The Long-Term Care Trust Act mandates a payroll tax for Washington-based employees to pay for long-term care expenses. The tax is scheduled to be paid by all Washington-based workers at a rate of $0.58 per $100 of income, where someone making $100,000 annually would pay $580 per year in taxes. The proposed tax is scheduled to start January 2022 and is scheduled to be paid by the employer on behalf of the employee, impacting all Washington W-2 employees. The program is optional for all self-employed workers.
Do you have a coverage gap?
Washington state long-term care coverage will be $36,500 under the new program. This may be sufficient coverage, or you may have a gap that needs addressing. On average, individuals need 4.5 years of in-home health services or independent or assisted living communities, and 2.5 years of long-term care in facilities like a nursing home.
Using private long-term care insurance
The law mandates a payroll tax based on your W-2 income starting in January 2022. The program allows an opt-out option for employees with private long-term care insurance. Coverage must be in place no later than October 31, 2021 to apply for the opt-out. However, implementing a private long-term care plan takes time, and I recommend connecting with me before the end of summer to discuss if this is an option for you to pursue.
Review your overall financial picture
With this recent change in law, and the upcoming deadline to take advantage of using private long-term care insurance, contact me to discuss how long-term care fits into your wealth plan.