Dear Friends and Neighbors,
Many of you have reached out to me regarding the new payroll tax which begins in January 2022. In this e-newsletter, I wanted to provide you with some information.
I know all of us don't always agree on everything all the time, but please know, I still value hearing from you! I enjoy our respectful dialogues, even when we don't agree on the issues. I'd like to hear your thoughts, concerns, and questions on the issues presented in this e-newsletter, and other issues involving your state government. My contact information is below.
New payroll tax coming January 2022 | Washington Cares Fund
In 2019, House Bill 1087 was enacted. This bill is known as the Long-Term Services and Supports Trust Program (LTSS), or the Washington Cares Fund, providing long-term services and support benefits to people who have paid into the program for a specific amount of time. The bill also established the LTSS Trust Commission.
As a provision of this bill, beginning January 1, 2022, all employees in Washington state will pay 0.58 percent per $100 of their earnings to fund the Long-Term Care Trust Act.
I, along with my House Republican colleagues, voted against this payroll tax because:
- This new tax will reduce workers' paychecks for a benefit they may not be eligible for due to retiring before they are eligible/moving out of Washington state.
- The maximum benefit an individual will qualify for is only $36,500 lifetime, which is significantly lower than most private long-term care insurance policies and is not realistic for today's market.
During the 2021 session, the Legislature passed House Bill 1323 which enacts several recommendations from the LTSS Trust Commission involving timelines for employees to opt-out, setting timelines for a self-employed individual to opt-in, and allowing tribes and individuals who were disabled before the age of 18 to qualify for this program.
Here are some answers to some frequently asked questions I have received:
Requirements to opt-out:
- An individual may opt-out if they are at least 18 years old, have purchased a qualifying long-term care insurance policy before November 1, 2021, and have applied to the Employment Security Department (ESD) during the designated opt-out window between October 1, 2021and December 31, 2022.
For the self-employed:
- Anyone who is self-employed can choose to opt-into the program between January 2022 and December 31, 2024, or within the first three years of becoming self-employed for the first time.
- Self-employed opt-ins are irrevocable, and the payroll tax will apply as long as you remain self-employed (and if you are later employed by a qualifying employer).
Impacts to current retirees:
- Current retirees who have no income from an employer will not be subject to this tax or its benefits.
- If a current retiree earns any income from an employer, you will pay the payroll tax on your earnings and could potentially qualify for benefits in future years if you meet the eligibility requirements.
There are a lot of moving parts to this new payroll tax, including deadlines from when and how you may opt-out. For more information, please visit the House Republican Caucus website. This site contains a frequently asked questions page specifically for this issue, which you can find by clicking here.
As always, thank you for the opportunity and the honor to serve you, your family, and our communities as your State Representative.
May God richly bless you all!