Washington delays payroll tax, adds exemptions for long-term service and support trust program | Jackson Lewis CP

After months of confusion over whether to begin withholding bonuses from employees’ paychecks on January 1, 2022, Washington State employers and employees have won a controversial payroll tax reprieve for the long-term services and support program, called WA Cares Fund.

On January 27, 2022, Governor Jay Inslee signed into law Substitute House Bill 1732, which quickly passed the House and Senate, to delay the payroll tax until July 2023. The law requires employers to reimburse all premiums they have collected within 120 days of (a) the employer’s collection of premiums from the employee, or (b) the state’s reimbursement to the employer of premiums already paid. Governor Inslee also signed the Wholesale Surrogate House Bill 1733, which added promised exemptions for certain Washington workers.

Last month, Governor Inslee, Senate Majority Leader Andy Billing, and House Speaker Laurie Jinkins issued a joint statement proposing to delay the assessment of bonuses so the legislature could change the law to “better serve disabled veterans, military spouses, non-residents and relatives. retirees will improve the program. At that time, they also suggested “[a] pause will also give the Long-Term Care Commission the opportunity to study and make recommendations on residents leaving Washington to retire and ensure those who have opted out of the program maintain their insurance policies. private. The statement noted that changes to the law may require work until the 2023 legislative session.

SHB 1732 addresses concerns about those nearing retirement by allowing anyone born before January 1, 1968, who has been paying dues for at least one year, to receive one-tenth (1/10) of the maximum number of units of benefits effective July 1, 2026 ESHB 1733 adds four new categories of exemptions to the law: (1) U.S. military veterans with a disability of seventy percent (70%) or greater; (2) spouses and domestic partners of active duty members; (3) employees with nonimmigrant visas for temporary workers; and (4) Washington workers with a permanent primary residence outside the state. The Washington Department of Employment Security will begin accepting applications for new exemptions for eligible individuals beginning January 1, 2023.

Employees who have already purchased replacement long-term care coverage should carefully consider retaining it for two reasons. First, the legislature can still deliver on its promise to require exempt employees with qualifying coverage to maintain that coverage to remain exempt. Second, the legislator cannot extend the date by which this coverage had to be in place (before November 1, 2021). Employers should be prepared to reimburse employees within applicable timelines and may want to communicate with employees about the delay and new exemptions.

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