Inslee Signs Bill Delaying Collection of Long-Term Care Tax for 18 Months

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OLYMPIA — The state's long-term care payroll tax is now delayed until July 2023.

Gov. Jay Inslee on Thursday signed two bills dealing with the controversial tax. One delays the collection of the 0.58% payroll tax until July 2023; the  other adds exemptions to the bill, including for those who work in Washington but live in another state.

"We do have to get this right because it's so important to so many people," Inslee said.

Legislators made delaying the tax a priority this session after criticism arose in recent months . The bill passed the Legislature on Wednesday. Democrats hope  the next 18 months give  them time to fix problems with the bill, including the sustainability of the account. Republicans, on the other hand, are still pushing for a total repeal of the program.

The program, also known as WA Cares, provides a benefit of up to $36,500 to those who qualify to use on professional care at home or in a facility, home safety evaluations, equipment and transportation. Originally, all Washington workers would pay into the program with a 0.58% payroll tax. The only way to be exempt from the program was if you purchased a private long-term care insurance plan.

With the new bills signed Wednesday, however, a number of other voluntary exemptions were added . Those include some veterans with a service-connected disability of 70% or higher; spouses and registered domestic partners of military service members; nonimmigrant temporary workers; and employees who work in Washington but live in another state.

Inslee said Thursday he supported the changes made to the program. If the Legislature proposes other changes over the next 18 months, he said those need to be "actuarially sound." He said he would not support making the whole program voluntary because it wouldn't work.

"You have to have a revenue stream to make it available to everybody," he said.

The tax technically went into effect Jan. 1. However, Inslee directed the Employment Security Department not to collect the tax from employers. Employers could still collect the tax from their employees, but lawmakers encouraged them not to.

In the bill signed Thursday, employers who did collect the tax prior to its new 2023 effective date must refund the premiums to their employees within 120 days of collecting it.

"It's a solid program and we look forward to getting it going," Inslee said.