WA Cares Fund 2026: Long-Term Care Tax for Washington Employers

1. What Is the WA Cares Fund?

The WA Cares Fund is the first-in-the-nation state-run long-term care insurance program. Signed into law in 2019 under House Bill 1087, it was created to address a growing crisis: most Americans will need some form of long-term care during their lifetime, but very few carry private long-term care insurance.

Premium collections began in July 2023 after a one-year delay from the original start date. The program is administered by the Washington State Employment Security Department (ESD), with benefits managed by the Department of Social and Health Services (DSHS).

The core idea is simple: a small payroll deduction today funds a meaningful long-term care benefit later. Rather than relying on Medicaid spend-down (which requires near-total asset depletion) or expensive private policies, Washington workers build eligibility for a state-provided benefit through payroll contributions.

2. 2026 Premium Rate

The WA Cares Fund premium rate for 2026 is 0.58% of gross wages. This rate applies to every dollar of earnings — there is no wage cap or taxable wage base ceiling.

Key details about the premium:

• Rate: 0.58% of all gross wages
• Paid by: Employee only — there is no employer portion
• Wage cap: None — applies to every dollar earned
• Frequency: Withheld each pay period

Example Calculations

Here is what the WA Cares premium looks like at different salary levels:

• $40,000/year: $232 annually ($19.33/month, or about $8.92 per biweekly paycheck)
• $65,000/year: $377 annually ($31.42/month, or about $14.50 per biweekly paycheck)
• $100,000/year: $580 annually ($48.33/month, or about $22.31 per biweekly paycheck)
• $150,000/year: $870 annually ($72.50/month, or about $33.46 per biweekly paycheck)
• $250,000/year: $1,450 annually ($120.83/month, or about $55.77 per biweekly paycheck)

3. Employer Responsibilities

Even though the WA Cares premium is employee-paid, employers bear the administrative burden. Here is what you must do:

• Withhold 0.58% from every paycheck for each covered employee
• Report and remit quarterly to ESD alongside your PFML and SUI filings
• Track employee wages accurately for WA Cares premium calculations
• Maintain records of exemption letters for employees who have approved exemptions
• Do not withhold premiums from employees with an approved exemption letter on file

Employers are not permitted to pay the employee share of the WA Cares premium on the employee's behalf. The law specifically designates this as an employee-paid tax. That said, some employers voluntarily increase wages to offset the cost — but the deduction itself must come from the employee's paycheck.

4. Who Is Covered

The WA Cares Fund covers nearly all W-2 employees who work in Washington State. Coverage is broad by design:

• All W-2 employees working in Washington, regardless of hours worked
• No minimum hours requirement — part-time, seasonal, and temporary workers are all included
• No employer size threshold — even employers with a single employee must withhold
• Self-employed individuals may opt in voluntarily through ESD

Workers who are not covered include:

• Independent contractors (1099 workers)
• Federal employees working in Washington
• Employees with an approved WA Cares exemption
• Tribal members working on tribal lands (unless the tribe opts in)

5. The Exemption (Now Closed)

Here is what employers need to know about the exemption:

• Approved exemptions are permanent. Employees who received an exemption letter from ESD are exempt for life, even if they later cancel their private LTC policy.
• Employers must have the letter on file. Do not stop withholding WA Cares premiums from an employee unless they have provided you with an official ESD exemption approval letter.
• Exemptions are employee-specific, not employer-specific. If an exempt employee changes jobs, they must provide their new employer with the exemption letter.
• No new exemptions. Employees hired after the window closed (or who did not apply in time) have no way to opt out of the WA Cares Fund.

As an employer, keep copies of exemption letters in your payroll records. If you are audited, you will need to demonstrate why certain employees were excluded from WA Cares withholding.

6. Benefits Overview

The WA Cares Fund provides a lifetime benefit of approximately $36,500 (as of 2026). This amount is indexed annually to inflation through the Washington State Consumer Price Index, so the actual dollar amount will increase over time.

Benefits can be used to pay for a wide range of long-term care services:

• Home care — professional caregivers, home health aides
• Assisted living facilities — room, board, and personal care
• Nursing home care — skilled nursing and custodial care
• Adult day care — structured daytime programs
• Adaptive equipment — mobility aids, home modifications (grab bars, ramps, etc.)
• Caregiver training and support — education for family caregivers
• Home-delivered meals and other supportive services

While $36,500 will not cover years of nursing home care (which can cost $100,000+ per year in Washington), it can make a meaningful difference for home-based care, short-term facility stays, or bridging gaps in coverage.

7. Qualifying for Benefits

To receive WA Cares Fund benefits, an individual must meet all of the following criteria:

1. Premium payment history: Must have paid premiums for at least 10 years without a break of five or more consecutive years, OR must have paid premiums for at least 3 of the last 6 years before applying for benefits.
2. Functional need: Must need assistance with at least 3 Activities of Daily Living (ADLs). ADLs include bathing, dressing, eating, toileting, transferring (moving in/out of bed or chair), and continence management.
3. Washington residency: Must be a Washington State resident at the time of applying for benefits.

Benefits are not available to individuals who:

• Have not met the vesting period (premium payment history)
• Have moved out of Washington State
• Need assistance with fewer than 3 ADLs
• Have an approved exemption (exempt employees opted out of the benefit entirely)

Because premiums only began in July 2023, the earliest anyone can qualify under the 3-of-6-year rule is approximately mid-2026. The 10-year vesting requirement will first be met around 2033.

8. How to Report and Remit

WA Cares premiums are reported and remitted through ESD's quarterly reporting system — the same system you already use for State Unemployment Insurance (SUI) and Paid Family and Medical Leave (PFML).

Filing Process

1. Log into your ESD employer account at esd.wa.gov
2. Complete your quarterly wage report, which includes WA Cares premium data alongside SUI and PFML
3. Report total wages and WA Cares premiums withheld for each employee
4. Remit the collected premiums electronically

Filing Deadlines

• Q1 (Jan–Mar): Due April 30
• Q2 (Apr–Jun): Due July 31
• Q3 (Jul–Sep): Due October 31
• Q4 (Oct–Dec): Due January 31

Electronic filing is required for most employers. Paper filing may only be available to very small employers by special arrangement with ESD.

9. Multi-State Considerations

If your business operates across state lines or employs remote workers, WA Cares adds another layer of complexity to your payroll. Here are the key scenarios:

Employees Working in Washington but Living Elsewhere

If an employee physically works in Washington State — even if they live in Oregon, Idaho, or another neighboring state — the WA Cares premium generally applies. The tax is based on where the work is performed, not where the employee resides.

Remote Workers

For employees who work remotely from Washington for an out-of-state employer, localization rules apply. If the employee's work is localized in Washington (meaning they primarily work from a Washington location), WA Cares premiums should be withheld. Employers with remote workers in multiple states should review ESD guidance or consult with a payroll professional to determine proper localization.

Multi-State Payroll Tips

• Track where each employee performs their work, not just where they live
• Use payroll software that supports multi-state tax calculations (Gusto, ADP, and Paychex all handle WA Cares)
• Review ESD's localization guidance for borderline cases
• Keep documentation of employee work locations in case of audit

10. Penalties

Employers who fail to comply with WA Cares Fund requirements face penalties similar to those for SUI and PFML noncompliance:

• Failure to withhold: If you do not withhold WA Cares premiums from employee wages, you may be held liable for the unpaid premiums plus penalties.
• Late payment: Late quarterly remittances accrue interest. ESD assesses penalties on delinquent filings, typically calculated as a percentage of the amount owed.
• Failure to report: Missing or late quarterly reports can result in estimated assessments from ESD, which are often higher than actual premiums owed.
• Fraudulent reporting: Intentionally underreporting wages or premiums can result in additional penalties and potential criminal referral.

The best way to avoid penalties is straightforward: withhold the correct amount each pay period, file your quarterly reports on time, and remit premiums by the deadline. If you use payroll software like Gusto, much of this is automated.

11. FAQ

Do employers pay any portion of the WA Cares premium?

No. The WA Cares premium is 100% employee-paid. Employers are responsible for withholding and remitting, but the cost comes entirely from the employee's wages.

Can an employee opt out of WA Cares?

Only employees who obtained an approved exemption during the original exemption window (which closed in 2022) can opt out. No new exemptions are being accepted.

Is there a wage cap on WA Cares premiums?

No. Unlike SUI (which caps at $72,800) and Social Security (which caps at $176,100), WA Cares applies to all gross wages with no upper limit.

When can employees start receiving benefits?

Employees must meet the vesting requirement (10 years of premiums, or 3 of the last 6 years) and need assistance with at least 3 ADLs. The earliest possible qualification under the 3-of-6 rule is approximately mid-2026.

What happens if an employee moves out of Washington?

Employees who leave Washington lose eligibility for benefits. However, if they later return to Washington and resume paying premiums, their previous contribution history may still count toward vesting.

Does WA Cares apply to part-time employees?

Yes. There is no minimum hours requirement. All W-2 employees working in Washington are covered regardless of part-time, seasonal, or temporary status.

How does WA Cares interact with private long-term care insurance?

Employees who hold private LTC insurance but did not obtain an exemption during the window must still pay WA Cares premiums. They can, however, collect benefits from both their private policy and WA Cares if they qualify.

Can self-employed individuals participate?

Yes. Self-employed workers can voluntarily opt into the WA Cares Fund through ESD. Once opted in, they must continue paying premiums for a minimum of three years.