jan 28, 2022
After a speedy passage in the Legislature, Governor Inslee signed House Bills 1732 and 1733 into law, thereby delaying implementation of the WA Cares Fund, also know as the Long Term Care Act. Addressing concerns about this program were some of the most debated in the run-up to the legislative session.

The two bills do the following:
  • Delay the start date for premium assessments to July 1, 2023
  • Delay the start date for benefits to July 1, 2026
  • Allow people born before Jan. 1, 1968 to receive partial benefits
  • Require refund of premiums collected before July 1, 2023
  • Establish exemptions from premiums for certain veterans, spouses of military service members, non-immigrant temporary workers, and employees who work in Washington but live out-of-state.
What does this mean for the payroll deductions collected by businesses?
The primary concern of many businesses was over the collection of a payroll deduction for a program whose viability was being questioned last year and what to do in the event of a delay after the implementation deadline (as has happened).

The original law, signed in 2019, designated a 0.58% premium on employees' wages (approximately $290 per year for someone earning $50,000), to be collected by their employer through payroll deductions and then remitted to the Employment Security Department. The collection of this premium was set to begin on January 1 of this year. Now with the delay enacted, collection has been paused until July 2023.

The Employment Security Office has the following recommendations for employers:
  • Stop withholding WA Cares Fund premiums from employee earnings
  • Reimburse employees for WA Cares premiums within 120 days of the date premiums were collected
  • Continue to maintain copies of exemption approval letters for workers who have provided them

What has not changed?
Self-employed people, sole proprietors, independent contractors, partners or joint venturers may still elect to participate in the program. Once they elect coverage, they may not withdraw from coverage.

At this time it does not appear that the window for an exemption by purchasing private long term care insurance was extended. Therefore, if an opt-out was not secured by the original deadline of October 31, 2021, there is no more opportunity to get one unless the legislature takes further action. As a reminder, employers are responsible for keeping track of any employees who were successful in opting-out of the program.

What's next?

GSBA will continue to monitor the implementation of the WA Cares Fund and how it impacts our members. The Legislature may address other concerns about funding and implementation in the coming year and a half. You can learn more about WA Cares Fund, program changes, and implementation on their website.