An Update on the Long-Term Care Trust Act

Editor's note: The long-term care insurance program has been paused until mid-2023. For more information, see our blog post State Puts WA Cares On Hold for Now.

Local government employers and employees need to be aware of key dates that are rapidly approaching related to the state’s long-term care insurance benefit.

Passed by the Washington State Legislature in 2019, this benefit (referred to as the WA Cares Fund and codified in Chapter 50B.04 RCW) creates an employee-financed program to provide payment or partial payment for long-term services to qualified individuals who have paid into the program and need assistance.

This blog will highlight key pieces of the WA Cares Fund (Wa Cares) and identify need-to-know dates.

Background

The purpose of the state-operated trust account is to provide for long-term care insurance for those who require services and have paid premiums into the account. Benefits are capped at $36,500 (adjusted annually for inflation). This state program provides an affordable option for long-term care, filling a necessary gap. As described on the WA Cares website:

Long-term care is expensive, it is not covered by Medicare and most of us will not have the savings to pay for it. Seven in 10 of us will need long-term care during our lifetimes, and most older adults today end up relying on family members to care for them or impoverishing themselves to qualify for Medicaid.

Participation in WA Cares

Every employee is required to participate in the state program unless they have purchased an alternative qualifying plan and have received an exemption from the Washington State Employment Security Department (ESD). An employee’s exemption status is permanent; once they receive an exemption, they are permanently disqualified from WA Cares.

The two key dates to be aware of regarding exemptions are:

• October 31, 2021, which is the deadline for having private insurance to qualify for the exemption; and
• October 1, 2021-December 31, 2022, which is the window to apply for a coverage exemption.

Applying for an exemption is the responsibility of the employee. The employer cannot apply for an exemption on behalf of the employee, although the employer can offer alternative private long-term care insurance to employees.

Employers need to track which employees have opted out of WA Cares and not deduct premiums for those who have opted out. Employers need to confirm the employee’s exemption status by reviewing the ESD exemption approval letter and must keep a copy.

What about New Hires?

If a new hire produces an exemption approval letter, then they are not subject to the premiums. If a new hire does not have an exemption approval letter, even if they have proof of private long-term care insurance, they are subject to the premiums. As stated in the Exemptions section on the WA Cares website:

If you fail to present your ESD approval letter, employers will withhold non-refundable WA Cares premiums.

The law does not set forth an alternative opt-out window for new hires who have just moved to Washington State or those who have just entered the workforce. The law provides one deadline for securing private long-term care insurance (by October 31, 2021) and one window for securing the exemption (October 1, 2021-December 31, 2022). If either of those dates are missed, the employee will be enrolled in WA Cares and must be assessed premiums by the employer.

Collection of Premiums

WA Cares is self-funded entirely by employee contributions in the amount of $0.58 per $100 of earnings; employers do not contribute.

Based on the governor's statements released December 17, 2021 and December 23, 2021, the law is expected to be revised in early 2022 and the Employment Security Department will not be collecting long-term care premiums from employers at this time in order to provide the legislature time to make these changes. Nonetheless, the law requiring collection of premiums starting January 1, 2022 is still in effect.

Local government employers will need to weigh the pros and cons of the two approaches: (1) begin collecting premiums on January 1, 2022, or (2) wait to collect premiums until the legislature clarifies the law. Some of these pros/cons could be whether the employer will need to refund a portion of the premiums once the law is revised or whether the employer will have to retroactively collect premiums, if they elect not to collect on January 1.

Premiums will be collected in the same way employers collect the premiums for Paid Family and Medical Leave (PFML) and employers will report and pay premiums for both programs at the same time.

Are Premiums Assessed Against Elected Officials?

Elected officials are covered by WA Cares. While normally an elected official is not considered an employee, in this case they are. As noted in this WA Cares FAQ:

Definitions for who contributes to the WA Cares Fund (Long-Term Services and Supports or LTSS) in RCW 50B.04.010 refer back to the Paid Family and Medical Leave Program (PFML) definitions in RCW 50A.05.010. This includes the definition of “Employment” in (8). If premiums are not assessed for the PFML program, they will not be assessed for WA Cares Fund.

And, as detailed in our 2019 blog, Elected Officials and Benefits Programs, elected officials are assessed premiums for the PFML program. Therefore, they are also assessed premiums for WA Cares. The only category of employees who are not covered by WA Cares are federal employees. See RCW 50B.04.010(7) and RCW 50A.05.010(5)(b).

Availability of Benefits

Lifetime benefits are capped at $36,500 (as adjusted for inflation) and are available beginning January 2025. Benefits can be used for a wide range of long-term care services, such as hiring a caregiver, home-delivered meals, adaptive equipment, and memory care.

Additional Resources

The WA Cares website has a wealth of helpful information, including an employer toolkit and handouts to share with employees.