Opinion: How to opt out of coming payroll tax

Elizabeth Hovde, of the Washington Policy Center, offers insight to those who want to opt out of a payroll tax that begins in January

This opinion piece was produced and first published by the Washington Policy Center. It is published here with the permission of and full attribution to the Washington Policy Center. 

Right now, the WA Cares Fund website says of opting out, "Exemptions are for life. That means you’ll never have access to the WA Cares Fund benefit, which is currently $36,500." Photo courtesy of the Washington Policy Center
Right now, the WA Cares Fund website says of opting out, “Exemptions are for life. That means you’ll never have access to the WA Cares Fund benefit, which is currently $36,500.” Photo courtesy of the Washington Policy Center

If you want to opt out of a payroll tax that begins in January — assessed to fund a state-run, one-size-fits-all, long-term-care-insurance fund that you might or might not benefit from (read more about the coming tax on our Center for Health Care blog) — here is what we know:

  • You need to already have or purchase a long-term-care plan through a private insurer by Nov. 1. (It’s a process, so get on it.) 
  • You can then apply for an exemption from the state between Oct. 1 of this year and Dec. 31, 2022, attesting that you have long-term-care insurance at the time of your application. (The state’s opt-out form is not expected to be available until the enrollment window’s opening date of Oct. 1. It will be made available in a format approved by the Employment Security Department.) 
  • You’ll need to show your employer (and future employers) a letter from the state that says your exemption has been approved to avoid the tax.
Elizabeth Hovde
Elizabeth Hovde

The state’s website about the program, called the WA Cares Fund, is here. We encourage workers to compare the state program’s lifetime benefit, requirements for the plan’s use and the payroll deduction of 58 cents per $100 of income to the costs and benefits of plans that suit your individual needs, offered by private long-term-care insurers.

Right now, the WA Cares Fund website says of opting out, “Exemptions are for life. That means you’ll never have access to the WA Cares Fund benefit, which is currently $36,500.”

We have asked the state to clarify if that also means the process of opting out is for life, if yearly attestation or proof will be required, and if the state can change the rules in the future. 

Stay tuned. 

Elizabeth Hovde is a contributor and author at the Washington Policy Center.

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