Washington Long Term Care Trust Act

Washington Long Term Care, LLC

The passage of the Long-Term Care Trust Act (HB1087), which becomes effective on January 1, 2022, makes Washington State the first state in the nation to create a publicly funded insurance program for workers. The program will be funded by employees, who will pay taxes through payroll deductions, like the Family Leave and Medical Leave plans that were enacted in 2018.

Key Points

  • In 2019, Washington State passed the first in the country, mandatory state sponsored Long Term Care (LTC) Program. This plan goes into effect January 1, 2022 for funding purposes. 
  • Employees will pay a payroll tax of 0.58% to fund the program’s benefits.
  • Eligible individuals may receive up to $36,500 (as adjusted for inflation) to pay for a variety of long-term care services.
  • Employees who have long term care insurance may apply for exemption from the payroll tax.

Important Dates

  • July 24, 2021: Tentative date an individual would need private long term care policy in hand
  • Oct. 1, 2021: Employees with private long term care insurance may start applying for exemption.
  • Jan. 1, 2022: Employers must begin collecting premiums from employees’ paychecks.
  • Jan. 1, 2025: Eligible individuals can start receiving long-term care benefits.

To put it into perspective, a person making $50,000, starting in January 2022 will have their income reduced $290 per year. An employee making $250,000 will be taxed about $1,400 per year.

There is a window of opportunity for workers who own private long term care insurance to apply for an exemption from this new tax.

Employees who have private long term care insurance may apply for a lifetime exemption from the payroll tax. Within House Bill 1323, there is a provision to develop the window of time in which an individual can obtain private Long Term Care coverage in order to opt out of the LTC program and tax. If this bill is passed by the Senate, there will be a very small window (until approximately July 24, 2021) for individuals to implement coverage on their own to avoid paying this tax and receive a lifetime exemption. 

Due to the many drawbacks to the State offering (such as: 10-year vesting schedule, only payable for facilities in Washington State, more restrictive qualifications, insufficient coverage, etc.), you may want to consider looking into an private long-term care policy that would permanently exempt you from the state program and exempt you from the 0.58% payroll tax.  

Though you can choose where to find your own private long-term care insurance, we wanted to provide you with a resource if you needed a place to start.   LTC Solutions, Inc. specializes in private long-term care insurance.  If you would like to obtain a quote to purchase your own coverage, which would allow you to opt out of the tax, the team at LTC Solutions, Inc. could help.

Their website is located at - https://www.ltc-solutions.com/ or you can send them an email request at info@ltc-solutions.com.

In addition, we have compliance bulletin which was provided by our insurance broker at The Partners Group which contains more detailed information.