State House passes 18 month delay for long-term care tax

Jan 19, 2022, 9:58 AM | Updated: Jan 20, 2022, 7:16 am
long term care tax...
(Photo by Tobias Hase/picture alliance via Getty Images)
(Photo by Tobias Hase/picture alliance via Getty Images)

— UPDATE on Wednesday, Jan.19, at 5:12 p.m. —

The state House voted 91-6-1 to delay implementation of Washington’s new long-term care payroll tax late Wednesday afternoon.

Efforts by House Republicans to pull their repeal and replace bills to the floor for votes despite them not getting hearings failed, as did several Republican amendments.

Despite that concerted effort to block a simple delay of the tax by Republicans, most still opted to approve HB 1732 as the lesser evil than allowing the law to remain in effect.

Republican Representatives Chase, Dufault, Hoff, McCaslin, Macentire and Walsh were all no votes, while Rep. Chandler was excused.

The bill’s sponsor, Democratic Rep. Pat Sullivan, called for all to support the bill.

“The legislation before us does two things,” Sullivan pointed out. “It allows for near retirees to receive partial benefits. But more importantly, it allows for that 18-month delay, so that we can address a few of the issues that we’ve heard about to ensure that the program is as effective and efficient as we can make it and, again, so that we can guarantee those benefits to our residents throughout the state.”

Moments later, the House passed a second bill, HB 1733, that addresses issues with WA Cares. HB 1733 adds additional opt-out options for some people.

The bill will move to the Senate next week.

— Original story —

State lawmakers prioritized pausing the implementation of a long-term care tax headed into the 2022 legislative session, and appear poised to push it through by next week.

Long-term care tax could still be taken out of paychecks despite delay from Gov. Inslee

The goal of the program — known more formally as WA Cares — was to help cover costs of long-term care that the majority of Washingtonians are not saving for, and avoid those in need of care being forced to spend their way into poverty.

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. Washingtonians could opt out of the tax, but that was contingent on having a separate private long-term care insurance policy in place by Nov. 1.

It was a first-in-the-nation program when it was passed by the Legislature in 2021, but apprehension grew as its implementation drew near, with concerns over people paying into the fund not being able to access the benefit should they move out of state, or those who work in Washington but live in a border state not being able to access the benefit at all.

Despite Gov. Inslee instructing the state Employment Security Department in December not to collect the tax, employers were still able to begin deducting it from worker paychecks starting in January.

On top of that, some 450,000 people already opted out, leading to worries about insolvency.

To address the issues, Democratic lawmakers have quickly moved on a bill to pause the program for 18 months to July of 2023. A second bill allowing for additional voluntary opt-outs is also on the fast-track.

Both bills are expected to come up for a vote on the House floor on Wednesday.

“We’re expecting this Wednesday that we will move a couple of bills related to the Cares act off of the House floor,” House Speaker Laurie Jinkins said earlier this week.

Once the House vote happens, the bill will move to the Senate.

“Our plan is to move the bill through committee and off the floor all next week and our goal will be to pass it late next week,” Senate Majority Leader Andy Billig said.

But the path through a final vote in the House will include some bumpy terrain laid out by Republicans, who are voicing complaints about how their proposals to repeal and replace the WA Cares tax did not receive hearings.

“These two bills have not been given hearings — we’ve asked for hearings repeatedly,” said House Republican Leader J.T. Wilcox during a GOP media briefing on Tuesday.

The bills he’s referencing come from Reps. Peter Abbarno and Drew Stokesbary, who both argue that delaying the tax’s implementation is not enough to fix the problems.

“Which is why I introduced House Bill 1594, which would repeal the WA Cares act and eliminate the payroll tax,” Abbarno said. “The objective findings of the Office of Actuary are evidence that the program has fatal flaws at really all three phases, from the regressive tax collection which over 450,000 workers have already opted out of to the restrictive investment strategy, to the limited short-term benefit, and you don’t have to get past probably about page three of the actuary report to find the fund is insolvent.”

State senator proposes bill to repeal Washington’s long-term care tax

“I think we need to revisit this concept and this program entirely and what we’re doing in the legislation,” Stokesbary said. “I think you’ll hear the majority try to explain how good it is to have people with long-term care coverage — nobody’s disputing that. I think there’s broad bipartisan agreement that having some solution is good. The question is, what should that solution be? And I’m afraid that without giving these bills a hearing, the Legislature is locking ourselves into only one particular solution that isn’t really a solution at all.”

“So instead, I introduced HB 1913, which would leverage the state’s significant $8.8 billion surplus to stabilize the private market and allow for private insurance carriers to ultimately offer much lower premiums to subscribers like you and me that were previously shut out of the market,” he continued. “It does this through a system of reinsurance that insurers would then get a tax credit for. We essentially would be leveraging the state’s largess to absorb the riskiest portion of this market, which is why coverage in the private market has been so unaffordable and unattainable before.”

With both bills not getting hearings, Republicans will do everything in their power to draw attention to their plans before Democrats bring their proposals up for a vote.

“We will be offering parliamentary motions before the Democratic bills are voted on for consideration of these important bills, and I think, honestly, there are plenty of people on the other side that would like to support them,” Wilcox said.

The motions are unlikely to block passage of the Democrat-backed bills.

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State House passes 18 month delay for long-term care tax