(The Center Square) – Democrats in the Washington State Legislature continue to fast track two bills to delay and fix the troubled WA Cares long-term care tax, while Republican lawmakers are pushing to repeal the program and associated payroll tax and replace it with a privately managed program.
Majority Democrats moved another step closer to their goal.
On Thursday, the House Appropriations Committee approved a bill to pause implementation of the tax for 18 months. The committee also approved a bill that would create voluntary exemptions of the tax for veterans, military spouses, nonimmigrant temporary workers, and employees who work in Washington but live outside the state.
HB 1732 would postpone the 0.58% payroll tax deduction on Washington state workers until July 2023. HB 1733 would allow some people not likely to receive benefits to opt out of the program and payroll tax.
The desire for a quick legislative fix is the result of a tumultuous response from government leaders to problems related to the long-term care tax that went into effect on Jan. 1, despite an ostensible attempt to pause collection of the tax.
On Dec. 17, Gov. Jay Inslee, along with Democratic leaders, announced a delay until April 2022 in collecting the tax, so that lawmakers could make changes during the legislative session that convened one week ago, following a multitude of complaints centering on workers who would pay into the system without benefitting from it, primarily those planning on moving out of state and/or less than 10 years from retirement
Confusion and uncertainty followed days later, when on Dec. 23, Inslee issued a statement saying he does not have the authority to delay the tax and that employers are still legally obligated to pay the full amount owed to the state.
Fixing WA Cares was referenced by House Speaker Laurie Jinkins, D-Tacoma, during last week’s House opening ceremonies of the 60-day legislative when she noted people being unable to “access long-term care without first spending themselves into poverty and losing everything they have worked toward their entire lives.”
While Democrats look to fix the program, first passed in 2019, Republicans hope to scrap the program altogether.
House Minority Leader J.T. Wilcox, R-Yelm, told The Center Square in December he was not impressed with delaying the collection of the tax until April.
“That’s not a great solution,” he said, noting that it puts pressure on employers in terms of enforcement.
“They collect the tax and then what?” he said.
Not much has changed now that Democrats want to delay the tax well into next year.
“Even with the changes contained in House Bills 1732 and 1733, the long-term care insurance program and payroll tax will continue to be unpopular, insolvent, and inadequate,” Wilcox said in a Saturday news release.
A bill introduced by state Rep. Drew Stokesbary, R-Auburn, the ranking Republican on the House Appropriations Committee, would repeal the WA Care program and its tax, to be replaced by a privately managed program that takes advantage of the state’s existing revenue to make long-term care coverage affordable and optional.
House Bill 1913 received its first reading on Tuesday.
Per the 16-page bill, private insurance carriers would reinsure a portion of the risk they assume in writing long-term care policies and receive a full state tax credit for all reinsurance premiums paid. By transferring some of their risk to the reinsurer, Stokesbary believes carries would have lower and more predictable pay out claims, resulting in offering subscribers lower premiums.
“For years, private long-term care insurance in Washington was optional, but unaffordable for many who wanted it,” Stokesbary said in a news release. “While the current Washington Cares program purports to offer affordable coverage for most people, it is optional for no one, as every employee in Washington must now purchase a private plan or pay a mandatory payroll fee. House Bill 1913 offers a real solution that would make long-term care insurance affordable for those who want it, but optional for those who don’t.”