WA CARES: Steps to prepare for implementation
by Rachelle Kelly and Nicole Anderson
ARTICLE | June 20, 2023
As you may know, WA CARES, also known as the Washington Cares Fund, is a state-mandated long-term care program that aims to provide a safety net for Washington residents who may require long-term care services in the future. In essence, it establishes a payroll tax on both employers and employees to fund a publicly provided long-term care benefit. With payroll tax contributions beginning on July 1, 2023, we want to ensure our clients understand the provisions of the WA CARES ACT and the steps needed to prepare for its implementation.
What is the WA CARES Act?
The Washington Cares Fund is a statewide long-term care program established by the WA CARES Act. This program aims to provide Washington residents with a modest level of long-term care coverage, helping to alleviate the financial burden associated with long-term care services. The program will be funded through a new payroll tax on employees’ wages.
Who is impacted by the WA CARES Act?
All Washington state employees will be subject to the new payroll tax, with some exemptions. Self-employed individuals can choose to opt in.
When does the WA CARES Act take effect?
The payroll tax contributions will begin on July 1, 2023, with the first benefits becoming available starting July 1, 2026. However, it’s essential to start planning and preparing now to ensure a smooth transition.
How much is the payroll tax?
2023, the premium is 0.58% of an employee’s wages. There is no cap on wages subject to the tax.
What are the benefits provided by the WA CARES Act?
The WA CARES Act aims to provide a modest level of long-term care coverage to eligible individuals. The program will cover services such as in-home care, assisted living, nursing home care, and more. Starting July 1, 2026 each eligible person can receive up to $36,500 (adjusted for inflation) over their lifetime.
What should you do to get ready for the WA CARES Act?
- Educate yourself: Take the time to understand the key provisions of the WA CARES Act and how they may impact you and your employees. Familiarize yourself with the eligibility criteria, benefit levels, and the payroll tax requirements.
- Assess your long-term care needs: Evaluate your existing long-term care plans and insurance coverage. Consider whether the benefits provided by the WA CARES Act align with your needs or if additional coverage may be necessary.
- Update your financial planning: Incorporate the new payroll tax into your budget and financial plans. Understand how this additional expense may impact your cash flow and make necessary adjustments.
- Communicate with your employees: As an employer, it’s crucial to inform your employees about the upcoming changes and provide them with the necessary resources to understand the WA CARES Act. Ensure they are aware of the potential impact on their paychecks and how it may affect their financial planning.
The Washington CARES Act introduces significant changes to long-term care coverage in the state. It is essential for both employers and employees to understand the provisions of the Act, prepare for the new payroll tax, and assess their long-term care needs. By staying informed and taking proactive steps, you can navigate the transition smoothly and ensure that your financial well-being remains intact.
This article is intended to provide a brief overview of the WA CARES Act. It is not a substitute for speaking with one of our expert advisors. For more information, please contact our office below.
Call us at (360) 734-4280 or fill out the form below and we'll contact you to discuss your specific situation.
Rachelle Kelly, MBA, Certified QuickBooks ProAdvisor
Client Accounting Services Manager
Rachelle joined Larson Gross in 2021. She graduated from Southern New Hampshire University with an MBA in 2018, and also has a bachelor’s degree in Food and Nutrition Science from Seattle Pacific University.
Prior to joining Larson Gross, Rachelle served as the Financial Planning and Analysis Manager and Accountant at an aerospace manufacturing business. Her passion is to help business owners successfully run their business with accurate and timely financial data and has experience serving a wide variety of industries, including manufacturing and construction.
Nicole Anderson, Certified QuickBooks ProAdvisor
Client Accounting Services Senior
Nicole Joined Larson Gross in early 2021 after 10 years of bookkeeping experience. She graduated in the Spring of 2019 with a bachelor’s in Accounting from Western Governors University.
Prior to joining Larson Gross, she worked as an Assistant Controller with a low-income property management organization and previously chaired on a Maple Valley non-profit as the treasurer. She specializes in assisting hospitality companies with their payroll and reporting needs.