What Now? Another Payroll Tax?!

Income earners in Washington will soon be taxed for a one-size-fits-all, long-term care insurance plan. Most people are unaware of this impending payroll tax and what – if anything – can be done to avoid it. One thing is for certain, if you do nothing, you will have no recourse and will begin paying out every paycheck without the ability to later opt out. You have only until October 31 to plan ahead.

The Chamber convenes a conversation on this urgent topic during its monthly program on Thursday, July 15 at noon. You will want to register in advance to hear from insurance expert, Melanie Bakala of State Farm Insurance, who will lead the discussion to ensure you have the facts about the new WA Care Trust account collecting 58 cents of every $100 per worker. This tax and it takes effect January 1, 2022, but those who wish to opt out must meet the requirements before November 1, 2021.

Essentially, the state determined not enough people were planning properly for their future long-term care. Now, workers must contribute to a plan that may not meet their future needs for what is currently a maximum benefit of a mere $36,500 (regardless of how much is paid in). Also, if you retire and move out of state, you forfeit any benefit. The state website wacarefund.wa.gov offers some basic information, however, the rules clarifying the law aren’t fully formed yet and some things may be changed in the future. Confusion is surfacing about eligibility, requirements, and alternative options.

Here is what we know about opting out: 

• You will need to have or purchase a long-term-care plan through a private insurer before November 1.
• You may apply for an exemption from the state between October 1 of this year and December 31, 2022, attesting that you have long-term-care insurance at the time of your application. (The opt-out form is not yet available).
• Workers must show proof to current (and future) employers that your exemption has been approved to avoid paying the tax.

Get the full scoop and your questions answered during the Chamber’s webinar on Thursday, July 15 at 12:00p. Don’t miss out: register now.