LONG TERM CARE COVERAGE: An alternative to the Washington State Long Term Services & Supports Act

Public Safety Employees Insurance Inc. is a wholly owned subsidiary of the Washington Council of Police & Sheriffs (WACOPS). 

Information as of June 11, 2021 -- please watch for updates!

Brief Background on Washington’s LTSSA:  In 2019 the Washington State Legislature passed a mandatory payroll tax to take effect on January 1, 2022.  The tax will be collected on every W-2 Wage Earner.  The tax is currently set at .58cents per every $100.00 of gross wages.  In 2021, WACOPS along with other first responder advocates and some employers, was able to get an amendment to the law that allows for current workers in WA to opt out of the tax if they have in place by November 1, 2021, an alternative insurance plan that meets the State’s mandated coverage level.

Where can you find out more? PSEII and its broker LBG Advisors are working hard to make sure every first responder in Washington has a choice when it comes to their long-term care needs.  For more information about Public Safety Employees Insurance Inc and their alternative to the state’s payroll tax, please visit www.pseiibenefits.com.  As this continues to develop information will be put there for your consideration.  For a brief video message from the WACOPS Executive Director please click here: https://youtu.be/dl_kzcEo6TM

Frequently Asked Questions:  In the past few weeks we have received many questions about long term care, the state’s mandatory tax, and how to opt out.  Please review the list of questions and answers below.  If you continue to have questions, please contact Jason Jakobsen at LBG Advisors ([email protected]) or Teresa Taylor, WACOPS Executive Director ([email protected])  

THE BASICS

Q – Who pays?

 A – Beginning January 1, 2022, all W-2 wage earners 18 years of age and older will be taxed.

 

Q – How much is the tax?

A – As of January 1, 2022, the state will collect .58cents on each $100 of gross earnings. 

 

Q – Is the tax capped?

A – No.  The State has already reported that the .58cents initially collected will not generate enough money by the time the first beneficiaries will be able to access the state’s plan. 

 

Q – How do I pay the tax?

A – Your employer will withhold the tax from your pay and remit it to the state on your behalf. 

 

Q – How much coverage will I receive from the State when/if I need long term care support?

A – The maximum payout will be $36,500 or the equivalent of $100 a day for 1 year.

 

Q – I am planning to move out of state.  Will I still be able to use the state’s coverage? 

A – No.  The state plan is not portable and if you are vested but move out of state, and remain out of state for an extended period, you may not be able to receive the benefits even if you return for care.

 

Q – How many years must I contribute to the tax to benefit from the state’s coverage?

A – There are a couple ways to determine if you ultimately qualify to receive benefits.  One test is the 10-year vesting.  In this case, the benefits are limited to Washington residents that have paid premiums in the program for a total of 10 years without interruption of at least five consecutive years.  The second way a person will qualify is that they contributed for at least 3 years in the last 6 years from the date they apply for benefits.  NOTE: Employees must have worked at least 500 hours during each of the 10 years of 3 years, whichever qualifier applies to the applicant’s situation.  Ultimately, anyone that stops work (retires for example) before reaching the 10-year mark may never qualify for the benefit. Also, since you must be a Washington resident, those that retire and move away from Washington will not be able to use their benefit either.

 

Q – I am going to retire or leave employment soon!  If I am not going to work enough years to vest in the state’s plan will my employer allow me to opt out?  

A – No.  You will have to either pay the tax or provide proof that you have an alternative insurance plan.

 

Q – I am not working now but plan to go back to work in 2022. When I go back to work after January 1, 2022, will I be offered a way to opt out of the tax?  NOTE: This is unlikely your situation but may be the case for a spouse or a dependent child.

A – Possibly, but probably not.  There may be a path, and you should contact LBG Advisors to learn more.  Ultimately, the very limited solution would still require that the wage earner (the person currently unemployed) purchase an alternative before November 1, 2021, and then inform their employer of their other coverage at time of hire, provided they are hired before December 31, 2022.  

 

IS THERE AN ALTERNATIVE TO THE PAYROLL TAX?

Q – Is there a way to avoid the tax?

A – Yes!  The current law allows for currently employed W-2 wage earners 18 years of age and older to opt out of the state’s tax if they have purchased an acceptable alternative insurance plan by November 1, 2021. 

 

Q – If I opt out now and later decide I would rather pay the payroll tax, can I get back into the sate’s program?

A – No.  Currently the law will not allow anyone that opts out now to opt back in later.  

 

Q – Will the insurance through PSEII be portable (take it to another state)?

A – Yes. 

 

Q – Will the insurance through PSEII be rate stable?

A – Yes.

 

Q – Will the insurance through PSEII require I pay into the plan for at least 10 years before I can use it, should I need to?

A – No.  Be sure to get detailed information about when coverage becomes available to you, based on the plan you select.

 

Q – Will the insurance through PSEII be less expensive than the state’s?  NOTE: The state is starting at .58cents for each $100 earned.

A – We expect it to be, but we will not know until we get the rates back from underwriting.  We do know that the state’s tax is unlikely to remain at .58center per $100 of earnings. The state has already said that rate is too low. We also know the alternative will be portable.

 

HOW CAN WE GET ACCESS TO THE ALTERNATIVE?

Q – How do I get a quote for the Public Safety Employee’s Insurance Inc. alternative coverage?

A – All WACOPS member organizations, and other first responder organizations will be able to log into a portal to get a quote sometime in July.  NOTE: This date is not yet set.  We need all census data returned to PSEII before we can open the portal to access quotes. Please keep watching www.pseiibenefits.com for current information.

 

Q – If I get a quote am I obligated to purchase the insurance?

A – No.

 

Q – If I want to buy the alternative and avoid the state’s tax but others in my organization want to pay the tax or use another option, am I out of luck?

A – No.  The decision to purchase an alternative or to pay the payroll tax to the state is a personal decision for each person.  You will make the best decision for you and will not be impacted by what others elect to do.

 

CENSUS for WACOPS MEMBERS and AFFILIATED NON-MEMBERS

Q – I have been asked by WACOPS to complete a census form to include all the members of my organization.  What is this for? Is it required?   (The census format is available here: 

LTC Census Template
Go to www.pseiibenefits.com

A –

What is it for:  The census is the document used by our underwriter to monetize the coverage options.  Trustmark, the underwriter, has agreed to treat all WACOPS members as one group, rather than treating large member organizations within WACOPS more favorable than small ones.  The census brings us all together, treats you all similarly, and leverages our strength in numbers. 

Is the census required:  In order to ensure our underwriter can offer the most affordable options, the census is required. The census is not to be completed by an individual.  The census must be submitted by an organization and must include all members of that organization whether they currently know what they want to do about the tax.  NOTE: There is no obligation to buy anything.  To have access to the PSEII alternative, please submit your organization’s census to [email protected].    

 

Q – My first responder organization is not currently a member of WACOPS.  Will our members have an opportunity to get a quote for this alternative?

A – Yes.  In this one instance, and only this one instance, the Board of Directors for WACOPS is making access available to all affiliated first responders and supporting professions (corrections, communications, etc.).  Please contact Teresa at WACOPS for the details about affiliation for this limited offer ([email protected]). 

 

Q – Who needs to submit a census?

A – Every organization of first responders that wants to ensure its members, their spouses, and children (18 – 25) can make a choice about their long-term care coverage.   

 

Q – Who do I include in the census?

A – Please include everyone that you consider a member of your organization.  NOTE: For organizations that also have records, corrections, and communications (just for example) please do not list them in your census.  They will have access but are not requested for the census. If you are unsure, or time is a concern, please go ahead and include them.