The WA Cares Fund

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What is the WA Cares Fund?

The WA Cares Fund, formerly known as the Washington Long-Term Care Program, is the nation’s first public state-operated long-term care (LTC) insurance program. It will be funded by a 0.58% tax on all employee wages, starting January 1, 2022.
At that time, employers will be required to collect premiums through employee payroll deductions and then remit to the Employment Security Department (ESD). The agency will then deposit funds into a trust for the individual until they qualify for the benefit.

Is There a Cap on Taxed Wages?

The WA Cares Fund currently has no cap on wages that are subject to this tax. Wages include stock-based compensation, bonuses, paid time off, and severance pay.

Which Employees Are Subject to LTC Tax in WA?

Any working WA residents are required to pay LTC Tax, except for the self-employed and those who work for a federally recognized tribe.

Can Employees Opt Out of the Program?

Yes. WA residents may opt out of the program and all associated taxes and benefits if ALL the following requirements are met:

  1. the employee is 18 years old or older on the date they apply for exemption,

  2. the employee buys private LTC insurance before November 1, 2021, and

  3. the employee must apply for an ESD exemption between October 1, 2021, and December 31, 2022 along with proof of ID.

Employees who apply and are approved for an exemption will be permanently disqualified from WA Cares. This means the employee may never re-enroll and will be prohibited from getting WA Cares benefits, even if those benefits are needed.

Once exemption is approved it takes effect the following quarter.

What Qualifies as LTC Insurance in WA?

According to WA State law, LTC insurance is an insurance policy that provides coverage for at least 12 consecutive months in the event of a debilitating prolonged illness or disability. Learn more about LTC qualifications here.

Who Is Eligible to Receive the WA Cares Fund Benefits?

To qualify for benefits the individual must:

  1. be at least 18 years old,

  2. be a current resident of WA,

  3. have worked and contributed to the fund for:

    1. At least ten years at any point in their life without a break of five or more years within those ten years, or

    2. Three of the last six years at the time they apply for the benefit, and

    3. At least 500 hours per year during those years.

  4. need assistance with at least three activities of daily living, such as: 

    1. Medication management

    2. Personal hygiene

    3. Eating

    4. Toileting

    5. Cognitive functioning

    6. Transfer assistance

    7. Body care

    8. Bathing

    9. Ambulation/mobility

    10. Dressing

*Note that employees who plan to retire in the next 10 years are required to pay premiums, but keep in mind they may never qualify for benefits based on the criteria above.

Who Should Consider Opting Out of the WA LTC Payroll Tax?

Anyone planning to retire outside of WA. A private policy will give flexibility to cash out in another state. The Long-Term Care Trust Act benefits will only pay out within Washington state.

Who Should not Consider Opting Out of the WA LTC Payroll Tax?

Any employee looking to retire soon, unless anticipating a need for long-term care. In this case, a private plan may not be economical.

Can Self-Employed Earners Opt In?

Yes, self-employed earners can opt in as soon as applications are available in January 2022.

How Will Employers Know If Employees Have Opted Out of the WA Cares Fund?

Employees must notify and give the employer a copy of their approved exemption letter from the Employment Security Department.

If an employee fails to provide the exemption approval letter, the employer must collect and remit premiums beginning January 1, 2022. An employee is not entitled to a refund of any premiums collected before the exemption took effect or before the approval letter was provided to the employer.

If an employer deducts premiums after an employee has already provided their exemption approval letter, it is the responsibility of the employer to refund those deducted premiums to the employee. Refunds will not be issued by ESD.

What are the Employer's Responsibilities?

Employers should inform employees about the WA Cares Fund, including the benefits available and the ability to opt out by November 1, 2021. Employees wishing to opt out must apply to ESD for an exemption and provide proof of exemption before the employer can waive WA Cares premiums.

Employers should keep copies of all exemption approval letters on file.

Employers should consider compensation timing—i.e., employees may benefit from delayed bonuses and stock awards in that such wages will not be subject to the payroll tax.

Employers should consider if they will offer private LTC insurance to their employees. Note that the coverage offered must be comparable to, or greater than the benefits in the state’s Long-Term Services and Supports (LTSS) program. Consider who will pay the premiums (employer/employee) and what percentage of the cost.

Employers evaluating private LTC insurance options should consider factors such as residency requirement, vesting period, benefits, premium stability, the ability for spouses or partners to participate, and underwriting.

How do I Apply for an Exemption?

Click on this link and follow the instructions:

Do you have additional questions?

Contact us!


Digital Fact Sheets are available for your employees upon request.