Washington House votes to delay mandatory long-term care tax to July 2023

The Washington state House on Wednesday voted 91-6 to delay the implementation of the mandatory long-term care payroll tax by 18 months.

House Bill 1732 delays the implementation of the program and delay premium collections to July 1, 2023.

The bill is also expected to be passed by the Senate and could be headed to Gov. Jay Inslee's desk in a few weeks.

The controversial tax will not be taken out of paychecks in the meantime.

A second bill, House Bill 1733, up for a vote would create four new voluntary exemptions for the program.

The House was still debating the bills Wednesday afternoon, but a vote was still expected.

In mid-December, Inslee announced that he would be delaying the mandate for a short time after Democratic lawmakers pushed the governor to re-examine the tax after confusion and exemption requests.

Under the program, called WA Cares Fund, workers would pay a premium of .58% of total pay per paycheck, meaning an employee with a salary of $50,000 will pay $290 a year.

The benefit also covers home-delivered meals, and reimbursement to unpaid family caregivers. The lifetime maximum of the benefit is $36,500, with annual increases to be determined based on inflation.

The reality is that $36,000 will not go far when people are decades away from a potential use - leaving many people choosing to opt-out.

"You have to be in it for 10 years and be a resident of Washington state and live in the state," said resident John Vindivich. "To get $36,000 and that to me was just ridiculous."

And he's not the only one opting out.

"With our income we would end up paying just as much if not more than a private policy would cost," said resident Giancarlo Lucia. "And a private policy was a much better way to go are far exceeding the 36,000 dollar max plan than the state offers.

In fact, so many people opted out that Republicans say the fund paying the benefit would be insolvent from the get go.

"The fund is already insolvent," said Rep. Drew Stokesbary (R-31st Dist.). "It's getting worse, the latest actuarial report is based on 105,000 - not the 450,000 we have."

You can opt out if you show proof that you have long-term care insurance through a private carrier. But one insurance broker says so many people in their 20s, 30s and 40s were getting private plans that private insurance companies stopped writing those plans for Washington state residents.

"In one day they said' we are no longer writing anyone under the age of 40,'" said Insurance Broker James Castell. "And then two days later they said 'actually we are not writing anyone anymore at all," so the private insurance market really tightened for options very quickly because they were being flooded (who) didn't meet their normal demographic."

Barring any unexpected changes by Senate Democrats, people who had the tax taken out of their paycheck will be eligible to get that money back after the governor signs the bill.

What is the WA Cares Fund?

Starting Jan. 1, 2025, people who need assistance with at least three "activities of daily living" such as bathing, dressing or administration of medication, can tap into the fund to pay for things like in-home care, home modifications like a wheelchair ramp and rides to the doctor, the initial law read.

When it was initially passed, the tax was mandatory. A deadline came and went for those to file for an exemption, meaning they would have to pay for their own private plan before the law went into place.

Due to wording confusion and issues with those filing exemptions, a class-action lawsuit was filed in November.

The suit, filed with the federal court for the Western District of Washington, was filed on behalf of three businesses in the state and six individuals. None of the individuals purchased a private, long-term care insurance plan before Nov. 1, the deadline to qualify for an exemption.

As of Dec. 2, the Employment Security Department had received more than 430,000 applications for an exemption, and more than 334,000 had been approved thus far. The high number of exemptions has raised concerns about the viability of the program, and the potential of a premium increase for workers.

RELATED: Class action lawsuit filed against Washington's new mandatory long-term care tax

"The state simply does not have the power to mandate an employee benefit," Richard Birmingham, a partner at Davis Wright Tremaine LLP, said in a written statement announcing the lawsuit.

Following Inslee's December announcement, two Democratic lawmakers filed HB 1732 on Jan. 3 to officially have the bill to delay introduced on the floor.

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