The Long-Term Care Act was passed in 2019, which made Washington the first state in the nation to establish a public program centered on long-term care. Employees and employers need to find out all they can about this act because it goes into effect in January 2022.
One of the deadlines that’s coming up soon is November 1, 2021. Washington residents have until that date to opt out of the program. In order to do this, you must have your long-term care insurance policy active by that date. If you don’t, you’ll be subjected to a 0.58% income tax.
Who has to pay this income tax?
All workers who reside in Washington must pay this tax, even if their employer is based in another state. The tax becomes effective on January 1, 2022. There isn’t any cap on the earnings that are taxable and it covers more than just basic wages. Severance pay, bonuses, stock-based compensation and paid time off are all subject to the tax. Self-employed individuals are exempt from the tax, but can opt into it if they want state long-term care insurance.
What are the benefits?
The benefits from this insurance aren’t payable until 2025. There’s a limit of $100 per day with a lifetime benefit limit of $36,500. That will be adjusted for inflation as time progresses. The benefits are only payable when a person needs help with at least three activities of daily living. Private long-term care insurance only requires that a person needs help with two of those.
Long-term care can be very costly, so everyone should consider how they will pay for the services they need. Taking steps to do this as early as possible can ensure that you don’t miss anything that will be able to help you when you need access to this care. In some cases, people have to appeal a denial of the services that are covered by their plan.