Organizations located in Washington state have another benefit they can offer to their employees: the WA Cares fund. This fund, created and managed by the state itself, provides long-term care options to all residents in the state. Residents contribute to the fund while they are working and can access the benefits if they meet certain criteria for long-term care needs.
How Does the WA Cares Fund Work?
In 2019, Governor Inslee signed the LTSS Trust Act into law. Through this act, Washingtonians will begin contributing .58 cents out of every $100 earned into the WA Cares fund starting in 2022. By 2025, those eligible for benefits may tap into them for long term care needs.
Why the WA Cares Fund?
Only about 7.5 million Americans have long-term care insurance, but more than 52% of people age 65 and older are likely to need long-term care at some point in their lives. And, with costs exceeding $300,000 on average over the course of a person’s lifetime, the expenses can be devastating to older Americans.
Washington is now the first state to offer long-term care insurance at an affordable rate for residents who meet eligibility criteria.
What Nonprofit Employers Need to Know
Employers do not need to contribute to the new fund. They do, however, have to track employee hours and wages, and report them to the state. Starting January 1, 2022, you will be required to report employees’ wages and hours worked, as well as collect WA Cares premiums from your employees’ wages. This is the same as you do now for Paid Leave.
You will not need to file a report during any quarters in which your employees have no hours or wages to report.
Are there exemptions?
Employees who wish to be exempt from the WA Cares premium may apply for an exemption. It is their responsibility to apply and to provide you with proof that their exemption was approved. Proof consists of a letter issued by the Employment Security Department (ESD). Once approved, exemptions are permanent, and employees cannot opt back in.
If you are notified that an employee has received approval for an exemption, you must keep a copy of the exemption letter on file and omit collecting the premium from the employee’s wages.
What if my organization offers long-term care insurance?
You may continue offering long-term care insurance to your employees, but it is up to them (not you) whether they should apply for exemption from the WA Cares coverage. There is no organization-wide exemption, so you are still responsible for monitoring wages and hours worked and deducting the appropriate amount of premiums from employees’ wages and reporting them.
You can learn more at: wacaresfund.wa.gov
MIP Fund Accounting Can Help You Track WA Cares Fund Premiums
For nonprofits running MIP Fund Accounting, setting up tracking of the WA Cares premiums is identical to the setup in the system for tracking WA Paid Family and Medical Leave. The only difference is that the setup for WA Cares should deduct .58 cents per every $100 of wages.
Washington is now the first state to offer this important coverage to employees. It’s one more benefit you can use to attract great employees to your organization and to provide your employees with peace of mind for their futures.
Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.