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May 27, 2022

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Washington House approves delaying payroll tax for WA Cares until July 2023

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OLYMPIA — Washington House lawmakers Wednesday approved a pair of key bills to delay the payroll tax collections for WA Cares until July 2023 and make broad changes to the first-of-its-kind long-term care program in the face of criticism.

The votes come in the second week of the 60-day legislative session, with Democratic House lawmakers moving speedily to address critiques and concerns that have emerged over the program this past year.

House Bill 1732, which delays the payroll tax, passed 91-6, with just a handful of Republicans in opposition. It now heads to the Senate.

In Wednesday’s floor debate, bill sponsor House Majority Leader Pat Sullivan, D-Covington, defended the long-term care program, calling it necessary for state residents to be able to remain in their homes as they age.

The delay will help “so we can address the issues we’ve heard about, to ensure that the program is effective and as efficient as we can make it,” Sullivan said.

Approved by Democratic lawmakers and Gov. Jay Inslee, WA Cares is styled as a social insurance program funded by a .58% payroll tax on workers. Starting in 2025, eligible beneficiaries could begin claiming up to $36,500 to pay for necessities like assisted living or nursing care, meal preparation and transportation, and respite for caregiving family members.

But as the program got going last year ahead of the new payroll tax — set to begin Jan. 1 — a host of concerns emerged. Many focused on people who would pay into the program but never receive benefits.

Those include, among others, roughly 150,000 Washington workers who live in another state and people who will pay into the program but move to another state to retire. At the same time, about 477,000 people in Washington are near retirement age and may not become fully vested in the program and claim full benefits, as it is currently structured.

House Bill 1732 would delay the payroll tax until July 1, 2023, and would allow some workers currently near retirement age to claim prorated benefits. People born before 1968 and who won’t be fully vested under the program’s current structure will be able to get partial benefits based on the number of years they ultimately pay into the program.

Under the bill, any premiums already collected would be refunded within 120 days.

Wednesday’s vote comes after House Democratic lawmakers initially resisted the concept, even as Senate Democratic leaders urged a delay. Late last month, Inslee announced the state would temporarily postpone collecting the payroll tax from employers as legislators explored changes.

Before Wednesday’s votes, Republican lawmakers unsuccessfully attempted to debate their own long-term care proposals, which weren’t given committee hearings in the Democratic-controlled House.

“This is one of the most important policies this chamber will discuss this session,” said Rep. Drew Stokesbary, R-Auburn. Stokesbary sponsored of one of those proposals, to replace WA Cares with an optional long-term care program.

Lawmakers also approved House Bill 1733 Wednesday, 67-29, to allow some people not likely to receive benefits, or who already have some coverage, to permanently opt out of the program and the tax.

Under the proposal, an estimated 150,000 people working in Washington but living in other states could opt out, as well as temporary workers with nonimmigrant visas, partners or spouses of members of active military and some disabled veterans.

Bill sponsor Rep. Dave Paul, D-Oak Harbor, called the changes a “critical improvement.”

“Let’s help improve the Washington Cares Act and let’s make it more robust and more accessible for more families,” said Paul in a floor speech.

Even as they supported the payroll-tax delay and to a lesser extent, the proposed fixes, Republicans Wednesday used the debate and amendments to highlight their critiques.

They questioned whether enough people would remain in the program to keep it solvent over the long haul. The exemptions being considered by lawmakers come on top of the roughly 450,000 residents who sought to opt out of the program by securing long-term care insurance on the private market or through their employer, state officials have said.

Others raised the issue of fairness over who would and wouldn’t receive benefits, even as they pay into the program.

Rep. Jacquelin Maycumber, R-Republic, sponsored an amendment to require the Employment Security Department — which is administering WA Cares — to send out educational materials about the program and its benefits.

“And everyone in the state of Washington who will be paying and may not benefit from this policy should be clearly educated by the department,” Maycumber said, shortly before the amendment was rejected.

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