On January 4, Speaker of the House Laurie Jinkins announced that an agreement had been reached between Democratic Leaders in the House and Senate and the Governor to delay implementation of the Long-Term Care program for 18 months. If this law is passed, then this delay means that employers do not have to start the collection of the 0.58% payroll tax to fund the program.
The proposed agreement:
- Delays implementation of the Long-Term Care program until July 1, 2023
- Allows for a pro-rated long term care benefit for individuals who are at least 54 years of age and retire within 10 years of program implementation.
- Adds new exemptions for disabled veterans, military family members, immigrants, and non-state residents.
The agreement also includes a requirement that if the delay is signed into law, any employer that withheld the payroll tax beginning January 1, is required to remit it back to their employees within 120 days. Additionally, if the employer had remitted the payroll tax to the Employment Security Department (ESD), then ESD is required to remit the amount back to the employer within 120 days.
Two bills, HB 1732, and HB 1733 have been pre-filed to implement the agreement.
Speaker Jinkins and Majority Leader Pat Sullivan indicated that their plan is to move these bills to the Senate within the first two weeks of Session.
Background:
In 2019, the Legislature passed HB 1087 to implement a Long-Term Care Program funded by a 0.58% tax (called “premiums”) on employee earnings. The new payroll tax took effect on January 1, 2022. The tax funds the Washington Cares Fund, which is intended to provide financial assistance for long term care. Under the original legislation, workers had the ability to opt out of the program at any time. In 2021, however, the law was amended to require all workers to contribute into the program unless they could show proof of private long term care insurance by November 1, 2021.
Over the past year, unions and employers, including the Wenatchee Valley Chamber of Commerce, communicated about several significant issues over eligibility requirements to collect benefits and the new payroll tax.
Employer Responsibilities and Options:
The current situation remains somewhat cloudy.
Current law requires employers to begin collecting the 0.58% payroll tax on January 1, 2022. The rules implementing the program, WAC 192-910-015 state,
(1) Employers must deduct premiums for each pay period in which the employee receives wages.
(2) When an employer is found by the department to be noncompliant with collecting premiums from an employee, the employer must file an amended report and pay the past due premiums.
Speaker Jinkins pointed out that Washington State will collect the payroll tax beginning January 1. She also indicated that the House and Senate will not withhold the payroll tax from legislative staff beginning January 1.
Options:
Current law requires withholding the new payroll tax. However, it appears likely that legislative action to delay the program by 18 months will happen early in 2022. The proposed legislation clearly contemplates the following scenario for employers:
- An employer complies with current law and withholds the payroll tax beginning January 1. The Employment Security Department (ESD); however, will not require remittance of the payroll tax to the state until April 2022.
- If the proposed agreement is passed and signed into law, then the employer returns the amount withheld to their employees.
- If the employer has remitted the payroll tax to ESD, then ESD has 120 days to remit back to the employer.
An employer should seek advice from their legal and/or financial advisor as they consider their options. |
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