A window to apply for an exemption from a payroll tax that begins in July 2023 is still open, but it will only be open for about two more months. It closes Dec. 31. If you’re one of the people who has private long-term-care insurance (LTCI), purchased before Nov. 1, 2021, you’ll want to jump through the exemption hoops available on the “Exemptions” page of the WA Cares website.
WA Cares is a mandatory social program created by the Legislature in 2019 to benefit some Washingtonians who have long-term-care needs and their caregivers. Nearly all W2 workers will pay into WA Cares, regardless of income, but only some people will benefit from the program — again, regardless of income. State lawmakers misguidedly created a safety net for people in need and people not in need. Read my analysis of the long-term-care law that penalizes work here.
An “Apply for an exemption” button is buried on the “Exemptions” page after information about the program, the process surrounding exemption, a warning that you’ll be permanently excluded from WA Cares after becoming exempt and what the state sees as benefits of its program as opposed to private long-term-care insurance. It fails to offer you full information about the differences between the two. That would include that the lifetime benefit of $36,500 attached to WA Cares is inadequate for most people’s long-term-care needs and less than what you can find with private LTCI. WA Cares-promoting staff members and lawmakers continually spread inaccurate information and misleading comments about private LTCI.
Marketing from the state also fails to mention that many people would prefer to save for this possible life need in other ways than a mandated state savings plan like WA Cares or private LTCI. After all, long-term care might not end up being a life need. (Some LTCI plans have options surrounding that possibility.) Some people would rather pay for long-term care with real estate and other investments or savings.
State lawmakers should repeal the misguided long-term-care law and let people plan in the way that is best for them. It should also make changes to Medicaid, preventing abuse of the system. Medicaid is not LTCI, and it shouldn’t be used that way.
This one-size-fits-some state program that will tax workers to the tune of 58 cents for every $100 earned is not a good investment and offers no guarantee that you’ll have long-term-care benefits. Even if you do need long-term care one day, if you've moved out of state, there won't be long-term-care dollars headed your way. If you don’t pay in for 10 years without a break of five or more years, you’re out of luck, too. WA Cares’ exclusions and qualifications will keep many Washington workers away from the money they'll be putting into this program throughout their working years.
Since last October when the exemption-application window opened, nearly 500,000 people have opted out of the payroll tax attesting they had private LTCI. As of Oct. 14, the Employment Security Department reports the following:
• Total opt-out requests submitted: 479,711
• Total opt-out requests approved: 476,025
• Total opt-out requests processed: 479,624
• Applications processed as a percentage of total: 99.98%
New exemption categories created in the last legislative session — including people who live out of state, people on nonimmigrant visas, military spouses and veterans with a 70% or greater service-connected disability — can start applying for exemptions in January 2023. I am assured by an ESD spokesperson that the exemption team is ready to handle the influx of applications expected.
We’ll know sometime next year how many current workers are left paying this payroll tax and what the exemptions do to the solvency of the program. Even before one exemption application was approved, WA Cares was not expected to be able to pay its way or fulfill its promises. Instead, the long-term-care payroll tax rate is expected to increase or the benefit decrease. It's not surprising nearly 500,000 Washingtonians applied for an exemption.
Elizabeth Hovde is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center.