The state of Washington revised the Long-Term Care Act in spring of 2021. Since then, many of our Vancouver area clients who own businesses have had many questions about their responsibilities pertaining to this new legislation. Here are the answers to the most frequently asked questions so you will be prepared when the Long-Term Care Act is implemented.
What does the Long-Term Care Act say in a nutshell?
Starting on January 1, 2022, all employees who meet the following criteria will be assessed a 0.58% premium by their employer:
- Over the age of 18
- Washington resident
- Earn over $500 per year
- File Form W-2 with the IRS
The money will be used to fund long-term care benefits after 2025, which will cover services not usually covered by health insurance, Medicaid, or Medicare. These services include assistance with daily activities, such as eating, bathing, dressing, and help moving around the home.
Is this a tax on employers?
No, employers are not responsible for paying the 0.58% premium. They are only required to collect the funds from employees’ paychecks via payroll and send the money to the Employment Security Department (ESD).
Can my employees opt out of the premium assessment?
Yes, if any employee can prove they have private long-term care insurance, they can opt out of the state plan. They must have purchased said insurance before November 1, 2021 and show you proof of their exemption from ESD, which they can apply for between October 1, 2021 and December 31, 2022. Contractors who work with you under different tax status, such as 1099 workers, are not required to pay the assessment either.
What steps should I be taking now as an employer?
We encourage employers to be proactive about preparing employees and their payroll department about the impending payroll deduction. Here are some steps you can take to make the process easier for everyone involved:
- Meet with your payroll professionals, whether in-house or at your accountants’ office, to set up changes that need to be made in 2022.
- Inform your employees about the impending assessment so they are not taken by surprise and have the opportunity to purchase their own long-term care insurance if they desire.
- Consider whether your business would prefer to offer private long-term care insurance instead of participating in the state plan.
- Review state government resources regarding the Long-Term Care Act, including the information created specifically for employers.
Where can I go with my questions about the Long-Term Care Act?
Once you have explored the resources from the state, it’s likely you’ll still have questions. You may wish to get a quote for private long-term care insurance so you can weigh your options for your workers.
We're happy to talk more with you and help you explore the best way to tackle the process. Call Davidson & Associates Insurance at 360-514-9550. Or, get in touch online, and we’ll work to clarify everything so you feel comfortable with your decisions and ready to move forward.
