Every legislative session in Olympia, there are several highly publicized and controversial bills that become law. But there also are consequential bills that advance through the Legislature and receive the governor’s signature without much news or attention during their journey.
One of the less publicized, but more troubling bills adopted into law this session was House Bill 1323, which is a follow-up to House Bill 1087, a 2019 law that created a new payroll tax here in Washington. This tax will fund a Long-Term Care (LTC) insurance program known as the WA Cares Fund.
Effective Jan. 1, 2022, nearly all working Washingtonians will be subject to a 0.58% payroll tax on all wages. (For example, if you make $50,000 per year, you will pay $290 per year until you retire or leave the state.) There is no guarantee that the state will not raise this rate in the future. If you move out of Washington, your benefits are not portable, and your contributions will be forfeited to the state.
It is possible to receive an exemption from paying this tax, but the time frame for this exemption is very short and coming up quickly. Under the follow-up legislation passed this year, you need to purchase a private long-term care plan before Nov. 1, 2021. Starting Oct. 1, 2021, through Dec. 31, 2022, you will need to fill out an application attesting to the Employment Security Department that you have purchased private long-term care insurance. ESD will provide you with an exemption letter, and this letter will need to be shown to your employer and any future employers to keep you from permanently paying the payroll tax.
As a member of the Long-Term Services and Supports Trust Commission, which watches over and advises this new long-term care program, I realized early on that this program and the new tax created to pay for it would cause problems for many people. I’m concerned that there are too many questions about the program’s viability, and that the people who are supposed to benefit the most from this program will end up being hurt financially in the long run. I think the tax rate for the program eventually will need to rise, which will hurt lower-income workers.
This new tax will be unfair to migrant workers who are here in Washington through the H-2A program. Our H-2A workers will have to pay this tax, but when they return to their country of origin, they will not have access to the benefit. Also, those who work in Washington state but live in Oregon, Idaho, or Canada will have to pay in, but will not be eligible for the benefit.