Last updated: July 19th, 2022
Reviewed by
Grant Desselle
Licensed Insurance Agent
In 2021, House Bill 1323 was passed which creates the Long-Term Services and Supports Trust Program also called the “LTSS Program” or “WA Cares Fund”. The program imposes a 0.58% premium assessment on all Washinton employee wages. The new Fund paid for by Washington employees provides long-term care benefits to those that require financial assistance and meet the qualification requirements.
To be eligible to receive long term care benefits under the WA Care Fund, an individual must meet one of the following contribution requirements:
or
Once you’re vested, you’re insured against long-term care up to $36,500 over your lifetime.
Medicare doesn’t cover long-term care (also called custodial care), and Medicaid covers long-term care only for qualified individuals who cannot afford the cost of the care.
The Medicaid program is jointly funded by the federal government and states. The federal government pays states for a specified percentage of program expenditures, called the Federal Medical Assistance Percentage (FMAP).
According to the WA Cares Fund website, long-term care is expensive and not covered by Medicare. Most will not have the savings to pay for it. Seven in ten Washingtonians will need long-term care during their lifetimes, and most older adults today end up relying on family members to care for them or impoverishing themselves to qualify for Medicaid.
The WA Cares Fund provides choices about how to receive care and a way to pay for it.
There Is No Cap on the Amount of Taxed Wages. Unlike other state insurance programs, there is no cap on wages. All wages and other compensation, including stock-based compensation, bonuses, paid time off, and severance pay, are subject to the tax.
An employee has a one-time opportunity to opt-out if they have comparable private long-term care insurance.
An employee who attests they purchased long-term care insurance before November 1, 2021, may apply for an exemption from the premium assessment.
The employee must provide proof of their ESD exemption to their employer before the employer can waive collecting the premium assessment from the employee’s wages. The employee must apply for the opt-out exemption to ESD between October 1, 2021, through December 31, 2022.
You’ll get an exemption approval letter from ESD, at which point you’ll be:
Exemptions will take effect the quarter after your application is approved.
Starting January 1, 2022, all Washington employee wages (those employees who work in Washington, receive wages reported on a Form W-2, and work at least 500 hours per year) are subject to a 0.58% premium assessment.
Those without W-2 income are exempt from the program but may choose to opt-in. Under the program, self-employed individuals must elect coverage by January 1st, 2025, or within 3 years of becoming self-employed for the first time.
You are considered self-employed if you are:
Note: You are NOT self-employed if you are an employee of a company you own, including being paid by the corporation. If this is your situation, you are required to withhold premiums and report yourself with all of your other employees.
Employers are required to collect premiums through employee payroll deductions and remit proceeds to the Employment Security Department (EDS). This agency will deposit funds in a trust for the individual until they qualify for the benefit.
If ESD finds that an employer is non-compliant with collecting premiums from an employee:
Starting January 1, 2025, proceeds of this premium assessment will be used to provide long-term services and supports benefits to Washington State residents who have paid into the LTSS Program for a specific amount of time and who need a certain amount of assistance with activities of daily living.
The tax applies to all wages and renumeration, including salary and hourly wages, stock-based compensation, commissions, bonuses, holiday pay, most paid time off, and severance pay.
For more on what wages are subject to the tax, see section 192-910-005 under the proposed rules.
Starting January 1, 2025, an individual may receive benefits from the LTSS program if:
They are a Washington resident;
For persons planning to retire in the next three years, the LTC insurance program will not be available.
Upon becoming eligible, a person may receive approved services of up to $36,500 over the course of the person’s lifetime. The DSHS will pay, in $100 per day increments (may be adjusted annually for inflation) for adult day services, in-home personal care, assisted living services, adult family home services, nursing home services, care transition coordination, dementia supports, home safety evaluation, adaptive equipment, respite for family caregivers, transportation, home-delivered meals, education and consolation, relative care, professional services, and services to assist family members to care for eligible individuals.
The LTSS Program will be administered jointly by the DSHS, ESD, the Health Care Authority (HCA), and the Office of the State Actuary (State Actuary). Their respective roles will include:
An LTSS Commission will be established and include legislators, agency directors, representatives from numerous long-term care organizations, a long-term care worker, and an employer who collects and remits the premium assessment from its employees. It will establish rules and policies for the LTSS Program, monitor the LTSS Program’s solvency, and make annual reports to the Legislature.
Because benefits are limited to Washington residents, employees who move out of state will not be eligible to receive benefits under the Program. Employees who maintain a second home will want to consider which location will be their permanent residence.
Most older adults today end up relying on family members to care for them or impoverishing themselves to qualify for Medicaid.
Yes, if you have an existing whole life insurance policy, you may be able to add a Long-Term Care Rider to that policy. This approach could be solution for a younger employee under 30 who would not be eligible to apply for a traditional LTCi policy.
There are additional insurance options available to you, such as utilizing a life insurance policy with added benefits for long-term care if you ever need them. These include hybrid policies and single pay, asset-based policies that could provide better long-term care coverage for you and would be considered comparable to the state program, exempting you from the payroll tax.
It is important to move fast to meet the November 1, 2021 deadline.
Because of the huge influx of applications, underwriting times may take up to 2 months, depending on the company you choose to apply with.
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Sources:
Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
Grant's past experience includes work as a licensed sales agent for Hagerty Insurance. He has reviewed thousands of existing auto policies across the nation and issued hundreds of new ones on everything ranging from classic cars undergoing restoration to modern exotics and motorcycles.
