WA Cares Fund Updates

On December 17th, Governor Inslee’s office released a statement declaring a delay in the Washington Cares Fund RCW 50B.04 premium assessment, specific dates were not provided.

What does this mean to employers? The assessed premiums scheduled for deduction on January 1st, 2022 from all employees working at least 12.5 hours per week, will be postponed until legislature can make amendments to the Act. Until further notice at this point. A statement released by Senator Andy Billig, House Majority Leader and Laurie Jinkins, speaker of the House provided a somewhat hazy timeline:
“In addition to delaying the premium assessment, we also support employers pausing premium collections from employees in Washington so lawmakers can take necessary action. While we cannot direct employers not to collect, we strongly encourage them to pause on collecting premiums from employees, giving us time to pass legislation extending implementation dates until next year. We know that this extra time will allow us to find solutions and craft updates to the Fund that allows Washingtonians to age with dignity in their own homes.”

Many Employers proactively researched and offered LTC coverage through various insurance platforms that provided employees the option to choose private coverage over the State’s fund. The caveat was that alternate and “qualified” coverage had to be in place on or before October 31, 2021. Due to the extremely high demand for private coverage, many insurers have not yet completed implementation of some contracts nor submitted bills for payment. It is important to stress to employees that despite the delay in the release of premium statements and collection, insurers will expect back premiums be paid retroactively to the effective date of the policies.

The short-term win is the state has delayed until further notice the earmarked income tax. The long- term challenge will be for Employers and Employees alike to determine the appropriate course of action specific to their respective insurance policies.

So, what should Employers do?
Immediately make your employees aware of the change. The employee announcement communicates the following:
– Choose to maintain coverage they requested and pay the required premiums until legislation communicates changes and a new implementation date.
– Change or cancel personal coverage and see how the legislation responds in late 2022 / 2023.
– Make them aware of the risks with an early termination – early termination may lead to a surrender charge.
– If their employer offers one of the State approved permanent life with LTC rider policies with a future enrollment period, they would most likely be able to re-enroll at that time. However, they may not be eligible for guarantee issue and subjected to evidence of insurability.
– As the law stands now, to be eligible for the exemption, employees had to enroll in a policy effective by 11/1/21.
– At this point in the legislative discussions, we are not aware of any commitment by the State to extend the exemption period.
– As of now, if employees cancel their policies with a future plan to re-enroll at a later date, there is nothing that suggests they would be exempt from paying into the State income tax
once settled by the State Legislature.
– During this pause of the tax the State has said they will work to assure that those who have opted out of the program maintain their private insurance policies going forward.