Washington State Long Term Care Trust Act

Why Should You Be Concerned About the Washington State Long Term Care Trust Act?

A new mandatory tax for all Washington state W2 employees will go into effect in 2022. While that may seem like a long way off, there are steps you and your WA alumni can take now to claim an exemption. It’s critical to focus on this now, as the window to claim the exemption is small.

The Long-Term Services and Support (LTSS) Plan

A publicly-funded Long Term Care (LTC) plan will be provided to Washington state residents who work a minimum of 500 hours/year and pay premiums for at least ten years or three of the preceding six years.

LTSS will be funded by a mandatory tax for all W2 employees age 18 or older. Payroll deductions will begin on January 1, 2022, with benefits payable beginning in 2025.

Designed to assist Washington’s unpaid family caregivers, the LTSS plans provides basic LTC benefits, subject to a $36,500 lifetime maximum. While this public program will provide critical benefits for some families, many WA residents would be better served by private LTC insurance – which also provides an exemption from the tax.

Timeline:

Soon: Bill expected to pass

July 2021: Deadline to purchase private LTC insurance to qualify for exemption

Oct 2021: Window to apply for exemption opens

Jan 2022: Mandatory payroll tax begins

Dec 2022: Window to apply for exemption closes

2025: LTC benefits available to those covered by LTSS

Private LTC Insurance

The Alumni Benefits Program offers private LTC insurance, which not only qualifies for the permanent exemption, but also provides alumni and their families with an exclusive alumni discount.

Private coverage through our program is:

• Portable. Washington residents who move out of state for five years or more forfeit WA state benefits and premiums. Private LTC insurance stays with you, no matter where you reside.
• Flexible. Coverage can be tailored to meet budgets and individual preferences for future care options. Our program offers a range of plans with various price points and benefit options.
• Well-supported. Your alumni can work with our licensed experts who are available to help with planning and assist with the purchase of private coverage. Advice and expertise are complimentary.
• Financially wise. A lifetime of tax exemptions can amount to thousands of dollars in savings.

Long term care services can deplete even the best-planned nest egg, so it’s important to have a plan in place. Private LTC insurance through the Alumni Benefits Program is an ideal alternative to the state-mandated plan, and it’s important to start planning early.

A Lifetime of Tax Exemptions

It’s Now or Never

• Whether you are 18 or 58, it’s wise to apply for an exemption while you can.
• The application period is only 15 months – October 1, 2021 thru December 31, 2022. After that, no exemptions will be available.
• You need to purchase LTC insurance soon – by July 2021 – to qualify for the exemption.

The Tax Can Really Add Up¹

• A 25 year old starting with a $35,000 salary can pay $202,653 3
• A 40 year old making $75,000 can pay $225,012³
• A 50 year old making can pay $258,088³

The Tax Savings Can Buy Equivalent Coverage – With Money Leftover

¹Without a break of five consecutive years.

²If passed by the Washington State Legislature, as expected, Substitute House Bill 1323 would set the deadline for ownership of private LTC insurance at approximately July 24, 2021 to qualify for the permanent exemption from the new tax.

³Assumes LTSS payroll tax of 0.6%, 3% annual salary increase, and retirement at age 70.