Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

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truenyer
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

Soon2BXProgrammer wrote: Mon May 03, 2021 3:24 pm
suemarkp wrote: Mon May 03, 2021 2:37 pm I was in the process of emailing our Union focals as to why they hadn't told us this was coming and how to opt out. We are a highly paid group of engineers. Then i discovered that this bill excludes people covered by a collective bargaining agreement. So not only did SEIU sponsor this, they opted themselves, and most other unions, out of this. It appears that when the union contract is renewed, then how this gets implemented will come up.
Can you provide a quote about the exclusion for people covered by a collective bargaining agreement?
https://app.leg.wa.gov/RCW/default.aspx?cite=50B.04.080
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

How does this new law and tax work for someone who is currently self-employed, does not have their own LTC policy, and chooses not to opt-in to the state’s program... but then many years down the road becomes a W-2 employee?

Are they permanently opted out? Permanently forced in when they become a W-2 employee? Would they have a window of opportunity when they become a W-2 employee to purchase their own policy to opt out?

It seems ludicrous that the opt-out window would be a one-time thing that doesn’t account for changing circumstances over time.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by AS7911 »

truenyer wrote: Mon May 03, 2021 3:26 pm
Soon2BXProgrammer wrote: Mon May 03, 2021 3:24 pm
suemarkp wrote: Mon May 03, 2021 2:37 pm I was in the process of emailing our Union focals as to why they hadn't told us this was coming and how to opt out. We are a highly paid group of engineers. Then i discovered that this bill excludes people covered by a collective bargaining agreement. So not only did SEIU sponsor this, they opted themselves, and most other unions, out of this. It appears that when the union contract is renewed, then how this gets implemented will come up.
Can you provide a quote about the exclusion for people covered by a collective bargaining agreement?
https://app.leg.wa.gov/RCW/default.aspx?cite=50B.04.080
Item 3
Its a new tax. Taxes can be added or increased without needing to change a contract. So I dont believe that most union contracts will exempt folks from this tax.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

arf1410 wrote: Tue May 04, 2021 2:01 pm
truenyer wrote: Mon May 03, 2021 3:26 pm
Soon2BXProgrammer wrote: Mon May 03, 2021 3:24 pm
suemarkp wrote: Mon May 03, 2021 2:37 pm I was in the process of emailing our Union focals as to why they hadn't told us this was coming and how to opt out. We are a highly paid group of engineers. Then i discovered that this bill excludes people covered by a collective bargaining agreement. So not only did SEIU sponsor this, they opted themselves, and most other unions, out of this. It appears that when the union contract is renewed, then how this gets implemented will come up.
Can you provide a quote about the exclusion for people covered by a collective bargaining agreement?
https://app.leg.wa.gov/RCW/default.aspx?cite=50B.04.080
Item 3
Its a new tax. Taxes can be added or increased without needing to change a contract. So I dont believe that most union contracts will exempt folks from this tax.
Not true. First, the law explicitly states CBAs prior to 2018 are exempt. Second, the same thing happened with PFML. I didn’t pay into the program until my contract was renewed.

Edit: also it’s not a tax. It’s a premium paid to a benefit program.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by suemarkp »

Here is another source for information relating to this. https://www.jdsupra.com/legalnews/updat ... n-7882872/
Mark | Somewhere in WA State
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by asdfgf »

truenyer wrote: Sun May 02, 2021 3:46 pm
Isabelle77 wrote: Thu Apr 29, 2021 11:57 am Scott Olson
Scott@ltcshop.com
Office: 877-727-9582


This is the agent we are using, he's on the west side but nowhere near us. Very reasonable quotes, we wound up choosing a Banker's Life policy that covers exactly what the new WA state plan will. $100 a day up to 365 days.
Bankers Life certainly had the best rates. But very bad customer reviews. Did you factor that into your decision at all??
It was kind of a positive for me. It told me I could expect lower premiums. If you know of a even worse company with even lower premiums, sign me up. I have no intention of using the policy at all. I just want the lowest premium that will get me an exemption.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by euler »

Kookaburra wrote: Mon May 03, 2021 11:00 pm How does this new law and tax work for someone who is currently self-employed, does not have their own LTC policy, and chooses not to opt-in to the state’s program... but then many years down the road becomes a W-2 employee?

Are they permanently opted out? Permanently forced in when they become a W-2 employee? Would they have a window of opportunity when they become a W-2 employee to purchase their own policy to opt out?

It seems ludicrous that the opt-out window would be a one-time thing that doesn’t account for changing circumstances over time.
I don't have the answer, but wanted to bump this, as I'm sure it applies to a LOT of folks in the tech industry (who seem well represented on Bogleheads). The elephant in the room, IMO. Does anyone know?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

WoW2012 wrote: Sat May 01, 2021 1:34 pm
willthrill81 wrote: Sat May 01, 2021 1:15 pm
WoW2012 wrote: Sat May 01, 2021 10:50 am
willthrill81 wrote: Sat May 01, 2021 10:31 am Once the state verifies that I did have a LTC policy in place at the time of the opt out window, I'll drop my LTC policy and remain permanently opted-out.
That loophole is in the process of being closed.
Won't that require a change to the law?
No.
The ESD writes the rules.
So the ESD is authorized to make any changes regarding eligibility for the opt-out that they want when they want?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

Jordon wrote: Sat May 01, 2021 11:40 am
WoW2012 wrote: Sat May 01, 2021 10:50 am
willthrill81 wrote: Sat May 01, 2021 10:31 am Once the state verifies that I did have a LTC policy in place at the time of the opt out window, I'll drop my LTC policy and remain permanently opted-out.

That loophole is in the process of being closed.
Source? I can't find a lot of information about this whole thing.
The lack of a reply from the insurance salesperson is telling.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

asdfgf wrote: Thu Apr 08, 2021 11:27 pm
willthrill81 wrote: Thu Apr 08, 2021 10:15 pm
asdfgf wrote: Thu Apr 08, 2021 1:55 pm
Cucumbers wrote: Thu Apr 08, 2021 10:25 am How much will a “small policy” premium cost? I don’t care for the actual quality of the policy as long as it qualifies for the opt out. Any recommendations?
What I've found for myself is that it depends. On the low end you could probably get something for about $300/yr, but you might have some serious concerns if WA will consider it good enough for an exemption. On the high end for about $900/yr you can get a policy that is unequivocally better than WA's and have pretty much no worry at all.
I agree with WoW2012 that if the benefits are equal or greater to the state's program that it's very unlikely to be a problem. The price of the policy will depend significantly on your age and health. In my case, it's looking like I can probably get a policy with slightly more benefits than the state program for about $450/year, about half what the payroll tax would cost me.
Does your $450 plan have a zero day elimination period and inflation protection. If it lacks those things, WA can easily argue that your benefits are not equal or greater.
As a reminder, the law does not (as of yet) state that LTCi policy one owns must have all of the same characteristics as the state's plan. Right now, any LTCi policy will do. But this is an evolving situation, so be mindful.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Kookaburra wrote: Mon May 03, 2021 11:00 pm How does this new law and tax work for someone who is currently self-employed, does not have their own LTC policy, and chooses not to opt-in to the state’s program... but then many years down the road becomes a W-2 employee?
The law says the following about self-employed individuals:
Sec. 6. RCW 50B.04.090 and 2020 c 98 s 5 are each amended to read as follows:
(1) Beginning January 1, 2022, any self-employed person, including a sole proprietor, independent contractor, partner, or joint venturer, may elect coverage under this chapter. Coverage must be elected before January 1, 2025, or within three years of becoming self-employed for the first time. Those electing coverage under this subsection are responsible for payment of one hundred percent of all premiums assessed to an employee under RCW 50B.04.080. The self-employed person must file a notice of election in writing with the employment security department, in the manner required by the employment security department in rule. The self-employed person is eligible for benefits after paying the long-term services and supports premium for the time required under RCW 50B.04.050.
(2) A self-employed person who has elected coverage may not withdraw from coverage((, at such times as the employment security department may adopt by rule, by filing a notice of withdrawal in writing with the employment security department, with the withdrawal to take effect not sooner than thirty days after filing the notice with the employment security department)).
(3) A self-employed person who elects coverage must continue to pay premiums until such time that the individual retires from the workforce or is no longer self-employed. To cease premium assessment and collection, the self-employed person must file a notice with the employment security department if the individual retires from the workforce or is no longer self-employed.
https://www.ltcinsuranceconsultants.com ... st_act.pdf

Based on this, it seems that in the scenario you describe (i.e., a self-employed person later becomes an employee), the individual would have to begin paying the tax upon becoming an employee.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Kookaburra wrote: Fri May 07, 2021 7:16 pm
Jordon wrote: Sat May 01, 2021 11:40 am
WoW2012 wrote: Sat May 01, 2021 10:50 am
willthrill81 wrote: Sat May 01, 2021 10:31 am Once the state verifies that I did have a LTC policy in place at the time of the opt out window, I'll drop my LTC policy and remain permanently opted-out.
That loophole is in the process of being closed.
Source? I can't find a lot of information about this whole thing.
The lack of a reply from the insurance salesperson is telling.
Here's what the law currently says about the matter.
An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title.
https://app.leg.wa.gov/RCW/default.aspx?cite=50B.04.085

No specifics about needed characteristics of the LTCi are provided in this or any section of the law, and this section makes it very clear that those qualify for an exemption are permanently ineligible. The ESD cannot change this on their own; the law would have to be changed.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

willthrill81 wrote: Fri May 07, 2021 9:00 pm
Kookaburra wrote: Fri May 07, 2021 7:16 pm
Jordon wrote: Sat May 01, 2021 11:40 am
WoW2012 wrote: Sat May 01, 2021 10:50 am
willthrill81 wrote: Sat May 01, 2021 10:31 am Once the state verifies that I did have a LTC policy in place at the time of the opt out window, I'll drop my LTC policy and remain permanently opted-out.
That loophole is in the process of being closed.
Source? I can't find a lot of information about this whole thing.
The lack of a reply from the insurance salesperson is telling.
Here's what the law currently says about the matter.
An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title.
https://app.leg.wa.gov/RCW/default.aspx?cite=50B.04.085

No specifics about needed characteristics of the LTCi are provided in this or any section of the law, and this section makes it very clear that those qualify for an exemption are permanently ineligible. The ESD cannot change this on their own; the law would have to be changed.
Yep, that’s my take on it too. Both of your most recent two posts point to the same structure of the law, that being that there is a once-in-time window to opt out (as an employee). If you don’t take it, you are forever locked in. If you do take it, you are forever locked out, without qualification.

The natural effect of it is that, in the absence of a new law, in a matter of 30 years all employees will be paying the tax (uh, I mean, premium).

Seems like an incredibly ridiculous concept, but at least we know the rules of the game now before the window closes. When I get my exemption letter, I plan on laminating or framing it :)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

I am a W2 employee and plan to apply for the exemption (after purchasing a private LTC policy). My spouse is currently self-employed, but at some point in the future might become a W2. We would like to prevent him from being hit with the payroll tax if and when this happens. Since the exemption application period appears to be a one-time opportunity this fall, what are thoughts on having him apply for exemption even though he isn’t currently a W-2 employee? Essentially it’d be a pre-emptive opt-out. Has anyone seen anything in the rule that allows or prohibits this?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

Kookaburra wrote: Sat May 08, 2021 2:48 pm I am a W2 employee and plan to apply for the exemption (after purchasing a private LTC policy). My spouse is currently self-employed, but at some point in the future might become a W2. We would like to prevent him from being hit with the payroll tax if and when this happens. Since the exemption application period appears to be a one-time opportunity this fall, what are thoughts on having him apply for exemption even though he isn’t currently a W-2 employee? Essentially it’d be a pre-emptive opt-out. Has anyone seen anything in the rule that allows or prohibits this?
Basically we almost have to wait a bit to figure these out until more guidance comes out.

Somewhere I saw this rule doesnt apply to federal employees so yet again current feds in wa it they leave federal service are going to be in a weird transition. (I can't confirm this and I dont have a good reference)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Kookaburra wrote: Sat May 08, 2021 2:48 pm I am a W2 employee and plan to apply for the exemption (after purchasing a private LTC policy). My spouse is currently self-employed, but at some point in the future might become a W2. We would like to prevent him from being hit with the payroll tax if and when this happens. Since the exemption application period appears to be a one-time opportunity this fall, what are thoughts on having him apply for exemption even though he isn’t currently a W-2 employee? Essentially it’d be a pre-emptive opt-out. Has anyone seen anything in the rule that allows or prohibits this?
You could certainly apply for the exemption, but I doubt that it would be granted. They'll likely say something to the effect of 'You're self-employed, so you don't have to opt out', even though later becoming a W2 employee will result in paying the LTC tax. That seems unavoidable, so your spouse might be better off remaining self-employed.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

willthrill81 wrote: Sat May 08, 2021 3:34 pm
Kookaburra wrote: Sat May 08, 2021 2:48 pm I am a W2 employee and plan to apply for the exemption (after purchasing a private LTC policy). My spouse is currently self-employed, but at some point in the future might become a W2. We would like to prevent him from being hit with the payroll tax if and when this happens. Since the exemption application period appears to be a one-time opportunity this fall, what are thoughts on having him apply for exemption even though he isn’t currently a W-2 employee? Essentially it’d be a pre-emptive opt-out. Has anyone seen anything in the rule that allows or prohibits this?
You could certainly apply for the exemption, but I doubt that it would be granted. They'll likely say something to the effect of 'You're self-employed, so you don't have to opt out', even though later becoming a W2 employee will result in paying the LTC tax. That seems unavoidable, so your spouse might be better off remaining self-employed.
Right, that was my fear. But when someone applies for exemption, how does ESD know that the individual is W2, self-employed, or both? Technically, one could get a quick W2 sidejob at McDonalds to get the exemption, then quit?
Last edited by Kookaburra on Sat May 08, 2021 3:49 pm, edited 2 times in total.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Kookaburra wrote: Sat May 08, 2021 3:47 pm
willthrill81 wrote: Sat May 08, 2021 3:34 pm
Kookaburra wrote: Sat May 08, 2021 2:48 pm I am a W2 employee and plan to apply for the exemption (after purchasing a private LTC policy). My spouse is currently self-employed, but at some point in the future might become a W2. We would like to prevent him from being hit with the payroll tax if and when this happens. Since the exemption application period appears to be a one-time opportunity this fall, what are thoughts on having him apply for exemption even though he isn’t currently a W-2 employee? Essentially it’d be a pre-emptive opt-out. Has anyone seen anything in the rule that allows or prohibits this?
You could certainly apply for the exemption, but I doubt that it would be granted. They'll likely say something to the effect of 'You're self-employed, so you don't have to opt out', even though later becoming a W2 employee will result in paying the LTC tax. That seems unavoidable, so your spouse might be better off remaining self-employed.
Right, that was my fear. But when someone applies for exemption, how do they know that the individual is W2, self-employed, or both?
I believe that the Employment Security Department knows the employment status of WA residents, but I'm not sure.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

They definitely do. When I took PFML last year, they already knew how many hours I worked.

They might only know what’s reported to them, however. For example, because I paid into PFML my employer tells ESD how much I’ve worked. Not sure if they know EVERY resident’s employment status.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

truenyer wrote: Sat May 08, 2021 4:41 pm They definitely do. When I took PFML last year, they already knew how many hours I worked.

They might only know what’s reported to them, however. For example, because I paid into PFML my employer tells ESD how much I’ve worked. Not sure if they know EVERY resident’s employment status.
They know every residents numbers of hours and earnings per quarter, if you work for a W2 job covered by unemployment.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by spencydub »

Is this "tax" collected before, or after 401k contributions?

At what salary level does this seem like a good deal (ignoring the 10 year vesting period)?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

spencydub wrote: Mon May 10, 2021 7:11 am Is this "tax" collected before, or after 401k contributions?

At what salary level does this seem like a good deal (ignoring the 10 year vesting period)?
before. its gross wages.

if you stay in Washington, its a great deal for $50k workers... its an ok deal for $75k workers... Its a good deal for anyone who has things wrong with them and doesn't qualify for TLC insurance. (except maybe anyone who is high enough income/assets that the benefit is meaningless)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by okayplayer »

Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

okayplayer wrote: Mon May 10, 2021 11:45 am Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

willthrill81 wrote: Mon May 10, 2021 12:24 pm
okayplayer wrote: Mon May 10, 2021 11:45 am Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
IANAL, but I think the vagueness of the law "has LTCi" does allow ESD to set their interpretation of LTCi for the purpose of this section. I know you're saying it's black and white: either you have coverage, or you don't. But this is the RCW and not the WAC or department-level guidance.

Case in point: ARPA states very vague allowances for FSAs in 2021. However, the IRS is the entity that published specific guidance on how they are interpreting the law. It's the department that "owns" the requirement that sets the administration and enforcement (this being the key here).
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

truenyer wrote: Mon May 10, 2021 12:28 pm
willthrill81 wrote: Mon May 10, 2021 12:24 pm
okayplayer wrote: Mon May 10, 2021 11:45 am Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
IANAL, but I think the vagueness of the law "has LTCi" does allow ESD to set their interpretation of LTCi for the purpose of this section. I know you're saying it's black and white: either you have coverage, or you don't. But this is the RCW and not the WAC or department-level guidance.

Case in point: ARPA states very vague allowances for FSAs in 2021. However, the IRS is the entity that published specific guidance on how they are interpreting the law. It's the department that "owns" the requirement that sets the administration and enforcement (this being the key here).
You could be right. Many aspects of this law and its implementation are certainly going to be challenged in the courts.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

willthrill81 wrote: Mon May 10, 2021 12:34 pm
truenyer wrote: Mon May 10, 2021 12:28 pm
willthrill81 wrote: Mon May 10, 2021 12:24 pm
okayplayer wrote: Mon May 10, 2021 11:45 am Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
IANAL, but I think the vagueness of the law "has LTCi" does allow ESD to set their interpretation of LTCi for the purpose of this section. I know you're saying it's black and white: either you have coverage, or you don't. But this is the RCW and not the WAC or department-level guidance.

Case in point: ARPA states very vague allowances for FSAs in 2021. However, the IRS is the entity that published specific guidance on how they are interpreting the law. It's the department that "owns" the requirement that sets the administration and enforcement (this being the key here).
You could be right. Many aspects of this law and its implementation are certainly going to be challenged in the courts.
If they wait too long to provide guidance, it could put people who want to purchase the bare-minimum coverage in a bind b/c they won’t know what will be considered eligible for exemption in time to actually apply and get it in place.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by truenyer »

Kookaburra wrote: Mon May 10, 2021 6:28 pm
willthrill81 wrote: Mon May 10, 2021 12:34 pm
truenyer wrote: Mon May 10, 2021 12:28 pm
willthrill81 wrote: Mon May 10, 2021 12:24 pm
okayplayer wrote: Mon May 10, 2021 11:45 am Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
IANAL, but I think the vagueness of the law "has LTCi" does allow ESD to set their interpretation of LTCi for the purpose of this section. I know you're saying it's black and white: either you have coverage, or you don't. But this is the RCW and not the WAC or department-level guidance.

Case in point: ARPA states very vague allowances for FSAs in 2021. However, the IRS is the entity that published specific guidance on how they are interpreting the law. It's the department that "owns" the requirement that sets the administration and enforcement (this being the key here).
You could be right. Many aspects of this law and its implementation are certainly going to be challenged in the courts.
If they wait too long to provide guidance, it could put people who want to purchase the bare-minimum coverage in a bind b/c they won’t know what will be considered eligible for exemption in time to actually apply and get it in place.
YUP!
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

truenyer wrote: Mon May 10, 2021 6:48 pm
Kookaburra wrote: Mon May 10, 2021 6:28 pm
willthrill81 wrote: Mon May 10, 2021 12:34 pm
truenyer wrote: Mon May 10, 2021 12:28 pm
willthrill81 wrote: Mon May 10, 2021 12:24 pm

No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
IANAL, but I think the vagueness of the law "has LTCi" does allow ESD to set their interpretation of LTCi for the purpose of this section. I know you're saying it's black and white: either you have coverage, or you don't. But this is the RCW and not the WAC or department-level guidance.

Case in point: ARPA states very vague allowances for FSAs in 2021. However, the IRS is the entity that published specific guidance on how they are interpreting the law. It's the department that "owns" the requirement that sets the administration and enforcement (this being the key here).
You could be right. Many aspects of this law and its implementation are certainly going to be challenged in the courts.
If they wait too long to provide guidance, it could put people who want to purchase the bare-minimum coverage in a bind b/c they won’t know what will be considered eligible for exemption in time to actually apply and get it in place.
YUP!
This might be their very intention. ESD has missed deadlines left and right without consequence. And it was only recently that the deadline was pushed from July (which would make it already too late) to November, at the request of someone in the legislature, not ESD.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by definitelynotMike »

It looks like the ESD has posted draft rules that some of you might be interested in (though they don't provide a lot of additional detail): https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf. So far it looks like they are just signaling they will require a LTC policy (no additional requirements yet) and that they have the ability to verify coverage.

According to the CR-102 filing, these rules are open for public comment. You can find that information and draft rules on the other pieces of the law here: https://esd.wa.gov/newsroom/rulemaking/ltss.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

definitelynotMike wrote: Tue May 11, 2021 10:20 am It looks like the ESD has posted draft rules that some of you might be interested in (though they don't provide a lot of additional detail): https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf. So far it looks like they are just signaling they will require a LTC policy (no additional requirements yet) and that they have the ability to verify coverage.

According to the CR-102 filing, these rules are open for public comment. You can find that information and draft rules on the other pieces of the law here: https://esd.wa.gov/newsroom/rulemaking/ltss.
Welcome, and thanks for the link! You're right that this doesn't seem to provide much new information, though they are clearly signaling that any LTC policy is good enough (so far at least) to qualify for the opt out.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

willthrill81 wrote: Tue May 11, 2021 11:48 am
definitelynotMike wrote: Tue May 11, 2021 10:20 am It looks like the ESD has posted draft rules that some of you might be interested in (though they don't provide a lot of additional detail): https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf. So far it looks like they are just signaling they will require a LTC policy (no additional requirements yet) and that they have the ability to verify coverage.

According to the CR-102 filing, these rules are open for public comment. You can find that information and draft rules on the other pieces of the law here: https://esd.wa.gov/newsroom/rulemaking/ltss.
Welcome, and thanks for the link! You're right that this doesn't seem to provide much new information, though they are clearly signaling that any LTC policy is good enough (so far at least) to qualify for the opt out.
There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

At first blush, this new program seemed like a huge favor to the long-term care insurance industry and insurance salespeople. But in actuality, it will severely cut into their business over the long-term because they are now competing with the government. While the initial exemption application period may produce an increase in applications for LTC policies, the very design of this program (with its limited one-time window for exemption) will eventually result in all W-2 employees being forced on it. It’s hard to imagine a lot of people who are forced into a government LTC policy going out and spending more for a private policy too. If this is the eventual outcome, I won’t shed a tear for the insurance industry.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

Kookaburra wrote: Tue May 11, 2021 3:13 pm At first blush, this new program seemed like a huge favor to the long-term care insurance industry and insurance salespeople. But in actuality, it will severely cut into their business over the long-term because they are now competing with the government. While the initial exemption application period may produce an increase in applications for LTC policies, the very design of this program (with its limited one-time window for exemption) will eventually result in all W-2 employees being forced on it. It’s hard to imagine a lot of people who are forced into a government LTC policy going out and spending more for a private policy too. If this is the eventual outcome, I won’t shed a tear for the insurance industry.
If this was a ploy by the insurance companies to make money, the opt-out clause would be permanent. Collect premiums from highly-paid employees while they live in WA, then keep the premiums when they move out of state and cancel the policy.

The insurance companies (and existing voters) may be the reason we have an opt-out at all.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

Whakamole wrote: Tue May 11, 2021 3:30 pm
Kookaburra wrote: Tue May 11, 2021 3:13 pm At first blush, this new program seemed like a huge favor to the long-term care insurance industry and insurance salespeople. But in actuality, it will severely cut into their business over the long-term because they are now competing with the government. While the initial exemption application period may produce an increase in applications for LTC policies, the very design of this program (with its limited one-time window for exemption) will eventually result in all W-2 employees being forced on it. It’s hard to imagine a lot of people who are forced into a government LTC policy going out and spending more for a private policy too. If this is the eventual outcome, I won’t shed a tear for the insurance industry.
If this was a ploy by the insurance companies to make money, the opt-out clause would be permanent. Collect premiums from highly-paid employees while they live in WA, then keep the premiums when they move out of state and cancel the policy.

The insurance companies (and existing voters) may be the reason we have an opt-out at all.
And what % of people do you think even know about the one time opt-out?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

Kookaburra wrote: Tue May 11, 2021 4:10 pm
Whakamole wrote: Tue May 11, 2021 3:30 pm
Kookaburra wrote: Tue May 11, 2021 3:13 pm At first blush, this new program seemed like a huge favor to the long-term care insurance industry and insurance salespeople. But in actuality, it will severely cut into their business over the long-term because they are now competing with the government. While the initial exemption application period may produce an increase in applications for LTC policies, the very design of this program (with its limited one-time window for exemption) will eventually result in all W-2 employees being forced on it. It’s hard to imagine a lot of people who are forced into a government LTC policy going out and spending more for a private policy too. If this is the eventual outcome, I won’t shed a tear for the insurance industry.
If this was a ploy by the insurance companies to make money, the opt-out clause would be permanent. Collect premiums from highly-paid employees while they live in WA, then keep the premiums when they move out of state and cancel the policy.

The insurance companies (and existing voters) may be the reason we have an opt-out at all.
And what % of people do you think even know about the one time opt-out?
Low, which means Washington State is the beneficiary of this new tax.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Kookaburra wrote: Tue May 11, 2021 4:10 pm
Whakamole wrote: Tue May 11, 2021 3:30 pm
Kookaburra wrote: Tue May 11, 2021 3:13 pm At first blush, this new program seemed like a huge favor to the long-term care insurance industry and insurance salespeople. But in actuality, it will severely cut into their business over the long-term because they are now competing with the government. While the initial exemption application period may produce an increase in applications for LTC policies, the very design of this program (with its limited one-time window for exemption) will eventually result in all W-2 employees being forced on it. It’s hard to imagine a lot of people who are forced into a government LTC policy going out and spending more for a private policy too. If this is the eventual outcome, I won’t shed a tear for the insurance industry.
If this was a ploy by the insurance companies to make money, the opt-out clause would be permanent. Collect premiums from highly-paid employees while they live in WA, then keep the premiums when they move out of state and cancel the policy.

The insurance companies (and existing voters) may be the reason we have an opt-out at all.
And what % of people do you think even know about the one time opt-out?
I've recently mentioned this law to some of my friends, and literally none of them had even heard of its existence, much less had any knowledge of the opt out.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Whakamole wrote: Tue May 11, 2021 2:58 pm
willthrill81 wrote: Tue May 11, 2021 11:48 am
definitelynotMike wrote: Tue May 11, 2021 10:20 am It looks like the ESD has posted draft rules that some of you might be interested in (though they don't provide a lot of additional detail): https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf. So far it looks like they are just signaling they will require a LTC policy (no additional requirements yet) and that they have the ability to verify coverage.

According to the CR-102 filing, these rules are open for public comment. You can find that information and draft rules on the other pieces of the law here: https://esd.wa.gov/newsroom/rulemaking/ltss.
Welcome, and thanks for the link! You're right that this doesn't seem to provide much new information, though they are clearly signaling that any LTC policy is good enough (so far at least) to qualify for the opt out.
There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)
The problem there is that Frank's Discount LTCi has to get approval from the state to operate within the state and underwrite all policies in under six months. :?
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

willthrill81 wrote: Tue May 11, 2021 4:16 pm
Whakamole wrote: Tue May 11, 2021 2:58 pm
willthrill81 wrote: Tue May 11, 2021 11:48 am
definitelynotMike wrote: Tue May 11, 2021 10:20 am It looks like the ESD has posted draft rules that some of you might be interested in (though they don't provide a lot of additional detail): https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf. So far it looks like they are just signaling they will require a LTC policy (no additional requirements yet) and that they have the ability to verify coverage.

According to the CR-102 filing, these rules are open for public comment. You can find that information and draft rules on the other pieces of the law here: https://esd.wa.gov/newsroom/rulemaking/ltss.
Welcome, and thanks for the link! You're right that this doesn't seem to provide much new information, though they are clearly signaling that any LTC policy is good enough (so far at least) to qualify for the opt out.
There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)
The problem there is that Frank's Discount LTCi has to get approval from the state to operate within the state and underwrite all policies in under six months. :?
Do you think the insurance commissioner will approve a private LTCI policy with the same restrictions as the state one? 8-)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

willthrill81 wrote: Mon May 10, 2021 12:34 pm
truenyer wrote: Mon May 10, 2021 12:28 pm
willthrill81 wrote: Mon May 10, 2021 12:24 pm
okayplayer wrote: Mon May 10, 2021 11:45 am Any update in regards to if the state has spelled out minimum coverage necessary to be exempt from the state plan?
No such update has been provided. Unless the law is amended, I don't think that they can specify minimum coverages. As noted above, the law says "An employee who attests that the employee has long-term care insurance may apply for an exemption from the premium assessment under RCW 50B.04.080. An exempt employee may not become a qualified individual or eligible beneficiary and is permanently ineligible for coverage under this title." That doesn't seem to leave open the possibility of specifying minimum coverages either at a later date or by a specific entity.
IANAL, but I think the vagueness of the law "has LTCi" does allow ESD to set their interpretation of LTCi for the purpose of this section. I know you're saying it's black and white: either you have coverage, or you don't. But this is the RCW and not the WAC or department-level guidance.

Case in point: ARPA states very vague allowances for FSAs in 2021. However, the IRS is the entity that published specific guidance on how they are interpreting the law. It's the department that "owns" the requirement that sets the administration and enforcement (this being the key here).
You could be right. Many aspects of this law and its implementation are certainly going to be challenged in the courts.
Are there any existing court challenges? I haven’t heard of any. But for sure it seems like there would be some.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Bmac »

When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by definitelynotMike »

Bmac wrote: Tue May 11, 2021 5:41 pm When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
Per RCW 50B.04.085 - "The employment security department must accept applications for exemptions only from October 1, 2021, through December 31, 2022."
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

definitelynotMike wrote: Tue May 11, 2021 6:36 pm
Bmac wrote: Tue May 11, 2021 5:41 pm When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
Per RCW 50B.04.085 - "The employment security department must accept applications for exemptions only from October 1, 2021, through December 31, 2022."
But coverage must be in place on November 1, 2021, for the opt out to be valid.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by willthrill81 »

Whakamole wrote: Tue May 11, 2021 4:30 pm
willthrill81 wrote: Tue May 11, 2021 4:16 pm
Whakamole wrote: Tue May 11, 2021 2:58 pm
willthrill81 wrote: Tue May 11, 2021 11:48 am
definitelynotMike wrote: Tue May 11, 2021 10:20 am It looks like the ESD has posted draft rules that some of you might be interested in (though they don't provide a lot of additional detail): https://media.esd.wa.gov/esdwa/Default/ ... 0Rules.pdf. So far it looks like they are just signaling they will require a LTC policy (no additional requirements yet) and that they have the ability to verify coverage.

According to the CR-102 filing, these rules are open for public comment. You can find that information and draft rules on the other pieces of the law here: https://esd.wa.gov/newsroom/rulemaking/ltss.
Welcome, and thanks for the link! You're right that this doesn't seem to provide much new information, though they are clearly signaling that any LTC policy is good enough (so far at least) to qualify for the opt out.
There is money to be made in Frank's Discount LTCI ($10 a year, $1 year in benefits up to the $2 maximum.)
The problem there is that Frank's Discount LTCi has to get approval from the state to operate within the state and underwrite all policies in under six months. :?
Do you think the insurance commissioner will approve a private LTCI policy with the same restrictions as the state one? 8-)
If you think so, I have some lovely ocean front property that you might be interested in. 8-)
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by calwatch »

Soon2BXProgrammer wrote: Mon May 10, 2021 8:25 am
spencydub wrote: Mon May 10, 2021 7:11 am Is this "tax" collected before, or after 401k contributions?

At what salary level does this seem like a good deal (ignoring the 10 year vesting period)?
before. its gross wages.

if you stay in Washington, its a great deal for $50k workers... its an ok deal for $75k workers... Its a good deal for anyone who has things wrong with them and doesn't qualify for TLC insurance. (except maybe anyone who is high enough income/assets that the benefit is meaningless)
It could be meaningful for someone on a BaristaFIRE or part time consulting path to do the minimum work needed and earn the benefit. As a self employed gig worker, it certainly wouldn't hurt to contribute provided one knew they were intending to stay in Washington until death.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Soon2BXProgrammer »

calwatch wrote: Wed May 12, 2021 1:11 am
Soon2BXProgrammer wrote: Mon May 10, 2021 8:25 am
spencydub wrote: Mon May 10, 2021 7:11 am Is this "tax" collected before, or after 401k contributions?

At what salary level does this seem like a good deal (ignoring the 10 year vesting period)?
before. its gross wages.

if you stay in Washington, its a great deal for $50k workers... its an ok deal for $75k workers... Its a good deal for anyone who has things wrong with them and doesn't qualify for TLC insurance. (except maybe anyone who is high enough income/assets that the benefit is meaningless)
It could be meaningful for someone on a BaristaFIRE or part time consulting path to do the minimum work needed and earn the benefit. As a self employed gig worker, it certainly wouldn't hurt to contribute provided one knew they were intending to stay in Washington until death.
I agree the less total income you pay the tax on the better, provided you stay in Washington.
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Whakamole »

Bmac wrote: Tue May 11, 2021 5:41 pm When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
The state hasn't been communicating out the tax and the opt-out. Why would they?

Some workplaces (think large tech) are telling their employees about the tax and opt-out - along with a LTCI plan that employees can easily apply for.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Bmac »

Whakamole wrote: Wed May 12, 2021 10:53 am
Bmac wrote: Tue May 11, 2021 5:41 pm When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
The state hasn't been communicating out the tax and the opt-out. Why would they?

Some workplaces (think large tech) are telling their employees about the tax and opt-out - along with a LTCI plan that employees can easily apply for.
Call me naive, but I would think it would be incumbent upon, if not mandatory for, HR/Payroll departments to notify all employees of this legislation. I can confirm what others have said previously that I have not heard a single person I know mention this whatsoever. I’ve only learned of it via this thread on Bogleheads. It appears to WA best kept secret.
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Re: Washington State Long Term Care Trust Act - 0.58% payroll tax - $36,500 lifetime maximum benefit

Post by Kookaburra »

Bmac wrote: Wed May 12, 2021 11:16 am
Whakamole wrote: Wed May 12, 2021 10:53 am
Bmac wrote: Tue May 11, 2021 5:41 pm When does the opt out occur? I’m retired, basically, but my spouse still works (UW). I don’t believe she has received any information regarding the new tax and opt out options so far from HR/payroll. She pretty much always forwards those kinds of communications to me.
The state hasn't been communicating out the tax and the opt-out. Why would they?

Some workplaces (think large tech) are telling their employees about the tax and opt-out - along with a LTCI plan that employees can easily apply for.
Call me naive, but I would think it would be incumbent upon, if not mandatory for, HR/Payroll departments to notify all employees of this legislation. I can confirm what others have said previously that I have not heard a single person I know mention this whatsoever. I’ve only learned of it via this thread on Bogleheads. It appears to WA best kept secret.
Yea, it’s almost like they know it’s a raw deal with lots of strings attached, and that it wouldn’t self-sustain if people actually knew about it.
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