New long‑term care tax begins in July

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Human Resource Services is reminding Washington State University employees that the state of Washington’s Long-Term Care program and the associated payroll tax that will fund the LTC Benefit Trust are set to start in July 2023. Most employees will see the new 0.58% state tax reflected on their July 10 paychecks.

Exemptions from the new program, which was created by the Washington Legislature in 2022 but paused to allow state lawmakers to make needed adjustments, are available under certain circumstances and if associated deadlines are met. 

What follows is a brief overview of the program, its benefits and eligibility.

The LTC benefit

Starting as early as July 2026, eligible applicants will be eligible to receive up to a lifetime $36,500 benefit (adjusted annually for inflation) to address a wide range of long-term services and support.      

Funding the benefit

Starting in July 2023, all state of Washington employees, except those who have received an exemption, will pay into the Long-Term Services and Support (LTSS) Trust which will be used to fund future benefits. This will be in the form of an employee-paid payroll tax of 0.58% of eligible earnings. There is no identified salary cap on the deduction or employer contributions to this program.

Eligibility

To qualify for this benefit, individuals must have worked at least 500 hours a year and contributed to the Trust for 1) at least 10 years throughout their life without a break of five or more years; or 2) three of the previous six years at the time of application. 

Individuals born before 1968 can earn a prorated 10% benefit for each year they contribute.  Therefore, if someone in this age bracket were to retire after contributing for four years, they would be eligible for a 40% pro-rated benefit of the maximum $36,500 benefit, or $14,600.  Applicants will need to show they need assistance with at least three daily living activities, are at least 18, and are a resident of the state of Washington to be eligible to receive a benefit.  

Exemption from the program

If an individual had a private LTC policy in place before Nov. 1, 2021, they were previously able to apply for an exemption.  Individuals who received this exemption do not need to reapply; these approved exemptions are still in place and these individuals will not be subject to the tax starting July 2023.  Any private LTC policies with effective dates after November 1, 2021, or if you did not receive an exemption letter from Employment Security Department by December, 2022 for a private policy, will result in this exemption path no longer being able to be pursued. 

Workers who live outside of Washington can now apply for an exemption, as can military spouses/registered domestic partners, workers on non-immigrant visas, and veterans with 70% or more disabilities.  The new exemptions are only applicable if the individual meets the exemption criteria and receives approval by the Employment Security Department (ESD), the state agency who reviews these requests.  If/when the circumstances change for the person, and upon notification of said change, they will be required to pay the tax at that time.  Additionally, workers who live and work outside of Washington, and are currently exempted from participating in the state’s Paid Family and Medical Leave tax will also be automatically exempted from paying the WA Cares tax. 

To apply for an exemption under the new categories, visit WA Cares Fund – Apply for an Exemption.  You will be required to provide documentation to support your request.   If approved, you will receive an approval letter and a copy of that letter needs to be provided to WSU Payroll Services, 236 French Admin, Campus Zip, 1024, fax 509-335-1472, or as an attachment to payroll@wsu.edu.  If you have already submitted an exemption, been approved and submitted your letter to Payroll, you can confirm your status in the WSU system by selecting the “Benefits and Pay App”, and then select “Tax” under the “Pay” option in the left hand menu. 

There is no deadline to pursue these new exemption options — they can be pursued at any time.  If you receive an approved exemption and submit your approval letter to Payroll by mid-June 2023, you should not see this tax affect your pay as of the July start date.  However, if you apply for the exemption at a later date, the exemption will go into effect the quarter after the exemption date identified in your approval letter, assuming timely submission of the notice to Payroll.  Late submissions of an exemption to Payroll that was approved in a previous quarter will not result in a refund of taxes already paid; instead the tax will stop the beginning of the next quarter after the approved exemption was received. 

Questions? Contact WA Cares Fund.

Information, videos/webinars, FAQ’s, and updates will be posted to WSU Long Term Care.

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