New payroll deduction coming for long-term care insurance trust

In 2019, the legislature created the state’s Long-Term Services and Support Trust, called Washington Cares, to address a growing need for long term care supports.  The program is funded by a payroll deduction of $0.58 per $100 starting January 1, 2022 and will provide benefits to workers who have paid in for ten years or for those have paid into the system in 3 of the last 6 years before needing the benefit.  The state benefits will be paid to qualifying individuals who reside in Washington when they need to rely on that benefit. There is a lifetime maximum benefit of $36,500 which will increase annually to keep pace with inflation. 

The recent action to delay implementation of the WA Cares long-term care insurance program is creating confusion. While the state will not be collecting premiums from employers until at least April 2022, existing law as written still requires employers to collect these funds from employees beginning Jan. 1, 2022.  Until the legislature acts, employers will be responsible for being prepared to remit to the state the employee contributions potentially from January 1, 2022.

The Governor’s announcement in December put the decision of when to begin collecting the premiums in the hands of employers until further action by the legislature. Our districts and colleges can choose to collect those premiums or not during the pause by the state collection.

Until state lawmakers take action during the legislative session, what happens to funds collected but not remitted to the state remains unclear.  If employers don’t begin to collect the premiums on January 1, there is a chance they will have to make multi-month deductions to make up for it. In short, our employer can collect those WA Cares premiums at this time. The legislature’s action will determine what happens with those funds and the future of the WA Cares program.

More information on the status of WA Cares as of Jaunary 10, 2022:  

Does our employer have the right to collect these funds, even though the state isn’t collecting from them?

Yes.  During winter break, the Governor clarified the original statement noting that there is no change to the law and that employers can make their own assessment about whether they begin making the deductions now or in April.   For those that start in January – they risk needing to refund those amounts after the legislature acts on the program.   For those that wait – they risk having to make multi-month deductions if there are no changes/delays to the program. 

What might happen next?

The legislature is expected to take action to reshape the WA Cares program. Depending on their legislation, any premiums collected from January to April could be refunded to employees OR employers who didn’t collect the premiums could be forced to collect the back premiums from employees in a lump sum.  We don’t know yet but will keep you posted.

Can we bargain over this?

Unfortunately, since it’s a state law directing employers to collect these premiums, we cannot bargain over the collection of premiums.

My employer said they were not collecting premiums,  but there was an increased payroll deduction this month.  Why is that?

At the same time that the long-term care program (WA Cares) was scheduled to go into effect, the deductions related to an open enrollment “opt in” for long-term disability insurance through SEBB will also start.   There could be some confusion about both deductions hitting at the same time.  WA Cares is the payroll deduction for long-term care, which is used with individuals need help with daily living activities (often in retirement years).  The long-term disability supplemental insurance is a wage replacement benefit while working.  The change to an opt in approach created rate savings for educators, but the increase in premiums/coverage may be a surprise to some.  If individuals want to lower their coverage or opt out of the employee-paid portion of long -term disability, they can make that change prospectively through SEBB My Account.

I applied for an exemption.  What happens next?

If you submitted your application by December 1, 2021, ESD has committed to processing the application before premiums take effect.  ESD will send you a confirmation email after they process your application.  If you have questions about your application, contact ESD at 833-717-2273.

Don’t forget that it is the employee’s responsibility to provide the approval letter to their employer for the employee to not be required to pay the WA Cares Premiums.  

Can I apply for an exemption now?

Under the current law, employees have until December 31, 2022, to apply for an exemption. However, to be eligible for an exemption, employees must have had a qualifying long-term care insurance plan in place prior to November 1, 2021.

In addition, the Employment Security Department said that for an exemption to be approved prior to the legally schedule start of premium collection (January 1, 2022), paperwork needed to be received by December 1, 2021.  Exemptions filed after that may not be processed in time for the employee to receive an approval letter and file said letter with their employer to not have premiums deducted during the first quarter.

It is the employee’s responsibility to provide employers with the notice of approval of exemption to their employer. Exemptions will take effect the quarter after the application is approved.

My employer isn’t collecting premiums, but I don’t want to risk having to pay a lump sum.  What can I do?

If you’re concerned about the risk of a lump-sum premium after legislative session, your best bet would be to set aside a few dollars of your paycheck for April.  WA Cares has a payment estimate calculator on its website.