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WA Cares Fund: Long-Term Care Insurance

Updated: Sep 21, 2023

The WA Cares Fund is a state program for employee long-term care insurance. Starting July 1st of 2023, employers are required to withhold 0.58% from employees' gross wages. Payment of collected premiums are reported and paid along with the PFML quarterly report. Employee tips are not subject to the Cares Fund tax and unlike PFML, there is no cap to the taxable wage.


The Cares Fund tax rate is not expected to increase over the years. A change to the law through legislature would be required to increase the rate.


Any amounts which were withheld from an employee's paycheck before July 1st would need to be refunded to the employee.


WA Cares Fund has provided a Paycheck Insert that can be given to an employee along with their paystub. Link: WA Cares Fund Paycheck Insert


Table of Contents:


Benefits

At retirement, WA Cares Fund provides a lifetime long-term care benefit amount of up to $36,500 (adjusted annually for inflation). Benefits will become available July 1, 2026 for qualifying individuals. An individual may use WA Cares Fund in combination with a private long-term care insurance. To be eligible to receive benefits, an individual must be a resident of Washington State.


To take advantage of the benefits, a worker must contribute to the Cares Fund for at least 10 years. Early access to benefits are available if a certain sudden care need arises (minimum 3 years of contributions are required). Partial benefits for workers who were born before 1968 are also available.


Additional Benefits Information: https://wacaresfund.wa.gov/how-it-works


Employee Exemption

S-Corp officer wages are not exempt. Workers under the age of 18 years are also not exempt.


The following individuals are exempt:

  • Self-Employed individuals are automatically exempt but can opt-in.

    • Rate: 0.58% of net earnings

    • Self-employed individuals are sole proprietors, independent contractors, and owners of a partnership.

    • Link: Self-Employed Opt-In

  • Individuals with private long-term care insurance who applied for an exemption before 12/31/2022 and have already received an exemption letter are exempt. The timeframe for applying for this type of exemption has closed.

  • Federal employees are automatically exempt and cannot opt-in. This includes active-duty military employees.

  • Tribal businesses are automatically exempt but can opt-in.

  • Washington residents who are retired and/or non-working.

  • Individuals who applied for a voluntary exemption.

Voluntary Exemption

An employer may not file an exemption on behalf of an employee. The following individuals are eligible for a voluntary exemption:

  • Residents living outside of Washington State.

  • Spouse or registered domestic partner of an active-duty service member of the U.S. Armed Forces.

  • Veteran's with a 70% or higher service-connected disability rating.

  • Individual's with a non-immigrant work visa.


Additional Information:

 

QuickBooks Desktop

1. Download payroll updates.

  • On July 1st, or before the first processed payroll in July, download the payroll updates.

  • On the menu bar, click: Employees > Get Payroll Updates

  • Select: Download only changes and additions to currently installed payroll files

  • Click: Update

  • Click: Ok

2. Add the Cares Fund payroll item to each non-exempt employee.

  • Open the Employee Center

  • Double-click on an employee name

  • Select tab: Payroll Info

  • Click: Taxes …

  • Select tab: State

  • Verify that State Worked is WA

  • Select tab: Other

  • If not already listed, add item: WA - Cares Fund

  • Click: Ok > Ok

3. Remove the WA - Cares Fund item from Exempt employees.

  • If QuickBooks automatically has added the Cares Fund to all employees, remove the item from Exempt employees. An exemption letter which is issued by Employment Security and provided by the employee must be on file.



QuickBooks Online

The Cares Fund premium will be automatically withheld.


For Exempt employees, an exemption letter which is issued by Employment Security and provided by the employee must be on file.


Follow these steps for Exempt employees:

  • Click: Payroll > Employees

  • Click on the exempt Employee's name

  • In the Tax withholding section, click: Edit

  • In the Tax exemptions section, checkmark: WA Cares Fund

  • Click: Save


Last updated: September 21, 2023

 


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1 Comment


Guest
Jun 14, 2023

Thanks that was helpful :)

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