Gov. Inslee delays controversial long-term care tax through 2022 as lawmakers ‘sort through issues’
Dec 17, 2021, 10:26 AM | Updated: 11:59 am
(Office of the Governor)
Gov. Jay Inslee announced Friday that he has reached an agreement with state lawmakers to delay the implementation of a controversial long-term care tax, originally set to take effect at the start of the new year.
Under the tax, all W2 employees who average 12.5 hours per week were initially set to see the deductions for the tax as of Jan. 1, 2022. A person earning $50,000 a year would pay $290 a year in additional taxes. The deadline to opt out of the program was Nov. 1, but that process was contingent on having a separate private long-term care insurance policy.
Leading up to that November deadline, state leaders acknowledged that none of the 12 companies authorized to sell private long-term care insurance were offering new policies, effectively blocking Washingtonians from accessing the necessary means to opt out of the tax.
Given that — as well as complaints from several lawmakers and business groups — Inslee stated a desire on Friday to “give legislators the opportunity to make refinements to the bill.” As such, he has ordered the Employment Security Department to not begin collecting premiums from employers when they’re due next April.
“My actions mean that the state will not collect those funds until the Legislature sorts through these issues,” Gov. Inslee clarified in a press release. “While legislation is under consideration to pause the withholding of LTC fees, employers will not be subject to penalties and interest for not withholding fees from employees’ wages during this transition.”
This effectively delays the tax through 2022, allowing lawmakers enough time to make necessary adjustments to the bill, and then giving Washingtonians an appropriate window to comply before its eventual implementation in 2023.
“Delaying implementation of the Washington Cares Fund premium assessment through the 2023 legislative session allows the Legislature time to pass the policy reforms that are ready to go now and to consider further recommendations from the Long Term Care Commission,” State Senator Andy Billig and State House Speaker Laurie Jinkins said in a joint statement.