Washington Long Term Care Trust Act

Washington Long Term Care, LLC

The Washington State Long Term Care Trust Act (LTCA), was signed into law in April of this year.  Eligible individuals will be able to apply for benefits beginning in January of 2025. This program will be funded by a NEW, EMPLOYEE PAID, payroll tax of 0.58%.  The LTCA begins funding activities January 1, 2022 through a NEW 0.58% payroll tax for all W-2 employees in Washington

  • District employee earning $50,000 per year will have their income reduced by $24.17 per month, ($290 per year), beginning with their first paycheck in 2022.
  • District employee with a working spouse and a total household income of $200,000 per year will have their income reduced by $96.67 per month, ($1,160 per year), beginning with their first paycheck in 2022.

Individuals DO have the one time ability to Opt-Out of this tax permanently.  Any individual who has a long term care insurance policy in place prior to 11/1/2021, may apply for a lifetime exemption from the new payroll tax.  The period of time the State will accept applications for exemption will begin October 1, 2021, and will end 15 months later on December 31, 2022.

Drawbacks to the LTCA (reasons an individual may want to opt out of the LTCA):

  • Benefits are only payable for facilities in Washington State
  • $36,500 Lifetime Benefit Cap
  • No income cap on the .58% payroll tax
  • 10-Year Vesting Schedule
  • No future opportunity to opt out of the plan if individual does not have their own LTC plan prior to 11/1/2021
  • No guarantee payroll tax percentage of .58% won’t increase substantially in the future.

Due to any of the drawbacks to the LTCA above, you may want to consider purchasing a private long-term care policy if you don’t already own one.  Owning a private Long Term Care policy prior to 11/1/2021 will allow you to be permanently exempt you from the state program and from the 0.58% payroll tax.  

To help you decide if opting out of the LTCA is the right choice for you and your family, we’ve provided a link to an informational page.  Simply click on this link: Conduct Your Anonymous Assessment Now and you will be able to calculate the cost of the new tax, compared to the cost of the tax to a new policy, and apply for a policy if you so choose.  If you do choose to purchase a new long term care policy, the site takes you to a long term care specialist that has been vetted by our insurance consultant, The Partners Group.

Lastly, we have attached a compliance bulletin which was provided by The Partners Group which contains more detailed information.

Please also be on the lookout for more information from the district as it becomes available.

Important Dates:

  • November 1, 2021: Date an individual long term care policy must be effective prior to, to be eligible for exemption from the payroll tax.
  • October 1, 2021: Eligible individuals may apply for exemption from the payroll tax from the ESD.
  • January 1, 2022: Employers must begin collecting premiums from employees’ paychecks.  (Excluding those employees who have received an exemption from the ESD.)
  • December 31, 2022: Deadline for Eligible individuals to apply for an  exemption from the payroll tax from the ESD.
  • January 1, 2025: First time individual may apply for benefits from the LTCA.