Washington’s Long-Term Care Tax Status Updates
Blog | Budgeting | Planning Perspectives
Thank you to Haley Sanford of New York Life for the status update regarding WA LTC Tax:
Earlier this year Governor Inslee signed a bill that postponed the tax by 18 months. WA State did this to try and address a few bipartisan issues such as options for those who are close to retirement and will not pay in for ten years, live in neighboring state but work in WA state, immigrants, and military.
Updates as of February 2022:
- Exemptions will be made available to groups who did not previously qualify, including workers who live outside of Washington, military spouses, workers holding non-immigrant visas, and certain veterans with disabilities. Exemption applications for newly eligible groups will become available January 1, 2023. Note: Workers who wish to apply for an exemption because they hold a long-term care insurance plan purchased by Nov. 1, 2021 must still apply by Dec. 31, 2022.
- Workers already approved for a permanent WA Cares exemption because they hold a long-term care insurance plan do not need to reapply. Opting back in is not an option provided in current law.
- Starting Jan. 1, 2023, exemptions granted to military spouses, non-immigrant visa holders, and those living outside Washington will not be permanent. Exemptions for these workers will only remain valid if the exemption criteria are met (e.g., if a worker living out of state moves to Washington, they would no longer be considered exempt).
As of now, residents still would need a LTC policy with an effective date prior to 11/01/2021 but have until the end of December 2022 to provide proof and opt out. There are a few additional changes that are being discussed; however, nothing additional has been signed/approved yet to our knowledge. We believe they are going to give those close to retirement the option to pay into this tax until it vests even if it’s after their retirement date, but this has not yet been confirmed.
With the law delayed, do I still need to/can I still apply for an exemption?
Yes. If you purchased private insurance prior to Nov. 1, 2021, and want to be permanently exempt from WA Cares, you must still apply for an exemption by Dec. 31, 2022.
If you already have an approved exemption, it can’t be canceled at this time. If the Legislature makes changes to that part of the law in the future, ESD will communicate directly with customers to explain their options.
For new residents that just moved into the state, can we buy insurance now and get an exemption?
No. There is a one-time exemption application period for those with private long-term care coverage in place prior to Nov. 1, 2021.
The updates are typically posted on https://wacaresfund.wa.gov/, however, we have been watching many of the hearings to try and stay up to date on more tedious details around the law. Right now, we are recommending that clients hold their LTC until at least January of 2023 to ensure that no additional changes will occur prior to the start date of the tax.