Washington is the first state to implement a Long Term Care program. Michigan, Minnesota, Illinois, and California are considering similar programs.
In 2019, Washington state enacted House Bill 1087 into law. This bill is know as the “Long-Term Care Trust Act” and becomes effective January 1, 2022. This Act is intended to provide eligible employees in Washington with some Long-Term Care coverage. The money to cover this is being collected through a Payroll Tax called “long-term services and supports premium” and will have an initial rate of 0.58% on all wages of eligible employees beginning on January 1, 2022. This tax is pay by the employer but is withheld from the employee pay, meaning it is not employer paid or sponsored, it is paid by the employee through payroll tax. You can opt out of the payroll tax if you can Demonstrate that you have Long Term Care Coverage.
Eligible employees who have paid into (a minimum number of years and a minimum number of hours) into the program may apply to become an eligible beneficiary of the approved LTC services and benefits. These benefits will become available starting on January 1, 2025. If an eligible employee meets the eligibility standard to receive benefits, the funds would be provided in $100 increments up to a lifetime maximum of $36,500 per person. Note that the LTC services may be provided only by a “registered long-term services and supports provider.”
A few key things to pay attention to in your planning:
There is not a great degree of language on eligibility.
This only covers expenses to registered services and providers.
There is no language on what qualifies Demonstrating Coverage. (Section 9)
The max benefit is roughly 50% of the national average of LTC expenses.
The state does not provide case work (Section 17)
Beginning in 2026 there will be an actuarily accounted for review of the plan to make sure it is funded properly (Section 15).
We do not provide legal or tax advice so we suggest that you as an advisor work with a CPA to how this may impact your clients. As we see things develop we will provide support in understanding how product can best fit your client’s plan given these circumstances.
[fivo_docs title=”House Bill 1087 Document” ids=”3476″]
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