New Laws Postpone Washington Cares Act Employee Premiums to July 1, 2023, and Require Employers to Refund any Premiums Already Collected

On January 27, 2022, Washington Governor Jay Inslee signed House Bills 1732 and 1733, delaying and amending the Washington Cares Act (WA Cares).  Notably, for employers, the bills delay the obligation to withhold WA Cares employee premiums, now set to begin on July 1, 2023, and require employers to refund employees for any WA Cares premiums that have already been collected within 120 days of withholding.  The delay, and the refund mandate, are effective immediately.

By way of background, in April 2021, Governor Inslee signed into law the WA Cares Act, which created the WA Cares Fund and the first-of-its-kind mandatory, state-run, long-term-care insurance program.  However, since its passage, several issues with the law have been raised, including: the ability of employees to opt out of the program; how the law impacts near-retirees who would contribute but not vest in the program; and how the law impacts Washington-based employees who would not be eligible for the care benefit because they do not live in Washington or do not intend to remain in Washington long term.  The new laws address some of these concerns, and additional changes to the law may still come.

What do the new laws mean for employers?

The newly enacted bills make the following changes to the WA Cares Act, which are of significance to Washington employers:

  • Employers are now responsible for collecting, remitting and reporting WA Cares employee premiums starting July 1, 2023 (as opposed to January 1, 2022).
  • Employers must refund employees for any WA Cares employee premiums collected to date within 120 days of when the premiums were collected.
  • Employers should be aware that the amendments broaden the populations of employees eligible to voluntarily opt out of the WA Cares program.  These additional populations of employees can begin opting out under the new opt-out criteria starting January 1, 2023.  As before, if an employer receives an approved ESD exemption letter from an employee, employers must stop withholding WA Cares premiums and must maintain the written exemption letter received from the employee.  Additional employee populations eligible to opt out now include:    
    • Veterans with a service-connected disability of 70% or more.  Such employees may qualify for a permanent exemption;
    • Spouses or registered domestic partners of an active duty service member.  Such exemption expires if the service member is discharged from the military or upon dissolution of marriage or domestic partnership from the service member;
    • Employees with a nonimmigrant visa for temporary workers.  Such exemption expires if the employee becomes a permanent resident or citizen; and
    • Employees with a permanent address/primary place of residence outside of Washington.  Such exemption expires if the employee establishes a permanent address/primary location of residence in Washington.

Notably, the legislature did not extend the time for employees to voluntarily opt out of the WA Cares Program under the original opt-out provision in the law by securing their own private long-term care insurance. As such, employees who do not fall under one or more of the new exemption categories noted above can opt out only if they obtained private long-term-care insurance before November 1, 2021, and file an application to opt out by December 31, 2022. 

In addition, the following changes have been made to the WA Cares program under the new laws:

  • Starting July 1, 2026, persons born before January 1, 1968 (those currently at least 54 years old) who have paid WA Cares employee premiums for at least one year may receive $3,650 in WA Cares benefits for each year of premium payments;
  • Qualified employees who have vested into the Fund and need long-term care can begin receiving WA Cares benefits starting July 1, 2026 (as opposed to January 1, 2025 in the original Act); and
  • Other dates related to the WA Cares Act, such as the state’s assessment of the premium rate and the state’s reporting on the program, are also respectively delayed.

Littler will continue to monitor this law and provide updates accordingly.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.