The WA State FLI Tax and the WA Cares Payroll Tax

The WA Cares Fund is a state program creating a public long-term care insurance benefit for eligible workers, financed through a mandatory employee payroll tax. The fund provides individuals with resources to cover long-term care costs. This program is separate from the state’s Paid Family and Medical Leave (PFML), which provides temporary wage replacement for personal medical events or caring for a family member. WA Cares is specifically for an individual’s own long-term care needs.

Calculating the Payroll Premium

The premium is set at a rate of 0.58% of an employee’s gross earnings, which is $0.58 for every $100 of income. This tax applies to an employee’s total gross wages, including salary, bonuses, and paid time off, with no income cap. For an employee with an annual gross salary of $75,000, the total annual payroll deduction would be $435 ($75,000 x 0.0058). Employers collect this amount each pay period and remit it to the state.

Eligibility for an Exemption

Some employees can opt out of the WA Cares payroll tax if they meet specific criteria and provide documentation. A permanent, irreversible exemption is available for veterans with a service-connected disability rating of 70% or higher. Applicants must provide a copy of their VA benefits summary or rating decision letter.

Other exemptions are conditional. An employee who works for a Washington employer but lives out of state can apply for an exemption with proof of residency, like a driver’s license or utility bill. The spouse or registered domestic partner of an active-duty U.S. armed forces member can also apply by providing documentation of the member’s active-duty status.

Individuals in Washington on a temporary, non-immigrant work visa are eligible for a conditional exemption by providing a copy of their visa. Conditional exemptions are only valid while the qualifying circumstance exists. If an employee’s situation changes, such as establishing Washington residency, they must notify the state and begin contributing. The application window for an exemption based on holding private long-term care insurance purchased before November 1, 2021, has closed.

The Exemption Application Process

The process to apply for an exemption is managed online through the state’s Employment Security Department (ESD). Applicants must first create a Secure Access Washington (SAW) account, the state’s central login portal. If an individual already has a SAW account for other state services, they can use their existing credentials.

Once logged in, the applicant must navigate to the WA Cares Fund section to submit their application. This involves uploading digital copies of the documentation required for their exemption category, such as a VA disability rating letter or proof of out-of-state residency.

After the ESD approves the application, the individual will receive an official exemption approval letter. It is the employee’s responsibility to provide a copy of this approval letter to their current and any future employers. Upon receipt, the employer must cease withholding WA Cares premiums from the employee’s paychecks.

Accessing WA Cares Fund Benefits

To access benefits, an individual must be a Washington resident at the time they apply and meet contribution requirements. To become eligible for the lifetime benefit, an individual must have contributed to the fund for a total of ten years, working at least 500 hours annually without a break of five or more consecutive years. A shorter vesting path exists for those who have contributed for at least three of the last six years at the time they apply.

After vesting and being deemed to need assistance with at least three activities of daily living, an individual can access a lifetime maximum benefit of $36,500. This amount is indexed to grow with inflation. The funds can be used for a wide range of approved long-term care services.

Approved uses include:

• Professional in-home care or costs at an assisted living facility
• Compensation for a qualified family member who provides care
• Home modifications, such as installing wheelchair ramps or grab bars
• Meal delivery services and transportation to medical appointments
• Adaptive equipment or personal emergency response systems