On January 27, 2022, Governor Jay Inslee signed into law two bills, SHB 1732 and SHB 1733, that delay the start of many WA Cares program activities, including delaying the start of employee premium payroll deductions by 18 months. The bills also provide near-retirees with less than ten years before retirement the ability to vest in WA Cares on a prorated basis. Finally, the new bills establish new exemptions for:
Substitute House Bill 1732
Effective Date: SHB 1732 contains an emergency clause and takes effect immediately.
Note that the bill did not provide any extension of the December 31, 2022 due date to submit an application for program exemption due to purchase of a private LTC policy before November 1, 2021. In addition, the WA Cares Fund website reminds employers that during this postponement period they should continue to maintain copies of exemption approval letters for workers who’ve provided them.
Substitute House Bill 1733
Effective Date: SHB 1733 takes effect 90 days after March 10th adjournment of the 2022 Legislative regular session.
This bill establishes four new exemption categories for the WA Cares program.
Beginning January 1, 2023, an employee may apply to the Employment Security Department (ESD) to be exempted from the LTSS Trust Program if they are:
An employee who receives an exemption is permanently ineligible from receiving LTSS Trust Program benefits unless their exemption is discontinued because they no longer meet the exemption criteria. An employee who has been exempted under one of the four new categories noted above, but no longer meets the exemption criteria must notify ESD and their employer within 90 days. Premiums must be assessed once the employee notifies their employer and ESD they no longer meet the exemption criteria. If the employee fails to begin paying premiums within 90 days of no longer meeting the exemption criteria, the employee must pay any unpaid premiums, with interest, from the date on which the premiums should have begun.
ESD will need to enact rules and procedures to support the administration of these new exemption categories.
Other 2022 legislative session activities related to the WA Cares Fund - No other substantive bills related to the WA Cares program are expected to pass this legislative session. However, additional changes to the WA Cares program are being contemplated by legislators and may be addressed in bills introduced in the next 2023 legislative session, which will also take place during the 18-month WA Cares premium assessment delay. Among the program revisions the legislature may consider in 2023, based on issues identified by the LTSS Trust Commission, are:
Whether to Maintain Private LTC Insurance - Many individuals purchased private LTC coverage in order to apply for a permanent WA Cares Fund participation exemption. Given the passage of SHB 1732 and 1733, some may question whether to cancel or stop premium payment for their existing LTC insurance policy. Canceling an in-force LTC policy at this time may put an individual at significant risk of being required to pay the premium tax in the future. The LTSS Trust Commission has recommended that the legislature consider establishing an exemption recertification process to require ongoing proof that an individual has maintained an in-force LTC insurance policy. Democratic legislative leaders indicate an intention to consider future legislation to “assure that those who have opted out of the program maintain their private insurance.” In addition, nothing in current statutes provides for future exemption application periods. Unless a new law is passed, the 2021 opt-out was a one-time opportunity. Individuals who may be considering cancelling a private LTC policy should consider all the potential ramifications, including the possible future loss of exemption status, by doing so.
Please contact a member of your AssuredPartners service team with any questions or requests for assistance.
This bulletin is provided for informational purposes only and may not be construed as legal or tax advice.
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