United States | Employment Tax | Washington – WA Cares Fund

June 29, 2023

Employment Tax

United States | Washington – WA Cares Fund

Impact : High

Summary

Beginning July 1, 2023, employers have a new responsibility to collect and remit employee contributions in Washington, relating to the Washington Long-Term Services and Supports Trust (WA Cares Fund). The WA Cares Fund gives working Washingtonians access to long-term care coverage. Washington employees will be able to access a $36,500 lifetime benefit (adjusted annually for inflation) beginning on July 1, 2026 that can help pay for long-term care services when needed.

Overview

Washington’s Long-Term Services and Supports Trust Program (WA Cares Fund) provides long-term care insurance benefits for all eligible workers. The program is intended to provide long-term care services to help pay for services needed by people who cannot perform everyday tasks themselves. Starting July 1, 2023, a 0.58% premium assessment will be imposed on all Washington employee gross wages. Employers are required to begin withholding premiums through payroll deductions on July 1, 2023.

Highlights:

1.  Employers do not contribute to the fund.

2. Employers are required to report employees’ wages and hours and pay premiums every quarter unless the employer had no payroll expenses during that quarter.

•  The first report and payment that includes WA Cares premiums will be due October 31, 2023, for July, August, and September 2023 payroll.

3. Employers will collect premiums from their employees the same way they do for Washington Paid Family and Medical Leave and can report both programs at the same time.

•  The premium is 0.58% of an employee’s gross wages.

4.  Workers who are localized in Washington state contribute to the WA Cares Fund. WA Cares uses the same localization definitions as the state’s Paid Family and Medical Leave program. If a worker is included in Paid Leave, they will also be included in WA Cares unless they have an approved exemption.

5. Unlike Washington Paid Family and Medical Leave, premium contributions for the WA Cares Fund are not capped at the taxable maximum for social security.

•  The total employee premium amount = gross wages x .0058

6. Premiums are assessed on gross wages, which mirrors the definition of gross wages for Paid Family and Medical Leave.

7. Some employees may choose to apply for an exemption from WA Cares coverage. It is the employee’s responsibility to apply, and—if approved—to notify and give employers a copy of their approval letter from Employment Security Department (ESD).

•  Please note that ESD is currently processing exemption applications, approved exemptions from workers who submitted their applications before July 1 will have an effective exemption date of July 1, 2023, regardless of when their application is approved. Once an employeeprovides their exemption approval letter, the ESD encourages employers to return worker deductions since ESD will not assess premiums for these workers for any part of Q3.
•  For any workers who submit exemption applications on or after July 1, and are approved, their effective exemption date will be the quarter following the date the exemption was approved and will be assessed premiums for all Q3.

8. Workers who had private long-term care insurance on or before Nov. 1, 2021, were able to apply for an exemption from the WA Cares Fund from Oct. 1, 2021, until Dec. 31, 2022. This opt-out provision is no longer available. The private insurance op-out exemption is permanent, and employees can never opt back in.

9. Other exemption categories are conditional upon the employee continuing to meet the requirements of the exemption. Beginning Jan. 1, 2023, Washington workers became eligible for exemptions from WA Cares if any of the following apply to them:

• Live outside of Washington
•  Are the spouse or registered domestic partner of an active-duty service member of the United States Armed Forces.
• Have a non-immigrant work visa.
•  Are a veteran with a 70% service-connected disability rating or higher (Exception: Veterans with a 70% service-connected disability rating or higher will receive a permanent exemption).

10. Once an employer notified of an exemption, employers must not deduct WA Cares premiums from workers who have provided an ESD exemption approval letter AND keep a copy of their workers’ approval letters on file.

How we can help

Vialto can assist you in complying with your responsibilities related to state paid leave programs, including determining which employees are covered under the program, assisting with any required registrations, calculating employee and employer contribution amounts, drafting employee
communications, and assisting with wage reporting.

Please reach out directly to your Vialto contact or one of the individuals listed below to discuss next steps.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
• Tina Schrob, Partner | cristina.g.schrob@vialto.com
• Greg Fetter, Partner | gregory.fetter@vialto.com
• Ligeia Donis, Partner | ligeia.m.donis@vialto.com
• Jessica Castro, Director | jessica.j.castro.acevedo@vialto.com
• Priya Schwartzburt, Director | priya.c.schwartzburt@vialto.com

Further information on Vialto Partners can be found here: www.vialtopartners.com

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