Washington employers must act now to stay ahead of new long-term care law

In 2019, Washington passed the first law in the nation requiring employees to fund a state-operated long-term care insurance program. The program, codified at RCW 50B.04 and set to begin on January 1, 2025, will be funded by an uncapped payroll tax starting at 0.58% on all employee compensation beginning January 1, 2022. Although changes to the law are subject to final approval, Governor Jay Inslee is expected to sign the final bill (HB 1323) shortly. If signed into law, the amendments will require employees who wish to opt out of the tax to purchase long-term care insurance by November 1, 2021. Accordingly, you should act now if you want to offer employees long-term care options before the anticipated deadline.

What is Washington's new long-term care program?

Passed in May 2019, Washington's long-term care program is the country's first public state-operated long-term care insurance program and is designed to provide basic long-term care insurance for Washingtonians.

Starting January 1, 2025, qualified employees who need long-term care will be able to access benefits up to $100 per day (maximum lifetime limit of $36,500) to pay for a range of services and support for one year.

How is the program funded?

Beginning January 1, 2022, the program will be funded by an uncapped 0.58% payroll tax on all employee compensation, including wages, bonuses, stock-based compensation, paid time off, and severance pay. This means an employee who earns $100,000 annually will pay $580 in taxes to fund the program each year.