Please note: The deadline for this option has passed.
Know Your Options
This summer, we were asked about the new Long Term Care Payroll Tax going in effect on 7/1/2023, and if either the Local or the Trust was going to develop a plan that would allow Local 29 members an alternative to paying the payroll tax by enrolling in a qualifying long-term care (LTC) plan.
UPDATE (8/27/2021): Please note that the LifeSecure group offering is no longer available
You have several options:
- Do nothing and pay the .58% payroll tax
- If you are already covered by a qualified LTC policy, you can complete the Opt-Out Certificate process, beginning 10/1/2021, to avoid paying the payroll tax.
- Decide if you want to seek your own coverage before the 11/1/2021 deadline.
First, understand the WA State Plan
Why did Washington State set this up?
“Two years ago, Washington became the first state in the nation to establish a defined benefit to help offset the costs of long-term care. Now, workers have just a few months to decide whether they want to buy a private plan and opt out of the state-managed program before a payroll deduction hits their paychecks starting in January.
Only an estimated 7 million to 8 million Americans have private long-term care insurance, which can be costly and generally requires applicants to pass a health screening. Many assume that Medicare covers long-term care, but that’s not the case except for limited care for skilled nursing or rehabilitation. Qualifying for public coverage under Medicaid, which covers low-income people, involves spending down lifetime savings.”
Source: AP News – Deadline coming on WA long-term care: private or state plan?
About the WA Cares Fund
“Under the program, called WA Cares Fund, workers will pay a premium of .58% of total pay per paycheck, meaning an employee with a salary of $50,000 will pay $290 a year. Starting Jan. 1, 2025, people who need assistance with at least three “activities of daily living” such as bathing, dressing or administration of medication, can tap into the fund to pay for things like in-home care, home modifications like a wheelchair ramp and rides to the doctor. The benefit also covers home-delivered meals, and reimbursement to unpaid family caregivers. The lifetime maximum of the benefit is $36,500, with annual increases to be determined based on inflation.”
Source: AP News – Deadline coming on WA long-term care: private or state plan?
As most of you are aware, the new payroll tax is set initially at .58% of ALL wages and there is no cap on income. This is equal to $580 per $100,000 of income and will be deducted by the city beginning in 2023, unless a member can provide evidence of being covered by a qualified LTC plan that is at least equal to what the State is mandating. The State’s plan pays $100/day for a maximum of one year (lifetime benefit of $36,500) at a Washington licensed facility.
A reasonable alternative to the state payroll tax
Through our own research we learned there were not many options available in the market for this product, and the products that were available were not fire fighter friendly. In addition, the amount of time available to find an alternative was short. We needed to have a qualifying plan in place prior to 11/1/2021 (this translates to 10/1/2021 to account for the administrative process).
However, we were able to identify one market which offered a qualifying plan(s), would underwrite firefighters, and had competitive rates. The insurance company was LifeSecure, which had an A- rating from AM Best, which specializes in long term care products.
Although some of you had already found different plans, we reviewed LifeSecure and its products in detail and concluded they were a reasonable alternative to the state payroll tax. Since we were able to negotiate favorable terms for Local 29 members for price, benefit and underwriting considerations, we believed this was a very solid option and made this plan from Life Secure through August 20, 2021.
The enrollment period for the LifeSecure group offering has ended and the plan is no longer available.
This group offering was available until August 20, 2021.
While we highlighted this option, we still encouraged you to do your own due diligence and make the decision that was best for you.