Delay to long-term care tax awaits Inslee’s signature as Legislature agrees to ‘make this bill better’

OLYMPIA – Less than three weeks into the session, the Washington State Legislature has passed an 18-month delay to the controversial long-term care payroll tax.

The state Senate on Wednesday voted 46-3 to pass the bill. The Senate also voted 38-11 on a bill that would create more exemptions for the tax, including for those who live out of state but work in Washington. Gov. Jay Inslee is expected to sign them Friday, according to his office.

If he does, the tax will be delayed until July 2023. Those wishing to access the benefits from the program could do so beginning July 1, 2026.

The delay would allow the Legislature to fix concerns with the program and “make this bill better,” Senate Majority Leader Andy Billig, D-Spokane, said on the floor.

“With such an important and impactful program, and especially one that is so innovative, it makes sense to take the time to get it exactly right,” Billig said.

The tax has remained controversial in recent months as the program, also known as WA Cares, went into effect at the beginning of this year. Leaders in both parties said they would make fixing the program a priority this session.

Inslee ordered the Employment Security Department to pause the collection of the tax from employers. He did not have the power to delay the tax completely, meaning employers could still collect the tax from their employees.

If he signs this delay, however, employers would stop collecting the tax.

Mike Faulk, spokesman for Inslee, said Wednesday the governor supported the two bills passed by the Legislature and that a delay would ensure residents have “improved access to much-needed long-term care.”

Opponents of the bill have said funding for full benefits could run out at the current 0.58% tax rate. Opponents have also taken issue with the fact that those who work in Washington but live somewhere else can’t access the benefit, up to $36,500 that can be used on professional care at home or at a facility, home safety evaluations, equipment, training for caretakers, meals or transportation.

The benefits are also not portable, meaning those who work in Washington but retire somewhere else can never access it.

Senate Minority Leader John Braun, R-Centralia, said Wednesday the delay was a “step in the right direction,” but “the right answer” is to repeal.

Under the original program, the only way to opt out of the tax was to purchase a private long-term care insurance plan. As of December, almost 450,000 people in Washington opted out of the program.

Under the bill passed Wednesday, however, a number of exemptions were added to the list. Those include some veterans with a service-connected disability of 70% or higher; spouses and registered domestic partners of military service members; nonimmigrant temporary workers; and employees who work in Washington but live in another state.

Sen. Karen Kaiser, D-Des Moines, said these exemptions are just the first step to adjustments to the program.

“Our work is not done,” she said.