State lawmakers seek to close crucial loophole in pause of long-term care tax

Washington lawmakers could soon be looking to close a crucial loophole in a recent delay of the state’s controversial long-term care tax.

In December 2021, Gov. Jay Inslee announced that he would be delaying implementation of the tax through 2022, by instructing the Employment Security Department not to collect it while the state Legislature worked on modifications during the 2022 legislative session. But because Inslee does not have the authority to halt the tax entirely, employers are still permitted to collect the tax from workers themselves.

A newly-proposed bill from a pair of Democratic state lawmakers — state House Majority Leader Rep. Pat Sullivan and Rep. Frank Chopp — would seek to pause the tax in its entirety through June of 2023, effectively closing the employer collection loophole. The text of HB 1732 also outlines goals to widen the age range for those who would benefit from the tax, while refunding any premiums paid to employers during the delay period.

Taxes collected under the bill — known more formally as the WA Cares Fund — would be used to provide long-term care services and support worth up to $36,500 over a single Washingtonian’s lifetime.

“WA Cares Fund is a benefit you earn like Social Security that covers care in your home or a facility, as well as home modifications, meal delivery, car rides, and caregiver training,” the fund’s website reads.

Under the tax, all W2 employees who average 12.5 hours per week were initially set to see the deductions for the tax as of Jan. 1, 2022. A person earning $50,000 a year would pay $290 a year in additional taxes. Washingtonians could opt out of the tax, but that was contingent on having a separate private long-term care insurance policy in place by Nov. 1.

Leading up to the deadline to have that alternative in place, state leaders acknowledged that none of the 12 companies authorized to sell private long-term care insurance were offering new policies, effectively blocking Washingtonians from accessing the necessary means to opt out of the tax.

While the state’s Republican lawmakers have expressed a desire to repeal the tax entirely, others in the Legislature have highlighted how the fund will still help provide crucial resources, arguing that its larger issues revolve around modifying its implementation.

This story was originally published on MyNorthwest.com.

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