Inslee Signs Bills To Delay WA Cares Payroll Tax Collection

OLYMPIA, WA — The Washington Cares Fund payroll tax has been delayed into mid-2023, buying state leaders and agencies time to refine the tax's collection and implementation.

The Washington Cares Fund is a first-of-its-kind program that would provide up to $36,500 for eligible Washingtonians, including seniors, disabled people and those battling serious illnesses. The funds can be used to help pay for things like assisted living, at-home care and other long-term needs.

The 0.58 percent payroll tax had initially been set to take effect on Jan. 1, 2022, but was delayed in mid-December, when Gov. Jay Inslee and other legislators announced a pause in its implementation to make further tweaks.

Now, it has been officially delayed again, after Gov. Jay Inslee signed two bills Thursday, House Bill 1732 and House Bill 1733. House Bill 1732 expands the fund, allowing near-retirees to qualify for partial benefits. It also included language delaying the WA Cares Fund by 18 months, telling employers not to withhold premiums until July 1, 2023. House Bill 1733, meanwhile, allows some Washingtonians to opt out of the payroll tax, including veterans with disabilities, spouses and domestic partners of military members, workers on temporary visas, and employees who work in Washington but commute from another state.

According to supporters, the delay was necessary to work out kinks in the WA Cares program, reconsider who qualifies for its benefits, and include all workers born before 1968.

“Washington is the first state to take bold action to address the looming long-term care crisis,” said DSHS WA Cares Director Ben Veghte in a statement. “Over the past year, we have heard concerns from the public regarding coverage gaps in the program. The reforms enacted today address those concerns.”

As HB 1732, notes, implementing the tax and distributing funds will require collaboration between the state's Employment Security Department (ESD), the Health Care Authority, the Department of Social and Health Services, and the Office of the State Actuary, which, the bill argues, needed more time to develop the systems necessary to maintain the fund. Following Inslee's signing, the ESD issued a statement thanking the governor for the extra time to get the program in order.

“The Legislature and Gov. Inslee’s work to improve WA Cares this session will give employers and the public more time to understand and prepare for this first-in-the-nation program,” said ESD Commissioner Cami Feek.

The extended delay is not totally unexpected: Even before Inslee first delayed the tax into 2022, there had been some concerns that the tax was not ready for implementation, with legislative leaders sending a letter to Inslee asking him to delay the tax for another year, allowing state lawmakers to make those extra tweaks.

Now that the tax is officially delayed, the state is advising employers to:

• Immediately stop withholding WA Cares premiums from employee earnings.
• Reimburse all employees for WA Cares premiums collected within the last 120 days.
• Hold on to copies of exemption approval letters for workers who provided them.

Under the new timeline, after the tax is reimplemented in July 2023, the first eligible employees will begin receiving Washington Cares Fund benefits in July 2026. Benefits will be adjusted for inflation, the ESD said, and can be used for professional personal care, dementia support, and other support programs.

“WA Cares will protect many Washingtonians from being driven into poverty by the need for long-term care and serve as a model for the rest of the nation," Veghte said. "The program will make it easier for all of us to age with dignity and independence in the setting of our choice.”

Patch Editor Lucas Combos contributed to this report.