WA State Long Term Care Tax


Washington State Long-Term Care Trust Act

What you need to know...


Beginning January 1st, 2022, all wage recipients within the State of Washington, will have an additional tax on their paycheck unless they opt-out with a private Long Term Care policy effective prior to November 1st, 2021. This tax is a first of its kind in the United States, which was first signed into law by Governor Jay Inslee on July 28th, 2019. As many people have started to wonder what this all means, we are here to provide the facts behind it.


What are the costs associated with this tax?

Starting January 1st, 2022, the state will require employers to begin deducting $0.58 for every $100 earned on a qualifying W-2 wage earner for which there is no maximum amount set forth but may have an increased rate in the future. If you are a self-employed individual or employer, you will have the option to opt into the program if you are not subject to a W-2.


What will Washington’s Long-Term Care Trust Act offer?

A maximum of $36,500 lifetime benefit, per individual, will work on offsetting first dollar costs Medicaid currently pays for, associated with long-term care such as meal delivery, home healthcare, caregiver support, professional caregiving, assisted living, and nursing facility costs.


How does one qualify for coverage?

To qualify, one must be an existing resident of Washington State and meet several conditions set forth by the state.

  • An employee who will end up paying for ten years not exceeding a five-year uninterrupted break will become perpetually entrusted.
  • An employee who will pay for a minimum of three years in the previous six can become entrusted but will no longer meet the three of the last six rule if for at any time they have not paid in ten years.
  • Any individual who needs the aid of at least three activities of daily living (ADL) which can include the following: mental deficiency, dressing, ambulation/mobility, cleansing, body care, transferring, toileting, eating, individual hygiene, and medication supervision.


If I move, can I keep my benefits or take it with me?

Unfortunately, being that is a first of its kind of program it is not recognized by any other state, but if you plan to move away for a short while meaning less than five years your benefits will remain in place. If you plan on moving out of Washington state for more than five years you will end up surrendering every bit of the value and tax that has been paid into it.


How do I opt out of this tax?

Every employee has a chance to perpetually opt-out of this tax and the benefits prior to the deadline on November 1st, 2021 by purchasing a private traditional Long-Term Care policy, or a life policy or annuity, with a long-term care rider.  The employee must attest that they have a policy in place with the Employment Security department for review only, during the window that is open between October 1st, 2021, and December 31st, 2022.  It is best then to have a private policy in place by October 1st, to ensure your attestation is approved before the tax is initially collected.  Once the tax is collected and paid to the state, there are no refunds!


How can BSP help?

We can help you find a private policy to avoid paying this ongoing tax and providing you with better coverage for long-term care.  These policies are at a fixed rate, with no surprises, under the jurisdiction of the insurance department, underwritten by authorized carriers, via licensed, trained, and regulated brokers like us!  Check out our free, pre-recorded webinar to learn more by registering below: