Did you know if you are a W2 employee in Washington State you will start receiving payroll deductions on January 1st 2022? Washington state has passed the nation’s first public-operated, long-term care insurance program – The Long-Term Care Act.
An obligatory short-term care benefit was signed into law by Governor Jay Inslee effective July 28th, 2019 following approval in the House and Senate. The short-term care benefit will be publicly funded by a 0.58% payroll tax on all wages and remuneration without a cap. For example, if you make $100,000 a year, you will have $580 withheld for this new benefit. The benefits are a maximum of $100 per day and a lifetime maximum of $36,500. Those who are currently retired may not pay premiums or qualify for benefits.
The payroll tax is deposited into a trust which currently can only be invested in U.S. Treasury investments. The payroll tax rate will likely increase over time, as the projected 5% rate of return is not feasible for U.S. Treasury investments given our current rate environment. Currently, the tax rate is able to reset January 1st, 2021 and biennially thereafter. It is possible to opt out of the payroll tax by applying for an exemption between October 1st, 2021 and December 31st 2022, but only if you are an owner of a private Long-Term Care policy or purchase a policy before November 1st, 2021.
Securities offered through LPL Financial, Member FINRA & SIPC. Investment advice and financial planning offered through Financial Advocates Investment Management, DBA Olympic Investment Group, a Registered Investment Advisor. Financial Advocates Investment Management and Olympic Investment Group are separate entities from LPL Financial.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.
