Our governor for the State of Washington in April, signed into law a new tax bill called the WA Cares Fund. It is the new Washington Long Term Care Tax that will begin January 1, 2022. I have done a lot of research on this topic because I am an insurance agent and I have received a lot of phone calls asking me where people should go to find their own plan to opt out of the State plan. Here are the things I have researched... and my thoughts are at the end:
The new tax will be $0.58 cents for every $100 you earn, which is 0.58%.
The new tax will begin January 1, 2022 and you will be able to benefit from it starting January 1, 2025. In order to receive this benefit, you must have worked and contributed to the fund for at least 10 years without a break of five or more years; or three of the last six years and at least 500 hours per year during those years.
Maximum benefit the plan will pay out is $36,500.
You have to submit receipts and get reimbursed for the care from what I have read. You don't have a fund you take the money out of, so that part could be tricky for some people. You will have to make sure you keep track of all those receipts.
You can only use this in Washington State. If you move, you lose all the benefits you paid with this tax.
If you don't have another plan in place by November 1, 2021, you can no longer opt out of the Washington State plan EVER. Hopefully you read that correctly... you will NEVER be able to opt out of paying this tax. Even if you get a better plan that covers you in any state, just in case you decide to move.
2019 this was on the ballot for us to vote on.
Here is how the voting went:
37.08% of people voted to maintain this new tax
62.92% of people voted to APPEAL this new tax
Here is how the voting went:
37.08% of people voted to maintain this new tax
62.92% of people voted to APPEAL this new tax
If you were LUCKY enough to get a long term plan on your own, you NEED to apply for an exemption through the Employment Security Department between October 1 and December 31. It is a one-time opportunity to be grandfathered OUT of the state plan. Once you have opted out of the plan, you will never be able to join again. You will receive a letter once your exemption is approved, and you HAVE to give this letter to your employer in order for them to stop taking this tax. You also will need to keep this letter forever, because you will need to provide it to every future employer to keep you from permanently paying the tax.
Most private plans require that a person applying for benefits is unable to do 2 daily activities. The WA State plan requires you to be unable to do 3 daily activities.
If you are self-employed, you will not be included in this tax. You have the option to OPT IN, but you are not required to do so.
Employers are RESPONSIBLE for collecting, remitting, and reporting these premiums. If they do not do this, they will face penalties.
Once you retire, you don't have to pay the tax anymore.
Those are the things I have researched. Now, here are a few of my thoughts:
Doing the math for myself, it is only $21 a month that will be taken out in taxes. Okay, I can live with that. For my husband, we are going to choose for him to get a plan with his work. They have a group plan that is guaranteed approval and has a set premium for your age and if you smoke or not. This plan will be a little more than the tax with the state, but it is a better option financially for his future. However, people who make way more than I do, have big bonuses and/or stock commissions, the State Plan will be something you will feel out of your paychecks.
Doing the math for myself, it is only $21 a month that will be taken out in taxes. Okay, I can live with that. For my husband, we are going to choose for him to get a plan with his work. They have a group plan that is guaranteed approval and has a set premium for your age and if you smoke or not. This plan will be a little more than the tax with the state, but it is a better option financially for his future. However, people who make way more than I do, have big bonuses and/or stock commissions, the State Plan will be something you will feel out of your paychecks.
Here are the 5 parts that really upset me and it should upset every single Washington State resident.
#1 - If you move out of Washington State, you lose all the benefits you have paid into over all the years you pay the tax. So, if you plan to retire and move out of Washington State, just know paying this tax will be a waste for you!
#2 OUR KIDS WILL NEVER BE ABLE TO OPT OUT OF THIS PLAN. They will pay into this plan as long as they stay in the state. And if they choose to move out of the state, they paid into this tax and will lose all the benefit from it.
#3 After November 1, you will never be able to OPT out of the state plan ever again. This frustrates me on all levels. Why is there a set date? Why can't people choose what best fits their needs? ESPECIALLY now, with all the companies not accepting anymore applications.
#4 If you are close to retiring, you will pay into this tax every month, without ever having a chance to use the funds. Remember, you have to pay into this for a certain number of years before you can collect the funds.
#5 - US WASHINGTONIANS VOTED TO APPEAL this new tax. Are they not listening to what we want? We voted. Our voices need to be heard.
Inslee signed this into law in April.
We never got notice this was signed into law.
We never got notice this was signed into law.
So, here it is August 31, and people are scrambling trying to find a company that will be able to give them a LTC policy so they can opt out of the Washington State Plan. The problem is... due to this new tax, they have been so inundated with new applications that every company I know of has stopped taking new applications, because they don't have time to approve anymore new applications before the November 1 cut off date. THERE ARE NO OTHER OPTIONS for people right now. This is why the cut off date frustrates me. No letter was sent to us, no news covered this; until recently. They either saw it on the news within the last few months or they were told by their employer of the change.
Don't get me wrong. I am all for offering a LTC option for people. I am just so frustrated that there is a cut off date and after that cut off date, you are locked in for LIFE. That is just not fair. They should allow people to get an exemption at any point in their life when they find the plan that best meets their needs. They shouldn't be stuck paying for something they won't benefit from. There are over 7 million people in Washington State. Signing the bill in April and giving people only 7 months to find a new plan, is just flat out RIDICULOUS. These companies are not use to writing so many plans. When they have to stop taking applications because they have so many, it should show our GOVERNOR there is a problem and this cut off date should be extended.
If you are frustrated.
If you are fed up.
If you are just baffled by any of what you read above, I urge you to send emails, make some calls, send a message.
I know our votes didn't matter, but maybe, just maybe if enough people email/call/use the link below, our voices will be heard and a change will come.
If anything, hopefully the CUT off date will disappear and everyone will have the option to do what is best for them without having to RUSH into a decision. If you are just frustrated, but don't really want to email/call/use the link... think about your kids. Complain for your kids... the ones who won't have an option of opting out of the State Plan EVER.
Ways to Contact:
Governor Inslee's Office: 360-902-4111
Send Inslee a message, click here.
Write a letter to Inslee:
PO BOX 40002 Olympia, WA 98504-0002
Insurance commissioner
Governor Inslee's Office: 360-902-4111
Send Inslee a message, click here.
Write a letter to Inslee:
PO BOX 40002 Olympia, WA 98504-0002
Insurance commissioner
Mike Kreidler's number: 360-725-7000
Ask Mike Questions, click here.
Employement Security Department's email:
wacaresexemptions@esd.wa.gov
Employement Security Department's email:
wacaresexemptions@esd.wa.gov
