Statutory Update – Washington State’s Long-Term Care Law
May 19, 2021
Washington State’s Long-Term Care Law
In 2019 Washington State passed a new law to create the Long-Term Services and Supports Trust Fund (LTSS), now called the WA Cares Fund (WCF), which will pay long-term care benefits to eligible individuals beginning January 1, 2025.
Upcoming Key Dates
- October 1, 2021: Window for individual exemptions opens (available for those with LTC policies effective prior to November 1, 2021)
- January 1, 2022: Employee contributions begin (payroll tax takes effect)
- January 1, 2025: Benefits commence
To Whom Does the Law Apply?
The definitions of “employee”, “employer” and “employment” under the long-term care law mirror those under the Washington Paid Family and Medical Leave (WA PFML) law*. Essentially, the law applies to all Washington employees in the employment of any private or public employer, excluding the federal government. Self-employed individuals and federally recognized tribes are also excluded, but may elect to participate (note, however, that self-employed individuals who opt-in may not later withdraw from the program). A collective bargaining agreement in existence as of October 19, 2017, is exempt from compliance unless and until the agreement is reopened, renegotiated or expires.
* RCW 50A.05.010; guidance may evolve during the rulemaking process
How Will the Program be Funded?
On January 1, 2022, all Washington employees** will begin contributing 0.58% of wages to the WCF; no contribution will be required of employers. “Wages” include all forms of remuneration including, but not limited to, commissions, bonuses, paid time off, severance pay, and stock-based compensation. There is no cap on applicable wages, nor is there a maximum contribution amount.
To illustrate, an employee earning $50,000 annually will contribute $290 per year, an employee earning $100,000 annually will contribute $580 per year, and an employee who makes $500,000 will contribute $2,900 per year.
Contributions will be collected via payroll deduction and remitted to the Employment Security Division (ESD) by the employer on a quarterly basis.
** The long-term care law adopted the WA PFML law’s localization test to identify “Washington employees”; see RCW 50A.05.010(8)(a).
Who is Eligible to Receive Benefits?
Two definitions apply here:
An employee is a “qualified individual” if, at the time of need for benefits, he or she has either:
- worked at least 500 hours per year for a total of ten years and paid into the WCF for those ten years, without interruption of five or more consecutive years; or
- worked at least 500 hours per year for three of the previous six years, and paid into the WCF for those three years.
An “eligible beneficiary” is a qualified individual who submits an application for long-term care benefits and who:
- is a Washington resident age 18 or older;
- has been determined by the Washington Department of Social and Health Services (DSHS) that he or she requires assistance with at least three activities of daily living (ADLs), which include tasks associated with eating, bathing, dressing, personal hygiene, and personal mobility; and
- has not exhausted the program’s lifetime benefits limit.
What is the Benefit?
On January 1, 2025, DSHS will begin paying benefits under the program. Payments are measured in “benefit units”, specified as $100 in the law text, but set to be adjusted annually by an established Council. Benefits may not exceed the dollar equivalent of 365 benefit units in an individual’s lifetime – using the benefit unit value in the law, this equates to $36,500 in total.
Benefits are payable for approved long-term care services such as adult day services, environmental modification, memory care and dementia supports, home meal delivery, in-home care, assisted living services, nursing home services, transportation, and family caregiver support. Services and support providers will be required to meet minimum qualifications and be registered with DSHS.
WCF benefits are only available to state residents and will coordinate with benefits through Medicaid, Medicare, coverage through the Department of Labor and Industries, and private long-term care coverage.
Are All Employees Required to Participate?
Yes, participation in the program is mandatory; however, employees 18 years of age or older who can attest to purchasing a long-term care insurance policy prior to November 1, 2021, may apply to ESD for an exemption from contributions to the state program. Exemption applications will be accepted from October 1, 2021, through December 31, 2022, and will be effective the first day of the quarter following approval. An individual who is granted exemption is permanently excluded from participation in the state program. Employees who obtain exemption are required to provide written notice of the exemption to all current and future employers so that state program contributions are not deducted. Employers must maintain record of all exemption notifications received.
Considerations for opting out of the state program may include:
- Income level – Higher-paid individuals should weigh the state plan contributions against the cost of an individual policy that may provide richer benefits.
- Age – Based on the requirements for “qualified individuals” outlined above, those close to retirement may never be able to collect benefits through the state program. Younger employees should consider whether the cost of contribution toward the state program eclipses any benefits they may eventually be entitled to.
- Location – Employees who plan to retire outside the state will not be able to access program benefits.
Employers are not required to provide long-term care coverage to their employees. However, if an employer wishes to offer a long-term care benefit option to their employees, the policy must be in place prior to the November 1, 2021, deadline in order for an individual to take advantage of the personal exemption.
The ESD is currently drafting rules around the requirements and administration of the long-term care program. “Phase 1” rules, effective on or around June 7, 2021, redirect to the state’s insurance law for the definition of “long-term care insurance” (RCW 48.83.020, specifically).
Who Will Implement and Administer the Program?
The state long-term care program will be implemented, administered and overseen through a collaboration of the state’s Health Care Authority (HCA), the Department of Social and Health Services (DSHS), the Employment Security Department (ESD), and the Office of the State Actuary.
Where Can Employers Obtain More Information?
By October 1, 2021, ESD and DSHS will begin conducting outreach to employers, including providing educational materials to help ensure that employees are aware of the program and the required contributions (note that the law itself contains no employee notification requirements).
Employers are encouraged to visit the recently launched WA Cares Fund website, which currently features basic information about the program, as well as an Employer Toolkit and the ability to subscribe to update releases.
Rules/Regulations: ESDWAGOV – LTSS Rulemaking
WA Cares Fund website: www.wacaresfund.wa.gov
Please contact your Trion Account Team members with specific questions.
No part of this document may be reproduced, quoted, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or by any information storage and retrieval system), without express, prior permission, in writing from Marsh & McLennan Agency, LLC.
This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Trion Group, a Marsh & McLennan Agency, LLC Company shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.
Copyright © 2021 Trion Group, a Marsh & McLennan Agency, LLC Company. All rights reserved.