Delayed long-term care tax

Many of you have written to me recently asking about the upcoming implementation of the “Washington Cares Fund.” This 2019 law created a trust fund to implement a new state long-term care program. For background, the Legislature approved House Bill 1087 concerning long-term services and supports in the 2019 legislative session after much debate. Many of us who voted against the bill argued that it was flawed and would lead to a multitude of problems. Due to a variety of implementation issues and public frustration, Governor Inslee ordered the state Employment Security Department in 2021 not to collect tax premiums for the program, which effectively paused its implementation.

After significant floor debate, the Legislature approved House Bill 1087 in 2019 to create a long-term care program, known as the “Washington Cares Fund.” I voted against the bill, but it passed the Senate 26-22 that year. The program is funded by a .58% payroll tax, which amounts to $5.80 for every $1,000 of earnings. Despite delays, the new tax began in July.

Delayed program to take effect

The Washington Cares Fund program, and its payroll tax, is scheduled to go into effect in July. In accordance with the law, Washington state will be requiring workers to pay into its long-term care program regardless of whether they will receive benefits from it. This mandatory long-term care program has a maximum lifetime benefit of $36,500. It is funded by a .58% payroll tax, which amounts to $5.80 for every $1,000 of earnings. Several bills have been introduced to repeal or replace the suspended law and requests have been made to the governor to terminate it, but no agreement was reached by the Legislature. Some adjustments were made to officially delay the program during the 2022 session but, unless terminated by the state in a future legislative session, the payroll tax will remain in effect to generate revenues for the program.

What is funded by the program?

The long-term care program is available to any Washington state resident over the age of 18 who has paid the payroll tax premium for at least three of the last six years or for a total of 10 years, with at least five years paid without interruption. The program has a maximum lifetime benefit of $36,500 and people qualify if they need assistance with at least three of the following daily activities: medication management, personal hygiene, eating, toileting, cognitive functioning, transfer assistance, body care, bathing, ambulation/mobility, and dressing. The Washington State Employment Security Department will help implement the tax collection. People can apply for an exemption through the department if they have purchased long-term care insurance through a private provider by November 1, 2021. I anticipate that the program will be adjusted over time, which could mean that the benefits and taxes could increase.

Why I voted against the long-term care tax?

Ensuring that our population has access to quality long-term care is a very important issue. As many of you know from friends and relatives, long-term care service is very costly. While this new program is intended to help people and may benefit some, creating a government program to tax everyone’s paychecks for years and years, including younger workers struggling to repay student loans and save for a home, seems very burdensome. This is especially true for a limited benefit that workers may never receive, either because they end up not needing long-term care or they have moved away. This benefit is also, at least currently, not “portable” across state lines. Many private or employer-based long-term care insurance programs are portable. Since the state program is currently not portable, workers who someday move to another state are no longer eligible to receive benefits despite paying into the system throughout their working careers in our state. Lastly, the cost of long-term care – sometimes over $10,000 per month – can far exceed the program’s maximum lifetime benefit of $36,500. These facts lead to this program likely significantly underperforming in its efforts to fund people’s long-term care needs.

 For all these reasons, I voted against House Bill 1087 in 2019. The bill, however, passed the House of Representatives (63-33) and the Senate (26-22). I have also joined many of my colleagues to call upon Governor Inslee to intervene related to the new long-term care tax. My position as state Senator exists to serve you. If you have any questions about the long-term care tax or other topics, please contact me at senatorbradhawkins.org. Please call our Legislative Hotline at 1-800-562-6000 if you need immediate assistance at any time. My office will also be actively working over the coming months to reach out to you about my Facebook page. You can like and follow me on Facebook @SenatorBradHawkins for my latest updates. Thank you for the opportunity to serve as your state senator.