OLYMPIA — Gov. Jay Inslee signed bills Thursday to delay the WA Cares payroll tax on Washington workers and expand the number of people who can seek permanent exemptions to avoid paying into the first-of-its-kind long-term care program.
The governor signed House Bills 1732 and House Bill 1733 just one day after Senate lawmakers voted them out of that chamber. The bills passed the House last week.
"By pausing and improving this important program, we've really made progress here in just the last few days in Olympia," Inslee said Thursday in a regularly-scheduled news conference. "We do have to get this right, because this is so important to so many people."
The 0.58% payroll tax on employees in Washington — which amounts to $290 per year for someone making $50,000 annually — was set to begin Jan. 1.
But amid questions and criticism about the nascent program, Inslee announced late last month that the state would hold off on collecting the tax from employers until lawmakers explored changes.
That tax is now delayed until July 2023. Any premiums collected so far by private and public employers are to be refunded within 120 days.
The delay also means that approximately 450,000 Washington residents who opted out of WA Cares by securing long-term care insurance through their employers or the private market are now making payments that they were told was necessary to avoid the payroll tax and the state program.
Passed by Democratic lawmakers and Inslee in 2019, WA Cares is styled to be a social insurance program to help people pay for needs in sickness and old age. That could include things like transportation and meal preparation, and nursing care, assisted living and respite for those giving care to family members.
Under the bills, eligible beneficiaries in July 2026 could begin claiming up to $36,500 to pay for those needs. The benefits were originally designed to start in January 2025.
But as the program got underway, a slew of concerns emerged from people who will pay into the program but never be eligible to receive benefits or get care under other programs.
That includes about 150,000 people who work in Washington but live in another state, like Idaho or Oregon; military families rotating through Washington; and some disabled veterans.
Under the legislation signed Thursday, people in those categories will have the opportunity to get a permanent exemption from the program.
Meanwhile, about 477,000 Washingtonians are near retirement age and may not become fully vested in the program as it is currently structured and claim full benefits.
Residents born before 1968 who won't be fully vested can receive partial benefits calculated by the number of years they ultimately pay into WA Cares.
Republican lawmakers voted against the legislation in 2019, and over the past year, have called for Inslee and Democrats to repeal the program.
As questions began to circulate about the program last year, scores of businesses, unions and other organizations — including Amazon, Microsoft, Alaska Airlines and more than 40 local of chambers of commerce — called for a delay of WA Cares.
In a statement Thursday, Kris Johnson, president of the Association of Washington Business, cheered the delay. But lawmakers and the governor must look at other issues with the program, he said, such as its long-term solvency.
"Delaying the start of the program and allowing for some additional populations to opt out is a good start, but it's not the full solution," Johnson said in prepared remarks.
In a statement, WA Cares Director Ben Veghte hailed the passage of the bills, saying that lawmakers listened to concerns and took action.
"WA Cares will protect many Washingtonians from being driven into poverty by the need for long-term care and serve as a model for the rest of the nation," Veghte said in prepared remarks. "The program will make it easier for all of us to age with dignity and independence in the setting of our choice."