Cliff Marshall

Washington Long Term Care Trust Act

The WA Care fund was previously known as the Washington Long-Term Care Trust Act. This is a new tax created as law that makes Washington the first state to create a publicly funded insurance program that will provide participants, working residents of Washington, an opportunity to vest into a basic plan of long-term care benefits.

This program will be funded by Washington workers who will pay a tax through payroll deductions. You are allowed to “opt out” of the plan if you can attest to having long-term care insurance prior to November 1, 2021, which means that if you do not have existing coverage, you have a very short window to obtain coverage if you don’t want to pay the tax.

Washington Long Term Care Trust Act

Here is an overview of the program:

1. Beginning January 1, 2022 each W-2 employee will pay a tax via a payroll deduction.
2. The initial tax will be 0.58% of wages for each $100 of payroll. So as an example, if your income is $100,000 then the tax for the year is $580.
3. There is no cap on the amount you pay, so the more the make the more you pay.
4. The first available time that you could receive a benefit is January 1, 2025
5. An “eligible person” is determined in a couple of different ways. A) Worked at least 3 years in the last 6 years or,  B) Worked 10 years without an interruption of 5 consecutive years and C) Has been working at least 500 hours per year. Basically after 3 years of paying into the program you would be qualified.
6. The “Maximum Benefit” is currently $36,500 which will probably be adjusted for inflation over time but that amount is hardly anything, that would last 6 months tops.
7. The WA Care Fund also has a stricter definition than a traditional LTC plan. They make you prove that you cannot do 3 or more ADL’s (Activities Of Daily Living) out of 10, the traditional plans on the market are 2 out of 6 ADL’s.
8. Benefits are NOT available to individuals who are residing outside of Washington state even if you have vested into the program.

Back in 2019 when this tax program was brought up, long-term care services and support comprised approximately 6% or the states general fund budget and with the number of people needing care they calculated that would account for a $6,000,000,000, yes six billion dollar increase by 2030. This program is how they plan on paying for it.

So what do you do?

For a vast majority, they will just pay it, never think about it and move on.

If you want to find an alternative and avoid paying the tax then we can help.

What qualifies as a long term care plan in the state of Washington?

1. Traditional qualified long-term care insurance contracts.
2. Long-term care riders on life insurance and annuity contracts.
3. Long-term care plans purchased under group coverage.

Chronic illness riders on life insurance plans do NOT qualify as an alternative plan.

If you would like to can explore your options contact Me Here