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200,000 Eligible Washingtonians Have Until Thursday Opt Out of Payroll Tax Program

Elizabeth Troutman | The Center Square contributor

(The Center Square) – The deadline to opt out of Washington state’s new payroll tax is approaching on June 1, but 200,000 eligible Washingtonians have not yet applied for an exemption.

The WA Cares program creates a mandatory tax of 58 cents per $100 of income to fund a long-term-care plan for Washington taxpayers. The program, enacted by the state Legislature in 2019, will begin in July 2023 after lawmakers approved an 18-month delay in January.

About 10,000 people have applied to opt out since Jan. 1, according to the state’s Employment Security Department. Spouses of active-duty military members, people who work but do not live in Washington, and temporary foreign workers are eligible for exemptions.

 “We’re encouraging eligible workers who want to apply for an exemption to continue sending in their applications after June 1,” ESD Commissioner Cami Feek said. “Our goal is to process as many applications as possible before workers see their first paycheck deductions in July.”

 The WA Cares Fund will provide qualifying Washingtonians up to $36,500 per year to cover services like personal care, assisted living and adaptive equipment. The median cost of assisted living in Washington is $76,000 per year, according to a 2021 survey conducted by Genworth.

Opponents of the program argue it requires mandatory contributions while maintaining a high threshold for eligibility compared with market-based plans. This means that some would contribute to the program but not be eligible to receive benefits.

Elizabeth Hovde of the Washington Policy Center told The Center Square she is afraid Washingtonians won’t save for their futures because they think the state wil fund them, though the new tax will not provide each person with enough to fund their needs.

“What’s happening is they’ll be taking a payroll tax on all of us — low income workers, medium ones, high income ones, and in some cases, money will be taken out of low-income workers’ paychecks and given to people with more resources for long term care, and they may not even need help with long term care, but they’re getting money from a low income worker through their payroll tax,” Hovde said.

The program is projected to be fully funded under most scenarios through June 30, 2098, according to a study published by actuarial research firm Milliman.

Workers who change their permanent residence to within Washington, change their immigration status to become a permanent resident or dissolve their marriage to a spouse in military service will lose their exemption eligibility.

Washingtonians who apply for an exemption will receive an approval letter from the ESD, which they must present to all current and future employers. Those who had private long-term care insurance on or before Nov. 1, 2021, were able to apply for an exemption, but the application deadline has passed.

Workers can apply online for an exemption from WA Cares by visiting its website.