Washington State recently passed the Long Term Care Trust Act. Starting January 1, 2022, all W-2 income in WA State will be taxed at 0.58% to fund this new program. Prompt attention may be required for those who are working and already have a private Long Term Care Insurance policy or those who are working and are interested in purchasing long term care insurance. Please read below for additional information.

As of 4/12/2021, this is what we know:

Who will pay?

  • The LTC Trust will be funded by a 0.58% payroll tax on all W-2 income beginning 1/1/2022.
  • There is no cap on wages used to calculate the tax.
  • W-2 income includes company stock awards.
  • Self-employed persons and independent contractors are excluded, but can “opt-in”.
Hypothetical W-2 Income0.58% Tax
$100,000$580
$150,000$870
$250,000$1,450
$500,000$2,900

What are the benefits of the WA LTC Trust Plan?

  • Beginning 1/1/2025, eligible WA residents may receive up to $100 per day for long term care services. Maximum lifetime benefit is $36,500 (365 days).
  • Current daily cost in Seattle – Home care (8hrs) ~$220, Assisted Living ~$224, Nursing Home ~$400.

Who will benefit from the Plan?

  • Only qualified Washington residents1 who, at the time of the claim2, paid the tax for either a) 3 years within the last 6 years, or b) for a total of 10 years, with at least 5 years uninterrupted.

What can you do (e.g. how to opt-out of the tax)?

  • For those with an existing private long term care insurance policy:
    • Apply for an exemption from the payroll tax with the employment security department (“ESD”) from October 1, 2021 – December 31, 2022.
    • Provide the approval letter from ESD to your employer.
  • For those without an existing private long term care insurance policy:
    • Purchase a qualified long term care policy by November 1, 2021.
    • Apply for an exemption from the payroll tax with the employment security department (“ESD”) from October 1, 2021 – December 31, 2022.
    • Provide the approval letter from ESD to your employer.

Sample premiums for a private policy

Coverage includes $3,000 per month, 2 year benefit period, 3% compound inflation rider:

Private Policy PremiumsAge 30Age 40Age 50
Male$845$881$1,045
Female$1,254$1,292$1,597
Married CoupleDiscounts may be available

If you are interested in exploring your options for a qualified long term care policy, or a hybrid long term care / life insurance policy, please start by contacting an insurance professional (see our Recommended Resources) to determine your eligibility, and to obtain a quote. If you still have questions on whether a private policy is right for you, contact Arrivity Financial Planning to set up a consultation.

1 Must reside in the State of Washington. Any person that moves out of the State of Washington for 5+ years will forfeit all benefits and taxes paid.
2 A qualifying claim requires that an individual needs assistance with a minimum of 3 of 10 Activities of Daily Living (“ADLs”): medication management, personal hygiene, eating, toileting, transferring, body care, bathing, ambulation/mobility, dressing, and cognitive impairment.