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You Can Opt Out of the New Long-Term Care Tax, But Hurry

Washington is about to impose a new long-term care tax on every employee in the state. Employers will start collecting the .58-percent payroll tax on January 1 from anyone in Washington who receives a W-2 form. That translates to $5.80 out of every $1,000 earned going into the Washington Cares Fund, a trust created to pay for long-term care insurance for state residents.

Why This New Long-Term Care Tax?

Odds are you will need long-term care (LTC) at some point in your life. If you turn 65 today, there’s a nearly 70 percent chance you will need some kind of LTC services and support at some point in your life. And 20 percent of those over 65 will need it longer than five years.

And LTC isn’t cheap. For home care, costs can run around $6,000 a month. For a facility, it can be $9,000. And contrary to popular thinking, Medicare probably won’t help. Medicare only pays when you need medical care, with a limit of 100 days per illness.

You Can Buy Your Plan to Avoid Paying the New Long-Term Care Tax – Should You?

The Washington Cares Fund coverage is limited, too. It will pay a maximum of $100 a day, with a lifetime cap of of $36,500.

But the state allows you to prove you have your own LTC insurance plan. That lets you off the hook for the paying the tax. And a plan you pay for yourself might be a better option, says Renee Caldwell, a Bellingham broker who specializes in long-term care insurance.

“If you’re in your 30s or 40s with poor health, the state plan might be your best option,” Caldwell says. “Someone in their mid-40s making $150,000 a year would pay $870 a year into the system. For same amount you could get a better benefit from a private policy, with some protection against inflation.”

If You Want to Opt Out, Don’t Wait

The state is going to make a form available October 1 that lets you opt out. You must file it by November 1. But Caldwell advises you to get a policy in place as soon as possible.

“Don’t delay in signing up,” she says. “Insurance companies are getting overwhelmed with all the new business coming from Washington. You’ll want to do it sooner rather than later.”

Insurance companies are strongly suggesting you apply before the end of July.

Caldwell’s brokerage, which works with several providers, has a web page that addresses most questions. It also allows you to start the process of getting a private policy. It contains a questionnaire asking for basic information, and some health information, too. Caldwell says it’s important to include answers to health questions so companies can get an accurate idea of your situation, and get you approved.


The Washington Care Fund has an official website.

Nicole Burdick has given us this PDF tool that lets you compare costs of the state plan vs. private insurance.

The financial services company Morningstar has an article on must-know statistics about long-term care.

Lastly, you can learn more about our services here!