Remember those emails from HR about a new paycheck deduction to ring in the New Year? Turns out they were a bit premature. After months of backlash, governor Jay Inslee recently signed a pair of bills to delay and amend the tax for Washington’s long-term care program.
A refresher: The Washington Cares Fund collects 58 cents for every $100 of income that workers in the state earn until they retire. This money will cover services and support some retirees need to perform daily activities. Each beneficiary can access up to $36,500.
Washington was prepared to roll out this program at the beginning of the year, but the new bills have delayed the timeline by 18 months. Now, workers in Washington won’t see this deduction from their paychecks until July 2023, at the earliest. Benefits will be available for eligible Washingtonians starting in July 2026. Any premiums collected this January will be refunded to employees within 120 days. Some politicians and activists are pushing for the program to be dismantled completely, but new legislation would be required to further postpone or cancel the program.
The bills signed in late January provide some additional opportunities for exemption. Washington workers who live out of state, temporary workers on nonimmigrant visas, spouses of active-duty military members, and veterans with service-connected disabilities can all seek opt-outs starting in January 2023.
But for most employees, the delay of the program’s start doesn’t give them any more time to find a way to avoid the tax. The deadline for exemptions was not extended, so anyone who doesn’t belong to one of the aforementioned groups newly eligible for exemptions, and who didn’t bail in time last year, is still locked in. They just have some extra time before their paycheck gets .58 percent slimmer.
Those who bought a qualifying private long-term care insurance plan before November 1, 2021, an option encouraged by some financial advisors for high earners, have until this December to submit their exemption forms. If you went this route and want to get a refund for the months affected by the delay, insurance companies suggest contacting your local agent, as this will be assessed on a case-by-case basis.
Legislators hope the postponement will address some bipartisan concerns about the program. One was raised by workers living in neighboring states. Since all Washington workers must contribute to the fund, but only Washington residents can access the services it funds, local employees who reside in places like Oregon and Idaho have fretted about paying into a system they will not see any benefit from.
Changes laid out in these new bills also allow for Washington workers and residents near retirement (those born before 1968) to qualify for partial benefits on a prorated basis. These residents wouldn’t have met the previous eligibility requirements.
For updates (you know there will be more) and all of the nitty-gritty, check the Washington Cares Fund site.