Washington lawmakers file bill to delay long-term care tax

Washington state lawmakers have filed a bill to be introduced that would delay the implementation of the mandatory long-term care payroll tax. 

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

As it stands now, it is set to go into effect in January 2023. 

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. 

RELATED: Washington state delays new long-term care payroll tax, Inslee says

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. 

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.

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.

During the pause, employers won’t incur penalties and interest for not withholding those taxes from worker wages.

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