Sen. Brad Hawkins | Delayed long-term care tax takes effect

I have received considerable correspondence in recent weeks concerning the implementation of the "Washington Cares Fund." This 2019 law created a trust to implement a new statewide long-term care program following the approval of House Bill 1087. Many of us who voted against the bill argued at the time that it was flawed and would lead to a multitude of problems. Due to many implementation issues and public frustration, Governor Inslee in 2021 temporarily ordered the state Employment Security Department not to collect tax premiums for the program, which effectively paused its implementation. The Legislature in 2022 officially delayed the program.

Delayed program to take effect

After much delay, Washington's long-term care program – and its payroll tax – finally went into effect this month (July). All workers are required to pay into the program regardless of whether they will receive benefits from it. This mandatory program has a maximum lifetime benefit of $36,500. It is funded by a .58 percent payroll tax, which amounts to $5.80 for every $1,000 of earnings. Several bills have been introduced to repeal or replace the law, but they did not advance. Requests have also been made to the governor by many legislators, including me, to terminate it. The program, however, proceeds forward.

What is funded by the program?

The long-term care program is available to any state resident over the age of 18 who has paid the payroll tax premium for at least three of the last six years or for a total of 10 years with at least five years paid without interruption. The program has a maximum lifetime benefit of $36,500 and people qualify if they need assistance with certain daily activities: medication management, personal hygiene, eating, toileting, cognitive functioning, transfer assistance, body care, bathing, ambulation/mobility, and dressing. People may be granted an exemption if they purchased long-term care insurance through a private provider and applied by December 31, 2022.

Why I voted against the long-term care tax

While this new program is intended to help people and may benefit some, creating a government program to tax everyone's paychecks for years and years – including young professionals like those featured in this Business World edition – seems heavy handed and burdensome. This is especially true for a limited benefit that workers may never receive, either because they end up not needing long-term care or they have moved away. This Washington benefit is not "portable" across state lines. Many private long-term care insurance programs are portable. Workers who someday move to another state in our program are no longer eligible to receive benefits despite paying into the system throughout their working careers in Washington. Lastly, the cost of long-term care – sometimes over $10,000 per month – can far exceed the program's maximum lifetime benefit of $36,500. This strongly suggests that the program will likely significantly underperform in its efforts to fund people's long-term care needs. I voted against House Bill 1087 in 2019, but it passed the House (63-33) and Senate (26-22).

What to expect going forward

Some limited exemption opportunities still remain for people who live outside of Washington state but work in-state, are the spouse or domestic partners of active service members, hold non-immigrant work visas, and or are qualifying as disabled veterans. Unless adjusted, the payroll tax will remain in effect to generate revenues for the program. I anticipate that it will need to be adjusted over time, which could mean that the payroll taxes could increase.

While my position on this program is clear, we should acknowledge that long term care is an important issue affecting many people and families. As many of you know from friends and relatives, long-term care service is very costly and can vary greatly depending on one's needs. Private insurance providers have long offered a variety of options for people's consideration. Forcing all workers to pay the entirety of their working careers into a Washington plan that offers a very limited in-state only benefit has been and will continue to be the wrong approach.

Brad Hawkins serves as State Senator for the 12th Legislative District.