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Countdown to the Democrats’ new payroll tax

Why will most workers in Washington face a new payroll tax?

On July 1, 2023, most workers in Washington, including part-time and temporary workers, will begin to pay up to $0.58 per $100 of their earnings for the WA Cares Fund – a new state-run, long-term care insurance program. If you make:  

  • $50,000 a year, it will cost you $290 annually or $24.17 monthly.
  • $75,000 a year, it will cost you $435 annually or $36.25 monthly.
  • $100,000 a year, it will cost you $580 annually or $48.33 monthly.
  • $125,000 a year, it will cost you $725 annually or $60.42 monthly.  
  • Estimate your costs and learn more about how contributions work here.

If you purchased a qualifying, private long-term care insurance plan by November 1, 2021, and applied for a permanent exemption from the WA Cares Fund, you are not subject to the new payroll tax. However, the deadline for applying for this exemption was December 31, 2022. While many Washingtonians chose this option, many others could not find a private plan in time. And many Washingtonians may not even be aware of the fact they are facing a new payroll tax.   

The long-term care benefit, including access to services and supports costing up to $36,500, will not be available to qualified, eligible individuals until July 2026. Learn more about the benefits, including earning and applying for them, by visiting this webpage.

How was the new long-term care insurance program and payroll tax established?

With no House Republican votes, the new long-term care insurance program was established by the passage of House Bill 1087 in the 2019 legislative session. House Bill 1087 created the Long-Term Care Services and Supports Program to provide individuals who have paid into the program for a specified period of time with a limited lifetime benefit (up to $36,500) to assist with future long-term care costs. To pay for the new program, the legislation created a new payroll tax – one of several tax increases passed by majority party Democrats since 2019.

What House Republicans believe

  • The new state-run, long-term care insurance program and its payroll tax should be repealed because they are unpopular, unfair and inadequate.
    • Unpopular: Washingtonians don’t want this program. In 2021, a Senate Democrat said she hasn’t heard from any constituents who are excited about the program. In the November 2019 general election, 62.92% of Washington voters said House Bill 1087, which was designed to levy 0.58% tax on wages to fund a program for long-term healthcare services, should be repealed in Advisory Vote No. 20. Many Washingtonians purchased private plans so they could escape the state-run program.  
    • Unfair: A new payroll tax is unfair and financially burdensome for someone living paycheck-to-paycheck and facing high inflation. Someone could also pay into the system for the duration of his or her career and never need to use the benefit. Or, someone could pay into the system for years, move to another state to retire and never get to use the benefit.
    • Inadequate: The limited $36,500 benefit, not available until July 2026, is not adequate and may give someone a false sense of security about future long-term care needs.
    • There are also questions about the program’s solvency. It is possible, if not likely, that the payroll tax may need to be increased in the future – adding to the financial burdens of Washingtonians.  
  • In the 2023 legislative session, Rep. Peter Abbarno introduced House Bill 1011. The legislation would repeal the long-term services and supports trust program. Democrats would not even give it a public hearing.
  • Nothing has been done in the 2023 legislative session to change, improve, or bring fairness to the new state-run, long-term care insurance program. It appears Democrats are content with allowing the new program and payroll tax to go into effect on July 1, 2023. There should have been a substantive policy debate in the Legislature, but Democrats were not interested in engaging on the issue.

What happened in the 2022 legislative session?

In the 2022 legislative session, the Democrats and governor knew they had major problems with the unpopular program and tax. They passed two bills that were fast-tracked to the governor’s desk. House Bill 1732 delayed implementation of the program by 18 months and moved premium collections to July 1, 2023. House Bill 1733 created four new voluntary exemptions from the program.

House Republicans introduced House Bill 1594. The legislation would have repealed the long-term services and supports trust program.

House Republicans also introduced House Bill 1913. The legislation would have repealed the long-term care insurance program and replaced it with an optional and affordable alternative.

House Democrats refused to give House Bills 1594 and 1913 public hearings, so House Republicans attempted to bring the legislation to the House floor for consideration through procedural motions. House Democrats voted them down.

House Republicans also introduced House Bill 1742. The legislation would have reformed and created fairness in the long-term care insurance program.

Washingtonians said they did not want this program and tax

In the November 2019 general election, 62.92% of Washington voters said House Bill 1087, which was designed to levy 0.58% tax on wages to fund a program for long-term healthcare services, should be repealed in Advisory Vote No. 20.

What is long-term care insurance?

According to the Office of the Insurance Commissioner’s website: “Long-term care insurance helps with many medical, personal and social services for people with prolonged illnesses or disabilities. It can include home health care, adult day care, nursing home care, and group living facility care.”

Long-term care insurance is defined in RCW 48.83.020.

Note: The content of this webpage should not be considered or construed as legal, financial or health care services advice from the House Republicans Caucus, including its members and staff. This content is meant to be informative, including the explanation of the legislation that created and changed the Long-Term Services and Supports Trust Program and how it impacts workers, retirees and employers in Washington state.