In 2019, the Legislature passed HB 1087 authorizing a Long-Term Care Program (LTCP) funded by a 0.58% tax (called “premiums”) on all employee earnings. The payroll tax was scheduled to take effect on January 1, 2022. However, due to questions regarding eligibility and long-term solvency, the Legislature delayed the payroll tax until July 2023 and authorized an independent actuarial analysis of the program.
The analysis released last week predicts the program will likely remain solvent into 2098 under the 0.58% authorized payroll tax level. It carefully states, “We estimate WA Cares Fund will require a level premium assessment on gross wages between 0.52% and 0.63% for the Baseline analysis to cover program expenditures over the 75-year period….”
The analysis examined a broad range of scenarios and found that, under most, the program would remain solvent under the 0.58% payroll tax. However, the analysis also reveals certain factors that could lead to higher payroll tax levels, above 0.63%, over the 75-year period. Those factors include lower wage growth, lower overall employment levels, higher inflation, and lower investment earnings.
The payroll tax funds the Washington Cares Fund, which will provide up to $36,500 in long-term care benefits for eligible recipients. Under current law, the payroll tax is scheduled to take effect in July 2023, with benefit payments beginning in 2026.
