PULLMAN – Workers in Washington state face a choice they must make about long-term care insurance.
And do it quickly.
In 2019, the state legislature created the Long-Term Services and Supports Trust Act, which on January 1, 2022 will begin collecting a tax of 58 cents for every $ 100 of income from most on-time employees. full of the state to create a long-term care benefit that will help ease the pressure on the state’s Medicaid system, which is responsible for paying for long-term care for those who cannot afford it. themselves.
Workers, however, can opt out of the new scheme, but must purchase private long-term care insurance by November 1, 2021 and have October 1 to December 31 to submit an exemption request.
“We’re learning that many people and businesses are just starting to realize this reality,” said Erik Newman, director of business operations for Pullman-based Schweitzer Engineering Laboratories (SEL), which employs 5,200 people worldwide.
SEL held a statewide conference call Friday morning to organize businesses across the state to write to Governor Jay Inslee and ask him to suspend implementation of the state’s long-term care program until that some of the more glaring problems can be solved.
“It impacts everyone in Washington state,” Newman added. “We encourage business owners to write letters asking the governor to stop this law.”
One of the main concerns business owners have with the new program is that the withdrawal is unique, only available this year, and collects taxes from out-of-state residents who work at Washington.
“In Washington, we have 2,600 employees, and 1,000 of them live in Idaho,” Newman said. “They are forced to pay tax but without any of the benefits. It is taxation without representation.
According to a presentation by New York-based USI Insurance Services, which underwrites and provides insurance to individuals and businesses, to be eligible for coverage under the new program, workers will need to be Washington residents who have worked for at least 10 years at least 500 hours per year.
The $ 36,500 benefit will cover a maximum of $ 100 per day for one year of nursing home care, home care or assisted living costs for anyone unable to care for themselves. – even after the exhaustion of private long-term care insurance, but before Medicaid kicks in, according to the ICU.
Only W-2 employees will be eligible.
Employees can get a one-time waiver if they purchased their own long-term care insurance before November 1. However, taxes will be collected from the employee until the start of the quarter following approval of the waiver.
For example, a worker who submits an application and has it approved on Jan. 2 would pay the long-term care tax until the end of March, according to Amy Anderson, director of government affairs for education at the Association of Washington. Business – the state chamber of commerce.
And anyone who goes to work in Washington after January 1, 2022 will still be registered in the system.
“$ 36,500 doesn’t get you much money,” Anderson said. “This will not solve the problem of payment for long-term care. “
Newman said the rules for what kind of private long-term care plan can qualify for an exemption have yet to be written, so no one knows what types of plans would allow workers to successfully apply for an exemption. tax.
Newman and Anderson said insurers don’t write a lot of policies either, since there is no audit process in place to ensure that once a worker has purchased a policy , it is not canceled or abandoned after one year. Because the opt-out is for life.
“Insurers don’t like this law either,” Newman said. “Many insurers will not write a long term care policy for someone under 40 because they are afraid to cancel it. “
According to a December 2020 study from the Washington State Office of the Actuary – the office that oversees the financial soundness of the state’s pension system – the 58-cent tax is only enough to maintain the solvency of the system. long-term care for about 50 years, rather than the 75 recommended by the actuary’s office.
And that makes Anderson fear that the 58 cents will increase and could even become a tax for employers if the tax hits the 1% threshold – the limit at which a payroll tax becomes an income tax, which is prohibited by the Washington State Constitution.
“They haven’t thought about it,” Anderson said of the state legislature. “It’s frustrating.”
Newman has described the long-term care legislation as “a box-checking exercise” that allows the legislature to say that it has solved the problem of paying for long-term care rather than an honest attempt to “get away with it.” protect against a future disaster ”.
Anderson hopes the committee overseeing the long-term care trust will tackle the problem of out-of-state residents being forced to pay the tax, and hopes the legislature can better address withdrawal issues.
“We are working with the legislature and state agencies and we would like to see at least a break on this,” she said. “Ideally the repeal would be great; it is horrible legislation.
That’s why Newman wants workers and business owners to write letters to the governor’s office. Not emails, but real letters.
“They are tangible and they can make a big pile,” he said. “It’s a little easier to ignore an inbox full of emails. “
Charles H. Featherstone can be contacted at [email protected]