Three businesses and six individuals who oppose a mandatory payroll tax to fund Washington state’s new long-term care program filed a class action lawsuit in federal court this week.
The suit seeks to stop the January start of the payroll premium for most employees in the state.
None of the individuals who filed the suit in the federal court for the Western District of Washington purchased a private, long-term care insurance plan before Nov. 1, the deadline to qualify for an exemption to the payroll tax.
The WA Cares Fund requires workers in Washington state to pay a premium of 0.58% of their total pay per paycheck, meaning an employee with a salary of $50,000 will pay $290 a year into the fund.
Beginning Jan. 1, 2025, people who need assistance with at least three activities of daily living can tap into the fund to pay for in-home care, home modifications, home-delivered meals and transportation to medical appointments. Unpaid family caregivers also can be reimbursed through the fund.
The lifetime maximum benefit is $36,500, with annual increases to be determined based on inflation.
The benefit is not portable, so workers who pay into the program but move outside of Washington state will not be able to access it. In addition, the program covers only the taxpayers, not a spouse or dependent. The benefit also is not available to those who work in Washington but live in neighboring states.
The lawsuit contends that the fund violates a federal law forbidding the state from passing any law requiring employees to participate in a plan that provides sickness or medical benefits. It also contends that the law violates the Equal Protection and the Privileges and Immunities clauses of the U.S. Constitution by its disparate treatment of people who pay the tax but don’t receive benefits if they are not a Washington state resident.
In addition, the suit contends that people who are within 10 years of retirement will pay into the fund but not receive benefits, a violation of the Older Workers Benefit Protection Act.