Washington Cares Fund

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The Washington Cares Fund, formally referred to as the Washington State Long Term Care Trust Fund Act, imposes a payroll tax of $0.58 per $100 of W-2 income, beginning January 1, 2022. This will be reviewed biannually beginning in 2024 and may be increased in the future. It is intended to assist in defraying the state’s Medicaid costs.


  • All W-2 income earners over the age of 18 will be subject to the payroll tax
    • This includes RSUs and stock options vesting in a given year
  • Self-employed individuals, independent contractors, sole proprietors, partners and joint venturers may choose to pay the tax, but are not required to do so
  • Those who are currently retired are not able to participate
  • Oregon and Idaho residents who earn income in Washington are expected to pay the tax, but will not be eligible for the benefits unless they later become a Washington resident
  • LTC insurance policyowners may opt-out (see additional details below)


  • The tax will be used to fund LTC policies with a lifetime maximum benefit of $36,500 per person
    • The benefit is available to those who work a minimum of 500 hours per year and pay in for at least 10 years (without a break of more than 5 consecutive years), OR who pay premiums for 3 of the last 6 years
      • Those who pay the tax for only 3 of the last 6 years will have their benefit vest on a temporary basis, which may un-vest. The only way to permanently vest is to pay the tax for at least 10 years.
    • To use the benefit, you must be a resident of Washington state and need assistance with at least 3 of 10 Activities of Daily Living.
      • If you move out of state for 5 consecutive years, you forfeit both your benefit and the premiums you paid
      • Activities of Daily Living include personal hygiene, medication management, eating, toileting, mobility, bathing, body care, dressing, transferring (e.g. getting in and out of bed, moving from a sitting position to standing), and cognitive skills
    • The benefit includes a 45-day elimination period
  • The benefit amount will be inflated annually according to Washington state’s CPI
  • The first claims for benefits will be accepted beginning January 1, 2025


  • You must be covered under a LTC insurance policy in order to opt-out of the payroll tax
    • Eligible policies include individual or partnership LTC policies, tax-qualified group policies and life insurance policies offering accelerated death benefits for LTC needs
    • Medicare supplemental policies, policies providing coverage for under 12 months, terminal illness riders and policies offering lump sum cash indemnity are NOT eligible for the opt-out
    • Your policy must be in-force by November 1, 2021
  • The opt-out window begins on October 1, 2021 and ends on December 31, 2022. This is a one-time window to opt-out and will require the completion of an attestation

Action Items

  • Check with your employer to determine whether or not you are covered under a qualified LTC group policy that would make you eligible to opt-out
  • Work with your Client Advisor on a cost comparison between the payroll tax and the purchase of an individual LTC policy
    • Consider purchasing at least a small LTC insurance policy before November 1, 2021 in order to opt-out of the payroll tax, if desired
  • If you choose to obtain a LTC insurance policy, begin the application process as soon as possible. Your Client Advisor can assist in facilitating the application process, which will include an interview, medical exam, and underwriting review
    • It may take as long as 4-6 weeks to get a policy in place
Posted By: Stephanie d'Ippolito, CFP®

Stephanie d’Ippolito, CFP®, is our Managing Director of Financial Planning. She is passionate about helping people and believes that financial planning can be a valuable tool for clients to understand and solve their unique financial problems. She lives in Seattle with her husband and two dogs, Toby and Thurman.