RON MUZZALL: Long-term care payroll tax
Sen. Ron Muzzall sent out a legislative update to constituents from his official email account on Tue., Jun. 29, 2021.
Long-Term Care Tax
This past session we had quite a few bad bills. Being in the minority, we had little chance of stopping the onslaught of policies that drive up the cost of government or shirk our responsibility to provide oversight of state agencies run amok. However, we did have some bipartisan wins. That includes an amendment I sponsored to extend the opt-out period to the long-term care payroll tax adopted in 2019.
This long-term care payroll tax was passed in 2019 as HB 1087, the Long Term Care Trust Act, requiring that everyone participate in a long-term care program by deducting a 0.58% payroll tax to fund it. This tax rate is likely to fluctuate as the costs and participation become more clear.
A significant problem with this program is that the benefits are negligible to the employee relative to how much they’ll be paying, especially for younger workers. In fact, the cost to taxpayers will return a maximum benefit of just over $36,000 per individual. That doesn’t cover much for people needing access to long term care services. Also, the benefits are not portable, meaning you must retire within the state to use them.
Fortunately, the Legislature provided a fix to allow people to opt-out. I was proud to sponsor the amendment that extended the date to get an exemption. You can apply for one by attesting that you have a qualifying long-term care insurance purchased before November 1, 2021. You must apply through the Employment Security Department (ESD).
Of course, it’s a challenge for government to do anything simply; the opt-out provisions are somewhat restrictive. For example, younger workers under 18 cannot apply for the exemption, and military spouses are not automatically exempt, though active-duty military are considered federal employees, so their pay is exempt. Getting one of these plans can take some time, so if you are wanting to take advantage of this option by purchasing your own plan, the time to act is now!
One important thing to keep in mind is that a lot of the implementation of this opt-out is up in the air. There are some hard questions that I know people want answers to now, but unfortunately, it’s a bit of a waiting game. ESD is in the process of formulating these rules.
For more information, I encourage you to visit the ESD website here or the Department of Social and Health Services, who is also involved with the roll out of this new program, called the WA Cares Fund. Legislative offices cannot advise people on a case-by-case basis, so questions about your particular situation will need to be directed to ESD or DSHS. Here is an email address where you can direct questions: wacaresfund@dshs.wa.gov
My office is here to help where we can. Email continues to be the best way to contact me. It is an honor to serve you.
Sincerely,
Ron Muzzall
Your 10th District State Senator
