Comment from Peter Abbarno
Beginning in January 2022, all workers in Washington will pay 58 cents per $ 100 of their income to fund the Long-Term Care Trust Act (LTCTA). There is no limit to how much you will contribute to the LTCTA throughout your life; however, there is a limit to the benefits.
You must opt out and get a comparable long-term care plan by November 1, 2021.
For your contribution, you will receive up to $ 100 per day for a maximum lifetime benefit of $ 36,500 (adjusted annually). This benefit is only available for care provided in Washington State to Washington residents and is not transferable.
If you plan to retire in sunny Arizona or Florida, you will lose your entire contribution to the system.
If you plan to retire within the next 10 years, you will not receive a benefit for your contribution as you have to work 500 hours per year for 10 years to vest. Therefore, if you retire in 9½ years, you will lose your entire system contribution.
Self-employed workers can choose to join the program between January 2022 and January 2025, or within three years of their first self-employment status. The opt-ins of the self-employed are irrevocable.
I recognize that long term care planning is necessary and often overlooked. However, this is a very flawed program that offers few benefits with a lot of restrictions. I know we can do better than that. Lack of portability, limited maximum benefits, contempt for workers within 10 years of retirement, and no hardship exception are just some of the reasons this new tax is bad policy. This is another unique scheme that places more burdens on families and businesses.
When can a person with acquired rights use the benefits?
To use the benefits, Acquired People (people working 500 hours per year for 10 years) must be a Washington resident and need help with at least three of the 10 Activities of Daily Living (ADLs): Medication Management, Personal Hygiene , food, toilet, transfer, body care, bath, walking / mobility, dressing and cognitive impairment. People who meet these requirements can start claiming benefits in January 2025.
How can the Fund be used?
The funds can only pay providers who are on a list approved by the Ministry of Health and Social Services. Funds can be spent on nursing care facilities, residential facilities such as assisted living and adult family homes, professional care such as home health care, wheelchair ramps, emergency alert devices, etc. emergency, medication reminders, meals on wheels, trips to doctor’s appointments, dementia education, care coordination. Family members may be eligible to receive funds after receiving 21 to 35 hours of formal training to care for beneficiaries.
Can you withdraw from the fund?
Washington employees aged 18 or older have a small window of time to permanently opt out of the LTCTP and its career-long payroll tax. To opt out, employees must have purchased comparable long-term care insurance by November 1, 2021.
Once a plan is purchased, employees must apply for an exemption from the program to the Department of Job Security (ESD) between October 1, 2021 and December 31, 2022. If ESD accepts the request, the individual is definitively exempted from the scheme. payroll taxes and ineligible for future long-term care trust program coverage. Once approved, employees must provide all current and future employers with a notice of the exemption to maintain the payroll tax exemption.
Workers can purchase long-term care insurance or add a rider to their life insurance policy through private companies that provide benefits equal to or greater than the program funded by state payroll taxes.
Is it constitutional?
Washington State’s constitution currently does not allow the state to impose progressive income taxes. According to the Washington constitution, “All taxes must be uniform on the same class of property within the territorial limits of the authority which levies the tax and must be levied and collected for public purposes only. Some lawmakers call this a “premium assessment” and not a tax to circumvent the ban and only the income of W-2 employees is taxed, not the income of the self-employed.
How did we get here?
In 2019, the legislature enacted HB 1087, the Long-Term Care Trust Act. This act was pushed by the governor’s majority party in response to the weak private long-term care insurance market at the time and high state spending on long-term care through Medicaid.
In the 2021 session, the Legislative Assembly passed HB 1323 relating to the trust program, which I voted against. This legislation enacted a set of recommendations forwarded to the Legislature by the Trust Commission and increased the time limits for employees to step down, set deadlines for a self-employed person to join, and allowed tribes and people with disabilities. before the age of 18 to qualify for the program.
I’m speaking to small business owners and working families who are confused and concerned about this regressive new payroll tax.
People are scrambling to figure it out and the unsubscribe deadline is fast approaching. Unfortunately, the agency’s “rules and regulations” governing the plan are still being developed. I encourage employers and employees to start planning and researching this issue to compare with private policies. Otherwise, the decision will be made for you.
Find additional information online at wacaresfund.wa.gov.
State Representative Peter Abbarno is a Republican from Centralia who represents the 20th Legislative District. He is also a lawyer and a former member of the Centralia City Council.